Last updated: July 2026
Quick answer
A reverse mortgage for financial hardship may help eligible homeowners aged 62 and older access part of their home equity without selling their home or making required monthly principal and interest payments.
If you are facing medical bills, rising costs, or a retirement income gap, the funds can ease that pressure while you stay in your home. You remain responsible for property taxes, insurance, and upkeep, and federal rules require that you complete HUD-approved counseling before you can apply.
Could your home equity help ease financial stress? Talk with a GO Mortgage specialist.
When might a reverse mortgage make sense?
A reverse mortgage may be worth exploring when:
- You have substantial equity in your home.
- You want to remain in the home for the foreseeable future.
- You need additional liquidity for essential expenses.
- You can continue paying taxes, insurance, association dues, and maintenance.
- You understand that the loan balance will grow, reducing the remaining equity.
How home equity can help during financial hardship
Financial stress in retirement rarely announces itself politely. A furnace fails. A prescription changes. Property taxes climb faster than a fixed income can keep pace with.
For many homeowners aged 62 and older, home equity is their largest asset, yet it has historically been hard to access without selling and moving.
A reverse mortgage, formally called a Home Equity Conversion Mortgage (HECM), was built for this situation. It lets you access a portion of your home’s value in cash while you remain in the home you know.
How does a reverse mortgage work?
Unlike a traditional mortgage, a HECM does not require monthly principal and interest payments. Instead, the lender pays you, and the balance grows over time as interest and fees accrue.
What you can access depends on:
- Your age
- Current rates
- Your home’s appraised value, up to the federal limit
HECMs are non-recourse loans. When the loan becomes due, the borrower or estate will generally not be responsible for any deficiency beyond the home’s value, provided the loan is handled in accordance with program requirements.
Repayment happens when you sell, permanently move out, or pass away, at which point the home is typically sold or refinanced to satisfy the loan.
What the funds can be used for
After any required loan payoffs, closing costs, or set-asides are addressed, borrowers can generally use the remaining proceeds for a range of personal needs. Homeowners facing financial stress commonly use them for:
- Medical expenses, in-home care, or accessibility upgrades
- Necessary home repairs
- Paying off an existing mortgage to eliminate a monthly payment
- Covering rising property taxes, insurance, or everyday living costs
- Supplementing Social Security or pension income
- Building a line of credit reserve for future emergencies
That last option deserves attention. A HECM line of credit can grow over time, giving you a standby resource to draw from only when you need it, rather than a lump sum sitting idle.
The obligations that come with a reverse mortgage
A reverse mortgage removes the required monthly payment, but it does not eliminate all responsibilities. To keep the loan in good standing, you must continue to:
- Pay property taxes and homeowners insurance on time
- Maintain the home in reasonably good condition
- Pay HOA dues, if applicable
- Live in the home as your principal residence
Note: Before a HECM can be completed, you must participate in counseling with a HUD-approved housing counselor who is independent of the lender.
Lenders also complete a financial assessment, reviewing your income and payment history to confirm you can keep up with taxes, insurance, and upkeep after closing.
The assessment is not based solely on a minimum credit score. The lender reviews your income, expenses, credit history, and record of paying property charges to determine whether you can meet the loan’s ongoing obligations.
A reverse mortgage is a loan, not a grant. Interest accrues over time, reducing the equity that remains for your heirs.
Weighing a reverse mortgage against other options
A reverse mortgage is not the only way to unlock home equity.
A HELOC requires monthly payments and an income qualification, which can be difficult during a financial squeeze. Selling and downsizing access your equity in full, but it means leaving your home and community.
If you are also weighing how the property fits into long-term family wealth, remember the loan is repaid from the home’s value before any remaining equity passes to heirs.
| Option | Required monthly loan payment | Remain in the home | Equity access |
| Reverse mortgage | No required monthly principal-and-interest payment | Yes, while obligations are met | Limited by program calculations |
| HELOC | Yes | Yes | Based on approval and credit limit |
| Sell and downsize | Not applicable | No | Net sale proceeds after costs and debts |
Getting the guidance you need before you decide
Every homeowner’s situation is different, and the right answer depends on your age, equity, health needs, and long-term plans for the property.
A conversation with a specialist, alongside your required HUD counseling session, gives you a clear picture before you commit. GO Mortgage’s team can help you understand what you may qualify for and what the obligations look like in your case.
A reverse mortgage is a significant financial decision. Speak with a GO Mortgage reverse mortgage specialist to discuss your equity, financial needs, property obligations, and long-term plans.
FAQs about reverse mortgages for financial hardship
No. A HECM does not require monthly principal and interest payments as long as you meet your ongoing obligations, including property taxes, insurance, and home maintenance.
Falling behind on these obligations can put your loan into default and potentially lead to foreclosure. This is why HUD counseling and the financial assessment focus so heavily on your ability to keep up with these costs before you close.
Reverse mortgage proceeds generally do not reduce Social Security retirement benefits or Medicare eligibility. However, funds retained beyond the month in which they were received may affect resource-based programs such as Supplemental Security Income or Medicaid.
Your available funds depend on your age, current interest rates, and your home’s appraised value up to the 2026 federal limit of $1,249,125.
You can remain in your home as long as you meet your loan obligations. The loan becomes due if you sell, permanently move out, pass away, or fail to pay property taxes, insurance, or maintain the home.
Heirs should contact the loan servicer promptly after receiving notice that the loan is due. They may be able to repay the loan and keep the home, sell the property and retain any remaining equity after the loan is satisfied, or allow the property to be sold to repay the balance. They may also want to speak with an estate attorney or financial professional before deciding how to proceed.
This article is for educational purposes and is not a commitment to lend. Loan availability, proceeds, costs, and eligibility depend on borrower qualifications, property requirements, current interest rates, and FHA guidelines.