Reviewed by Dan Frio, NMLS #246527, 38 years in mortgages · October 15, 2026
A reverse mortgage turns part of your home equity into cash. There is no required monthly mortgage payment. You keep your home and your name stays on the deed.
Here are six common ways people use one. Each example uses round numbers. They are for example only, not a promise of what you will get.
If you still have a mortgage, the reverse mortgage pays it off first. After that, there is no required monthly mortgage payment. You keep that money each month.
Example only: Mary pays $1,200 a month on her mortgage. A reverse mortgage pays off that loan. Now she keeps the $1,200 each month for groceries, travel, or savings. She still pays her taxes, insurance, and upkeep.
You can choose monthly payments for as long as you live in the home. This is called a tenure payment. It can help fill a gap between your bills and your income.
Example only: Joe and Linda have $500 a month less income than they need. They set up monthly payments of about that amount to cover the gap.
You can set up a line of credit and use it only when you need it. The unused part of the line grows over time. As long as the loan stays in good standing, it cannot be frozen or reduced.
Example only: Ruth sets up a line of credit and leaves it alone. Three years later her roof needs a $15,000 repair. She draws just what she needs from the line.
Many people want to age in place. A reverse mortgage can pay for help at home or for changes that make the home safer.
Example only: Frank uses $10,000 to add grab bars, a walk-in shower, and a ramp. Later he uses part of his line of credit for a few hours of in-home help each week.
Having another source of cash can give you room to wait before claiming Social Security. It can also help you avoid selling investments when the market is down.
Example only: When stocks drop, Carol draws $20,000 from her line of credit for living costs. That way she does not have to sell her investments at a low price.
With a HECM for Purchase, you can buy a new primary residence and have no required monthly mortgage payment. Read more about buying a home with a reverse mortgage.
Example only: Sam and Pat sell their large house and use part of the money as a down payment on a smaller home near their grandchildren.
A reverse mortgage is not right for everyone. Read the honest downsides before you decide.
You can take a lump sum (fixed rate only), a line of credit that grows, monthly payments for life, monthly payments for a set number of years, or a combination.
Yes. Any existing mortgage is paid off first from the loan. After that, there is no required monthly mortgage payment.
You need substantial equity. Most homeowners who qualify have about 50% or more equity, because any existing mortgage is paid off first.
No. The HECM line of credit cannot be frozen or reduced as long as the loan is in good standing.