Can you sell a house with a reverse mortgage?

The balance of a reverse mortgage isn’t due until you no longer occupy the residence. If you choose to sell, you’ll need to pay off the reverse mortgage with the proceeds of the sale.

Who should consider a reverse mortgage?

Reverse mortgages can be a good option for older homeowners who are looking to withdraw equity from their property without selling the property. They can choose to receive their funds in a few different ways, including a lump-sum disbursement, a line of credit, or fixed monthly payments.

Is income from a reverse mortgage taxed?

No, income from a reverse mortgage is not taxable . The funds that you receive are considered loan proceeds, not income. Don’t forget that the balance of the loan will become due when you no longer live in the home.

Do you pay closing costs on a reverse mortgage?

As with a conventional mortgage, you’ll pay fees and closing costs when acquiring a reverse mortgage. These include origination fees, appraisal fees, title search charges, mortgage insurance, and others. However, you will have the option of adding these costs to the loan balance and paying them off at the end of the loan.

Best Reverse Mortgage Companies of 2023

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Reverse mortgages allow eligible homeowners to withdraw equity from their homes without the need to sell. Although there are specific requirements to obtain these types of loans, they can be a good option for older borrowers with low or no mortgage balances remaining on their properties.

To develop our list, we collected hundreds of data points across the 10 largest reverse mortgage lenders. We evaluated interest rates, fees, borrower requirements, customer satisfaction, company reputation, and transparency.

Best Reverse Mortgage Companies of 2023

Best for Customer Service: Longbridge Financial
Best for Rapid Funding: American Advisors Group
Best With Low Variable APR: Nationwide Equities Corporation
Best With No Monthly Fee: Finance of America Reverse
Best With Low Fixed APR: Liberty Reverse Mortgage

Best for Customer Service : Longbridge Financial

Minimum Age: 55
Loan Types: HECM, jumbo, purchase
NRMLA Member: Yes

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Pros & Cons

Pros

Offers multiple loan products
High customer satisfaction
Finances younger borrowers

Cons

Requires more equity
Higher interest rates
Charges monthly fees

Why We Chose It

Longbridge Financial isn’t the cheapest reverse mortgage company, but it makes our list as the best reverse mortgage company for customer service.

Along with its 4.8 score on Trustpilot, Longbridge Financial is a member of the National Reverse Mortgage Lenders Association (NRMLA). In addition to these bona fides, Longbridge Financial has faced very few regulatory actions (one of the criteria we considered), with the most recent occurring in mid-2019. It was tops in our ranking when it comes to transparency about its services, which is important to consumers who are shopping for a lender.

Its interest rates were on the high end among the companies we researched. The company does provide a variety of reverse mortgage products, including those for higher-end properties.

Expect to pay as much as a $6,000 origination fee (the maximum allowed by the government). After approval, funds will be disbursed in three business days.

Best for Rapid Funding : American Advisors Group

Minimum Age: 62
Loan Types: HECM, jumbo, purchase
NRMLA Member: Yes

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Pros & Cons

Pros

Quick to close
Lower equity requirements
No monthly service fee

Cons

Higher interest rates
Must be 62 or older
Higher regulatory actions

Why We Chose It

Those who’ve financed a mortgage in the past will know that the process can be drawn out. As the most prolific reverse mortgage company in the country, American Advisors Group has the ability to close quickly. According to the lender, loans can be closed in about 20 to 25 days, which is significantly faster than the 30 to 60 days you can otherwise expect.

Fixed-rate mortgage APRs are in line with other lenders we researched. However, adjustable-rate mortgage APRs are a little higher, which may price out many borrowers.

Origination fees top out at $6,000 (the cap set by the government).

Best With Low Variable APR : Nationwide Equities Corporation

Minimum Age: 55
Loan Types: HECM, jumbo, purchase
NRMLA Member: Yes

Learn More

Pros & Cons

Pros

Lower age limit
Lower variable APR
Close in 30 days

Cons

Not available in every state
No payout or equity minimum disclosed

Why We Chose It

Nationwide Equities Corporation provides a variety of lending options for reverse mortgages. Among its offerings are government-backed home equity conversion mortgages, proprietary reverse mortgages for loans of up to $4 million, and reverse mortgage refinancing.

While its fixed-rate APRs are on par with other lenders, its variable APR loans are highly competitive. Rates can vary, but when we collected rate details, Nationwide Equities’s rates were at least half a percentage point lower than most competitors.

Fees from Nationwide Equities Corporation are also average; the origination fee caps out at $6,000. Once the loan has been approved, you’ll receive your funds in three business days.

Best With No Monthly Fee : Finance of America Reverse

Minimum Age: 55
Loan Types: HECM, jumbo, purchase
NRMLA Member: Yes

Learn More

Pros & Cons

Pros

No monthly fees
Available in every state

Cons

Fixed-rate APR not disclosed
Requires 50% equity

Why We Chose It

Finance of America Reverse offers government-backed HECMs and a variety of proprietary products. This includes options for those with high-value properties, a loan that reduces your existing mortgage payment, and a second mortgage that doesn’t impact your first mortgage.

These types of reverse mortgage products mean borrowers who wouldn’t typically qualify for a reverse mortgage may qualify for a loan.

Variable interest rates from the lender are competitive, and like other reverse mortgage lenders, HECM fees max out at $6,000, and the company doesn’t charge any monthly management fees.

Best With Low Fixed APR : Liberty Reverse Mortgage

Minimum Age: 62
Loan Types: HECM, purchase
NRMLA Member: Yes

Learn More

Pros & Cons

Pros

Low APR

Cons

Must be 62
No proprietary mortgages
Higher regulatory actions

Why We Chose It

Liberty Reverse Mortgage makes our list for best-rated reverse mortgage companies due mainly to its low APRs for fixed-rate loans. These are the best rates on our list, nearly a full percentage point lower than competitors. The lender's variable APRs are also competitive.

Liberty Reverse Mortgage deals exclusively with home equity conversion mortgages (HECMs), which means you’ll need to meet federal requirements in order to qualify. This includes a 62-year-old age minimum. Also, the home must be your principal residence and you cannot owe any federal debt.

Origination fees with Liberty Reverse Mortgage are capped at $6,000. This cost—along with all other closing costs—can be rolled into the loan. As with other lenders, you will need to pay out of pocket for the mandatory HUD counseling session.

Final Verdict

If you are eligible for a home equity conversion mortgage and looking for the lowest APR on a fixed-rate loan, then Liberty Reverse Mortgage should be at the top of your list. When it comes to variable-rate APRs, Nationwide Equities Corporation may be a good option with very competitive rates.

Perhaps you don’t fit the standard qualification requirements for a HECM but would still like to withdraw equity from your property. In this case, Finance of America Reverse may be your best bet due to its flexible financing options.

Finally, American Advisors Group will get you your money as quickly as possible, while Longbridge Financial mortgage advisors will support you every step of the way.

Compare the Best Reverse Mortgage Lenders

Lender	Minimum Age	Loan Types	NRMLA Member?
Longbridge Financial	55	HECM, jumbo, purchase	Yes
American Advisors Group	62	HECM, jumbo, purchase	Yes
Nationwide Equities Corporation	55	HECM, jumbo, purchase	Yes
Finance of America Reverse	55	HECM, jumbo, purchase	Yes
Liberty Reverse Mortgage	62	HECM, purchase	Yes

Guide to Choosing the Best Reverse Mortgage Lender

Factors to Consider When Comparing Reverse Mortgage Lenders

Fees and closing costs: Most fees for HECM loans are regulated by the federal government. For non-HECM loans, fees can vary and closing costs on either type of loan will vary, too. Shop around and gather multiple quotes to find the lowest fees and costs.
Interest rates: As with fees, interest rates vary with lender. Rate shopping can help you narrow down which lender you choose.
Company reputation: Reverse mortgages can be trickier than other loan options, in part because they have additional requirements. Investigating customer complaints and regulatory actions will give you a better grasp of the type of lender with which you’ll be working. Websites like TrustPilot host consumer responses, positive and negative. For regulatory actions, see the NMLS consumer access website.

Proprietary reverse mortgages offered by lenders are not backed by the Federal Housing Administration (FHA).

How To Qualify and Apply for a Reverse Mortgage

Determine eligibility: Requirements to qualify for a reverse mortgage vary based on the loan you’re acquiring (proprietary versus HECM). Check with your lender to see if you meet the age, income, and residency requirements before applying.
Evaluate your property: Reverse mortgages rely on the equity you have in your home for funding. You should have at least 50% equity in the property before pursuing a reverse mortgage.
Select a lender: Once you’ve covered all your bases, choose the lender that works best for your situation.
Gather paperwork: Reverse mortgages require documentation that’ll need to be submitted before approval.
Apply for the loan: Applying for the loan can usually be completed in a few different ways, including online or via the phone.

When rate shopping for a mortgage, multiple hard inquiries into your credit score within a specific time frame will count as a single inquiry. This keeps the impact to your score at a minimum.

Frequently Asked Questions

Can you sell a house with a reverse mortgage?

The balance of a reverse mortgage isn’t due until you no longer occupy the residence. If you choose to sell, you’ll need to pay off the reverse mortgage with the proceeds of the sale.
Who should consider a reverse mortgage?

Reverse mortgages can be a good option for older homeowners who are looking to withdraw equity from their property without selling the property. They can choose to receive their funds in a few different ways, including a lump-sum disbursement, a line of credit, or fixed monthly payments.
Is income from a reverse mortgage taxed?

No, income from a reverse mortgage is not taxable. The funds that you receive are considered loan proceeds, not income. Don’t forget that the balance of the loan will become due when you no longer live in the home.
Do you pay closing costs on a reverse mortgage?

As with a conventional mortgage, you’ll pay fees and closing costs when acquiring a reverse mortgage. These include origination fees, appraisal fees, title search charges, mortgage insurance, and others. However, you will have the option of adding these costs to the loan balance and paying them off at the end of the loan.

Methodology

The Balance is dedicated to providing consumers with unbiased, comprehensive reviews of reverse mortgage companies. We collected hundreds of data points across the 10 largest reverse mortgage lenders. We evaluated interest rates, fees, borrower requirements, customer satisfaction, company reputation, and transparency. Because many features of the most common type of reverse mortgage are regulated by the federal government, we gave particular weight to transparency, reputation, and customer satisfaction.