Reverse Mortgages in Texas: How HECMs Work

A reverse mortgage is a loan secured by a home that allows an eligible older homeowner to convert part of the home's equity into loan proceeds. With the FHA-insured Home Equity Conversion Mortgage (HECM), no monthly principal-and-interest payment is required while the loan remains in good standing, but the borrower must continue meeting occupancy, property-tax, homeowners-insurance, maintenance, and other loan obligations.

The lender advances money based on factors including the youngest eligible borrower's age, current interest rates, the home's value, existing liens, and FHA limits. Interest and eligible loan charges are generally added to the balance over time, so the amount owed usually grows rather than declines.

For an FHA-insured HECM, at least one borrower must generally be age 62 or older. The age of the youngest borrower or eligible non-borrowing spouse affects the amount available.

Yes. A reverse mortgage is a lien against the property; it is not a sale of the home. The homeowner keeps title subject to the mortgage and must continue meeting the loan's property and occupancy requirements.

HECM borrowers generally are not required to make monthly principal-and-interest payments. Property taxes, homeowners insurance, applicable HOA charges, maintenance, and other required property expenses still must be paid.

Reverse mortgage proceeds are loan advances rather than ordinary earned income. Tax treatment can depend on the borrower's circumstances, so borrowers should discuss tax questions with a qualified tax adviser rather than relying on a blanket 'tax-free' claim.

The loan generally becomes due after the last borrower dies or another maturity event occurs. Heirs can typically sell the home, repay the balance, or—under HECM rules—may be able to keep the property by satisfying the applicable payoff rules. Estate and title questions should be reviewed with qualified legal advisers.

Potentially. For an FHA-insured HECM, heirs who want to retain the property generally may satisfy the debt for the lesser of the loan balance or 95% of the home's current appraised value, subject to HUD servicing procedures and deadlines.

Some eligible non-borrowing spouses may qualify for protections that can postpone displacement after the borrowing spouse dies, but the protections are conditional and depend on HECM rules, the spouse's status, occupancy, and other requirements. This should be reviewed before closing.

Yes. HECM for Purchase can allow an eligible borrower to purchase a new principal residence using a combination of the borrower's funds and HECM financing. The required cash contribution depends on the transaction and HECM calculation.

There is no single percentage that applies to everyone. Availability depends on the age of the youngest borrower or eligible non-borrowing spouse, interest rates, the lesser of the appraised value or applicable FHA HECM limit, and existing liens and costs.

For FHA case numbers assigned in calendar year 2026, HUD's nationwide HECM maximum claim amount is $1,249,125. That is a program calculation limit, not a promise that a borrower can receive that amount.

Yes. FHA-insured HECMs require counseling from a HUD-approved HECM counselor before the loan can proceed.

It depends on the homeowner's age, equity, income, goals, expected time in the home, need for monthly-payment flexibility, and tolerance for a growing loan balance. We compare the structure with alternatives rather than assuming a HECM is automatically the best answer.