Understanding FHA HECM Loans and other Home Equity Conversion Mortgages

Also called a senior reverse mortgage, the FHA Hecm Loan is a government insured loan available to seniors who are 62 and over in the United States, and is used to create access the home equity in the home as either lump sum or multiple payments. The homeowner’s obligation to repay the loan is deferred until the owner dies, the home is sold, or when the homeowner no longer lives there.

In a reverse mortgage, otherwise known as the home equity conversion mortgage, the home owner makes no payments, and rather just have access to their home equity. All interest is added to the lien on the property. If the owner receives monthly payments, then the debt on the property increases each month.

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