A Homeowner’s Guide to HECM Property Requirements

A Home Equity Conversion Mortgage (HECM) is the most common type of reverse mortgage and can be a powerful tool for retirees who want to access their home equity without making monthly mortgage payments. But many people don’t realize that to qualify for an HECM, your property must meet specific HUD requirements.

These rules vary depending on your home’s structure, condition, and even its community type. For many homeowners, especially those in condos or manufactured homes, property eligibility is the biggest approval hurdle. Understanding the HUD’s requirements will help you determine your next steps before you apply.

Basic HECM property eligibility

To qualify for an HECM, the property must meet the FHA’s minimum property standards (MPS) and serve as the primary residence for at least one borrower:

• A 1–4 unit property with at least one unit owner-occupied
• Safe, sound, and structurally secure
• Free from major hazards or code violations
• Equipped with all required utilities and proper permits
• Able to pass an FHA appraisal, including any required inspections

If the appraisal identifies safety or structural concerns, the lender may require repairs before you can close on the loan. In some cases, the lender can set aside part of your reverse mortgage funds to cover the needed repairs so you don’t have to pay for them up front.

Property types eligible for HECMs

1. Single-family homes

Traditional single-family homes are typically the simplest to approve since these homes only need to meet general FHA standards and pass the FHA appraisal. Common issues that could delay approval include roof deterioration, foundation cracks, exposed wiring, or peeling paint on homes built before 1978.

2. Two- to four-unit properties

HECMs are available for duplexes, triplexes, and fourplexes as long as the borrower occupies one unit as their primary residence. All units must be legally permitted, meet local zoning requirements, and be fully habitable. Unpermitted additions or basement apartments can create delays or disqualify the property.

3. Townhomes

Townhomes generally follow the same guidelines as single-family homes. They must meet FHA’s safety and structural requirements, and depending on the region, termite inspections may be required. Because townhomes often share walls or roofs, issues with attached structures must be resolved before approval.

Special HECM rules for condos

Condominiums carry some of the strictest HECM eligibility criteria. That’s because the lender isn’t just evaluating your unit, they’re also evaluating the entire building and the homeowners association (HOA) that manages it. To qualify for an HECM, a condo must either be in an FHA-approved building or meet the rules for Single-Unit Approval, which allows certain units in non-approved projects to qualify individually. Your lender can look up your building in HUD’s approval database and let you know which path applies.

For many condo owners, the HOA is the biggest hurdle in getting approved for a HECM. Because condos share roofs, walls, elevators, and common areas, the lender has to make sure the entire building is well-managed. That means reviewing the HOA’s insurance coverage, budget, reserves, and any major repairs or legal issues.

If the HOA is involved in a lawsuit, has low reserves, has too much commercial space, or doesn’t carry the right insurance, the condo may not qualify. And if the HOA won’t provide the required paperwork, the lender can’t complete the review, and the loan usually can’t move forward.

Manufactured home requirements for HECMs

Manufactured homes (mobile homes) must meet some of HUD’s most specific property standards.

HUD code and certification

To qualify, a manufactured home must:

• Be built on or after June 15, 1976, when HUD construction standards went into effect
• Have its original HUD Certification Labels (exterior metal tags)
• Include the HUD Data Plate posted inside the home
• Be permanently affixed to a foundation that meets HUD and local building codes
• Be titled as real property, not personal property
• Have wheels, axles, and towing hitches removed

Common roadblocks

Many manufactured homes run into the following eligibility issues:

• The HUD tags have been removed or lost
• The home isn’t properly affixed to a permanent foundation
• The title still reflects personal property
• The home is located in a flood zone - these properties face stricter foundation and elevation requirements.

Properties that may qualify for HECMs with additional review

Mixed-use properties

Mixed-use homes are eligible as long as more than half of the total floor area is residential. Any commercial use must be limited and cannot compromise safety or accessibility.

Homes in planned unit developments (PUDs)

Most PUD homes qualify as long as they meet standard FHA property requirements. The HOA’s responsibilities are limited to common areas, and PUDs do not require FHA project approval like condos.

Rural or agricultural properties

Large-acreage properties can qualify if the residential use is clearly dominant and there are no active farming or commercial agricultural operations. Outbuildings must be typical for residential use and in good condition.

Properties that are not eligible for HECMs

HUD does not allow HECMs on:

• Second homes or investment properties
• Cooperative housing units (co-ops)
• Boarding houses, short-term rentals, or hotel-like operations
• Homes with excessive deferred maintenance
• Manufactured homes built before June 15, 1976
• Properties that cannot meet FHA standards, even with repair escrows

Required inspections, appraisals, and repairs

Every HECM property must undergo an FHA appraisal, which evaluates both market value and whether the home meets FHA’s safety and structural requirements. Depending on the property type and region, additional inspections may be required, such as termite, roof, foundation, well, or septic evaluations.

If repairs are necessary to meet FHA standards, the lender may set aside a portion of the borrower’s proceeds to complete the work after closing. Significant structural or safety issues typically must be repaired before closing.

How to confirm your home’s HECM eligibility

Homeowners can avoid delays by checking on their home’s eligibility early in the process - here are the steps you’ll take:

1. Identify your property type and review its category-specific rules.
2. For condos, check whether your project is FHA-approved or Single-Unit Approval eligible.
3. For manufactured homes, verify HUD Certification Labels, Data Plate, and foundation type.
4. Address obvious issues like roof damage, peeling paint, missing handrails, or exposed wiring.
5. Speak with a HECM lender to review potential red flags before ordering the appraisal.
6. Request a pre-check of documents or HOA data (for condos) to confirm eligibility.

The bottom line on HECM property requirements

Understanding HECM property requirements can save time and help you avoid unexpected roadblocks during the reverse mortgage process. While most single-family and multi-unit homes qualify fairly easily, condos and manufactured homes face stricter requirements.

Reviewing your property type and addressing potential issues early can streamline this process. You can also connect with a qualified reverse mortgage lender below to confirm your home’s eligibility and discuss next steps.