How to Use a Reverse Mortgage for Home Improvements and Accessibility Upgrades

Many older homeowners want to remain in their homes as long as possible, but the necessary renovations to make this happen can be expensive. Bathroom safety upgrades, mobility improvements, and accessibility modifications often cost thousands of dollars, and covering those costs on a fixed income isn’t easy.

A reverse mortgage allows eligible homeowners to access a portion of their home equity without making monthly mortgage payments, providing the necessary funds for home renovations. Let’s look at how reverse mortgage funds work and which home improvements qualify.

How reverse mortgage funds work

A Home Equity Conversion Mortgage (HECM) is the most common type of reverse mortgage and is available to homeowners age 62 and older. The home must be your primary residence and meet the HUD’s safety standards. Instead of making monthly payments to a lender, you receive funds that don’t need to be repaid until you move, sell, or pass away.

Most borrowers choose either a lump-sum payout or a reverse mortgage line of credit (RMLOC) to fund the home renovations. A lump sum provides immediate funds for larger projects, while a RMLOC lets homeowners pay for upgrades in stages or address unexpected repair needs over time.

Common home improvements that support aging in place

Reverse mortgage funds can be used for a wide range of home improvements, including upgrades that enhance safety and accessibility. Popular projects include:

• Bathroom safety renovations like walk-in showers, grab bars, non-slip flooring, and comfort-height toilets.
• Kitchen modifications like lower countertops, pull-out shelving, lever-style faucets, and improved lighting.
• Mobility and entryway improvements like widened doorways, wheelchair ramps, stair lifts, and zero-step entries.
• Flooring updates, such as replacing carpet or uneven surfaces with slip-resistant materials.
• Smart-home safety features like video doorbells, remote-controlled lighting, fall-detection sensors, and security systems.
• Electrical or lighting upgrades like brighter LED lighting, additional outlets, and accessible switches.

Why a reverse mortgage can be a good fit for home renovations

Using reverse mortgage funds for home upgrades offers several advantages. Because HECM borrowers don’t make monthly mortgage payments, it’s easier to manage cash flow while completing major renovations. The funds are tax-free and can be substantial depending on your age and home value, which may allow you to tackle multiple improvements at once.

A RMLOC can be especially helpful for phased projects, like planning accessibility upgrades now while reserving funds for future modifications. Renovating earlier can also prevent injuries, reduce long-term care costs, and delay or avoid the need for assisted living.

HECM property requirements to keep in mind

Before closing, the FHA requires your home to meet certain property standards. During the appraisal, the lender may identify mandatory repairs needed for safety or structural integrity. These required repairs are separate from elective renovation upgrades.

Borrowers can complete required repairs before closing or use a portion of their reverse mortgage proceeds to fund them after the loan closes. Owners of manufactured homes or condos should be aware that additional FHA rules may apply.

Alternatives to using a reverse mortgage for home improvements

Homeowners should compare a reverse mortgage with other ways to finance renovations, including:

• FHA 203(k) renovation loan: Combines the cost of renovations with a new mortgage. Requires monthly payments, income documentation, and credit qualification.
• Home equity loan or HELOC: May offer lower upfront costs, but requires strong credit and the ability to take on additional monthly payments.
• Cash-out refinance: Could be a good option if you can secure a lower interest rate, but it may increase the amount you owe over the life of the loan.
• Grants and programs for seniors: Options may include USDA Single Family Housing Repair Loans and Grants, VA housing adaptation grants, or local aging-in-place assistance programs.

When a reverse mortgage makes the most sense

A reverse mortgage makes sense for seniors who:

• Plan to age in place for many years.
• Need accessibility upgrades costing $10,000–$75,000.
• Prefer not to take on additional monthly payments.
• Want the flexibility of a RMLOC to manage current and future renovation needs.

Making these upgrades earlier can reduce long-term care risks, improve daily living, and help seniors remain independent in their homes.

The bottom line on a reverse mortgage for home improvements

A reverse mortgage can be a practical way to fund the home improvements needed to age in place safely and comfortably. With no required monthly mortgage payments and flexible access to the funds, it allows homeowners to tackle important renovations without straining their budget. However, it’s important to compare alternatives, review the FHA property requirements, and work with a HUD-approved counselor first.