Retiring Abroad? How a Reverse Mortgage Fits (or Doesn’t)

Many Americans dream of retiring abroad thanks to lower living costs and a slower pace of life. But if you’re considering an international move, your housing decisions at home become more complicated, especially if you’re thinking about a reverse mortgage.

Reverse mortgages are designed for homeowners who plan to age in place. While they can offer flexible, tax-free cash flow, they also come with strict occupancy rules that don’t always align with living overseas.

In this article (Skip to...)

• How reverse mortgages work
• What happens after you leave the country
• When a reverse mortgage can work abroad
• Reverse mortgage alternatives

How reverse mortgages work

A reverse mortgage allows homeowners age 62 and older to convert a portion of their home equity into cash without making monthly mortgage payments. The most common type is the Home Equity Conversion Mortgage (HECM), which is insured by the Federal Housing Administration (FHA).

Unlike traditional loans, you don’t have to repay the HECM until you sell the home, move out permanently, or pass away. From the start, the program is built around one core assumption: the home remains the borrower’s primary residence.

This design is what makes reverse mortgages a useful tool for retirees who want to stay in their homes long term. It’s also what creates challenges for homeowners wanting to live abroad.

Primary residence rules and why they matter

To keep a HECM in good standing, borrowers must occupy the home as their primary residence. The HUD defines a primary residence as the place where you live most of the year and intend to return to when you’re away.

This doesn’t mean travel is out of the question. Many reverse mortgage borrowers take extended trips, visit family, or spend part of the year in another location. The issue arises when time away starts to resemble a permanent move rather than temporary travel.

Under HECM rules, borrowers generally cannot be absent from the home for more than six consecutive months for non-medical reasons. Longer absences can signal that the property is no longer your primary residence, which may cause the loan to become due.

What happens if you leave the country for extended periods

Spending time abroad isn’t automatically a problem. The key factor is whether you maintain the home as your primary residence and intend to return. Short trips, seasonal stays, and extended travel under six months typically don’t violate occupancy rules. However, living overseas for most of the year or establishing residency in another country can raise red flags.

Lenders may require periodic occupancy certifications to confirm that the home is still your primary residence. If you can’t certify occupancy (or if it becomes clear that you’ve relocated permanently) the loan may be called due and payable.

When a reverse mortgage can still work for retirees abroad

There are limited scenarios where a reverse mortgage can still fit into a retirement abroad plan. These arrangements generally involve living overseas part-time while maintaining a clear U.S. primary residence.

For example, some retirees spend a few months abroad each year but return home well within the six-month window. Others maintain their U.S. home as a financial and personal base while traveling seasonally.

In these cases, borrowers must continue meeting all HECM obligations. That includes paying property taxes and homeowners insurance, keeping up with home improvements, and completing any required occupancy certifications. The home cannot be rented out full-time or treated as an investment property.

Using a reverse mortgage line of credit before relocating

Another strategy involves using a reverse mortgage line of credit while you’re still living in the home, then relocating later. Funds accessed before moving can help build liquidity for an international retirement, cover relocation costs, or supplement income abroad.

However, once you move out permanently, the loan will still become due. This approach works best for retirees who plan to sell the home or repay the loan after relocating, rather than those hoping to keep the reverse mortgage indefinitely.

Reverse mortgage alternatives for retiring abroad

If retiring abroad is your plan, other options may better align with your goals. For instance, selling the home outright provides a clean break and full access to your equity. This can simplify taxes, insurance, and property management while freeing up cash for life overseas.

Some retirees choose to open a HELOC or take out a home equity loan before relocating. These options allow access to equity but come with monthly payments and credit requirements. A cash-out refinance may also be an option, though rising interest rates and payment obligations can make timing critical. In some cases, homeowners use a reverse mortgage strategically before selling, accessing equity while still living in the home and then repaying the loan when the property is sold.

The bottom line on using a reverse mortgage for living abroad

Reverse mortgages are designed for homeowners who plan to age in place, not for individuals making a permanent move overseas. While limited scenarios allow for part-time living abroad, strict primary-residence rules apply.

If retiring abroad is part of your long-term vision, it’s best to plan ahead. Understanding when a reverse mortgage fits and when it doesn’t can help you choose a strategy that supports your retirement lifestyle.