HECM Occupancy Requirements & the 12-Month Absence Rule

A Home Equity Conversion Mortgage (HECM) can be a powerful tool for older homeowners, but it comes with ongoing obligations that don’t always receive enough attention. One of the most common reasons a reverse mortgage becomes due and payable is failure to meet the occupancy requirement.

To qualify for a HECM, the property must be considered your primary residence, which means extended absences can put your loan at risk, especially if they last longer than 12 months. Understanding how the occupancy rules work can help borrowers avoid costly surprises.

In this article (Skip to...)

• What does primary residence mean for HECM?
• What types of absences are allowed?
• What happens if the borrower moves out permanently?
• Special considerations for married couples
• How to avoid occupancy-related defaults

What does “primary residence” mean for a HECM?

To keep a HECM in good standing, the home must be the borrower’s primary residence. This means it’s the place where you live most of the year and return to after any temporary absences.

You don’t need to be home every single day, and short trips are not a problem. FHA rules recognize that most homeowners travel and visit family. The key question is whether the home remains your true residence, not whether you ever leave it. As long as the property is your primary residence and you intend to return, temporary absences are generally allowed up to a point.

What types of absences are allowed?

Short-term absences are allowed and expected. Examples include vacations, seasonal travel, extended visits with family, and medical stays that last less than 12 months. Even longer absences can be acceptable if the borrower returns before the 12-month mark and continues to treat the home as their primary residence.

However, borrowers should be cautious about extended travel plans or open-ended stays elsewhere, especially when medical issues are involved. The longer the absence, the more important it becomes to document intent to return and stay in communication with your loan servicer.

How lenders verify occupancy

HECM servicers are required to verify occupancy on an ongoing basis. This typically happens through annual occupancy certification forms that borrowers must sign and return. Servicers may also use other methods to confirm residency, like mail delivery checks, property inspections, or public records.

Failing to respond to occupancy certifications can raise red flags and potentially trigger a default, even if the borrower is still living in the home. Keeping your mailing address current and promptly returning required paperwork is one of the simplest ways to avoid unnecessary issues.

What happens if the borrower moves out permanently?

If a borrower permanently moves out of the home, whether by choice or due to health needs, the HECM becomes due and payable once the occupancy requirement is no longer met. This doesn’t mean the lender automatically forecloses. Instead, heirs or other representatives typically have options, including:

• Repaying the loan balance, often through a home sale
• Refinancing the loan into another mortgage
• Selling the property and keeping any remaining equity

Special considerations for married couples

Occupancy rules can become more complicated for married couples, especially when only one spouse is listed as a borrower. If both spouses are borrowers on the HECM, the loan remains in good standing as long as one borrower continues to occupy the home as a primary residence. However, if the last remaining borrower permanently leaves the home or passes away, the loan becomes due.

For eligible non-borrowing spouses, FHA rules provide important protections, allowing them to remain in the home without triggering repayment, as long as they continue to meet occupancy, tax, and insurance requirements. So understanding how your loan is structured is critical for long-term planning.

How to avoid occupancy-related defaults

Most occupancy-related issues are preventable with proactive planning and communication. Borrowers can protect themselves by:

• Keeping track of how long extended absences last
• Notifying the servicer if a long medical stay is expected
• Responding promptly to annual occupancy certifications
• Consulting a housing counselor or advisor before making permanent moves

If you anticipate being away for close to 12 months, it’s especially important to speak with your loan servicer early. In some cases, returning to the home before the deadline can preserve the loan.

The bottom line on HECM occupancy requirements

The HECM occupancy requirement seems simple in theory but it can quickly become confusing for borrowers who like to travel. As long as the home remains your primary residence, temporary absences are allowed. Once you’ve been away for more than 12 consecutive months, however, the loan may become due and payable.

For borrowers, the best defense is awareness. Knowing how the 12-month absence rule works can help ensure your reverse mortgage continues to support your retirement plans instead of disrupting them.