10 Biggest Reverse Mortgage Myths — And the Truth Behind Them

Reverse mortgages are often misunderstood. Despite being around for decades and backed by federal consumer protections, they still come with outdated assumptions and half-truths.

Much of the confusion comes from early versions of reverse mortgages or simply not understanding how today’s Home Equity Conversion Mortgage (HECM) program works. Let’s clear up the most common myths and explain what’s actually true.

In this article (Skip to...)

• Biggest reverse mortgage myths
• The bottom line

Myth 1: The lender takes ownership of your home

Truth: You keep the title to your home.

With a reverse mortgage, the homeowner remains the legal owner of the property. Just like on a traditional mortgage, the lender places a lien on the home, but ownership stays with the borrower. As long as you meet the loan obligations, the home remains yours.

Myth 2: You can be forced out of your home

Truth: You can live in your home for the rest of your life if you follow the rules.

A reverse mortgage doesn’t come with a set loan term. The loan becomes due only if a triggering event occurs, like selling the home, moving out permanently, or failing to meet ongoing obligations. Borrowers who continue to live in the home as their primary residence and stay current on taxes, insurance, and maintenance cannot be forced out.

Myth 3: Your heirs will be stuck with debt

Truth: Reverse mortgages are non-recourse loans.

With a HECM, neither you nor your heirs can ever owe more than the home’s value at the time it’s sold. If the loan balance exceeds the sale price, FHA mortgage insurance covers the difference. Heirs can choose to sell the home, repay the balance and keep the property, or walk away altogether.

Myth 4: Reverse mortgages are only for people in financial trouble

Truth: Many borrowers use them as a proactive planning tool.

While some homeowners use reverse mortgages to supplement limited income, others use them strategically. A reverse mortgage line of credit can provide liquidity, reduce risk, or serve as a financial buffer during market downturns. It’s increasingly used as part of broader retirement and estate planning.

Myth 5: You can’t sell your home if you have a reverse mortgage

Truth: You can sell your home at any time.

Homeowners with a reverse mortgage can sell whenever they choose. The proceeds from the sale are used to repay the loan balance, and any remaining equity belongs to the homeowner or their estate. There are no prepayment penalties for paying off a HECM early.

Myth 6: Reverse mortgages are extremely expensive

Truth: Costs are higher than some loans, but often comparable to alternatives.

Reverse mortgages do have upfront costs, including FHA mortgage insurance, but these costs are often rolled into the loan rather than paid out of pocket. When compared to long-term HELOC interest, selling investments, or paying for private insurance products, a reverse mortgage can be cost-effective depending on how long the borrower stays in the home.

Myth 7: You lose control over how you receive the money

Truth: Borrowers can choose how they access their funds.

HECM borrowers can select from several payout options, including a lump sum, monthly payments, a line of credit, or some combination of these. The line of credit option is especially popular because unused funds grow over time, increasing available borrowing capacity.

Myth 8: You must have a perfect home to qualify

Truth: Many homes qualify, and repairs can often be addressed at closing.

Single-family homes, FHA-approved condos, and certain manufactured homes can qualify for a HECM. If a property needs repairs to meet FHA standards, lenders may allow them to be completed after closing using a portion of the loan proceeds.

Myth 9: The lender can take your home when you die

Truth: Heirs control what happens to the home.

When the last borrower passes away, heirs are notified and given time to decide how to handle the loan. They can sell the home, refinance it into a traditional mortgage, or deed the property back to the lender. The lender cannot simply seize the home without following this process.

Myth 10: Reverse mortgages haven’t changed in decades

Truth: Today’s HECMs have stronger safeguards than ever.

Modern reverse mortgages include mandatory HUD counseling, financial assessments, non-recourse protections, and strict disclosure requirements. These rules were designed to prevent the problems seen in earlier reverse mortgage products and to ensure borrowers understand their obligations before closing.

The bottom line on reverse mortgage myths

Reverse mortgages aren’t right for everyone, but many of the fears surrounding them are based on outdated or incorrect information. Today’s HECM program is heavily regulated and designed to protect homeowners while offering flexible access to home equity.

Understanding the facts behind these common myths can help homeowners and their families have more informed conversations about whether a reverse mortgage belongs in their long-term financial plan.