Reverse Mortgage Eligibility
Who Is Eligible
To be eligible for a reverse mortgage, you must own your home and all owners listed on title for the home must be at least 62 years of age. The home must be your primary residence, meaning that you must live there for a minimum of 6 months out of each calendar year. Second homes and investment properties cannot be used for a FHA reverse mortgage. A spouse under the age of 62 can be protected under the terms of the program.
Property Types Allowed
To be eligible for an FHA reverse mortgage, the subject property must be a 1- 4 unit home, a manufactured home constructed after 1976, or a condominium. Condominiums must be approved by the Department of Housing and Urban Development (HUD) and all eligible property types must meet FHA requirements. Typically, properties located in cooperative developments are ineligible for this type of financing but that will soon change. If you have specific questions regarding your property and its eligibility, discuss these concerns with us.
Who Can Be on the Loan
The federally insured reverse mortgage allows up to three homeowners to be on the note. One homeowner on the note must be at least 62 years of age and both must occupy the home as their primary residence. It is possible to add or take off owners to the title of the home while obtaining a reverse mortgage. However, anyone added to title must be eligible for reverse mortgage financing. Non-relatives can be on the reverse mortgage as long as the applicant meets all age and occupancy requirements, relationship has no bearing on their ability to be on the title or the note.
Limited Income – Credit Dings- NO Problem!
Seniors only have to meet minor income requirements to qualify (much less then a normal loan) and credit is not looked at as strongly as other types of loans.
Reverse Mortgage for Purchase
The FHA reverse mortgage purchase product allows eligible seniors to obtain a residence using the proceeds of a reverse mortgage. The purchase program was developed to enable eligible homeowners to purchase a home that better suits their needs without having to take on new mortgage payments. A down payment on the new home of 35 to 50% will be necessary. Borrowers are required to occupy the new residence within sixty days of closing.
No; seller contributions are not allowed on FHA reverse mortgage for purchase transactions.
If there are any repairs necessary for reasons of health, safety, or structural integrity, they must be completed by the seller prior to closing. The buyer cannot pay for any repairs before taking ownership and the necessary repairs must be noted in the purchase agreement. Necessary repairs include issues such as: lack of running water, leaking roof, absence of a heat source, inadequate electrical systems, inoperable doors or windows, etc.
The source of any funds that are due at closing must be verified and must either be cash on hand or proceeds from the sale of a home. Gift funds are allowed only if they are not received from anyone with a financial interest in the purchase transaction. With the exception of sale proceeds, all funds must be seasoned for sixty days prior to closing.
