Selling a house that has a reverse mortgage
How a HECM gets paid off when the house sells, for an owner who is moving out and for heirs settling an estate.
No obligation. No pressure. Takes about 2 minutes.
The short answer
A HECM reverse mortgage comes due when the house is sold, when the borrower no longer lives there as a primary home, or when the last surviving borrower dies. The sale pays off the loan balance, and whatever is left belongs to the owner or the estate. If the balance is more than the home is worth, heirs can sell for at least 95% of the current appraised value and the lender accepts the net proceeds as payment in full.
Step by step
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1
Call the servicer first
Tell them you plan to sell and ask for a current payoff. The balance grows over time because interest and fees are added to it, so an old statement won't be accurate.
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2
Heirs: know the clock
HUD's guidance says the loan must be satisfied within 30 days of the borrower's death, and the lender may approve 90-day extensions when the estate or heirs show they're actively selling or repaying. Keep the servicer updated and keep copies.
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3
Keep taxes and insurance paid
Under HUD's guidance, property taxes and insurance stay the estate's responsibility until title transfers.
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4
If you owe more than it's worth
On a HECM, mortgage insurance covers the gap. Heirs won't have to pay more than 95% of the appraised value, and the CFPB says a borrower who sells at appraised fair market value while owing more has the rest paid by mortgage insurance.
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5
A surviving spouse not on the loan
A non-borrowing spouse may be able to stay in the home, but must give the lender a Non-Borrowing Spouse Certification within 30 days of the last borrower's death, among other requirements.
Sources: HUD: Inheriting a home secured by an FHA-insured HECM · CFPB: Can my heirs keep or sell my home after I die? · CFPB: What if my reverse mortgage balance grows larger than my home's value? · CFPB: What is a reverse mortgage?
This page explains the general HECM rules. It isn't legal or financial advice. Your loan documents control, so talk to the servicer, a HUD-approved housing counselor or an estate attorney about your situation.
Cash offer vs listing
Example: a $250,000 home
| Offer | $205,000 |
|---|---|
| Repairs | $0 |
| Commissions | $0 |
| Closing costs | $0 |
| You walk away with | $205,000 |
| In 7 to 14 days | |
| Sale price | $250,000 |
|---|---|
| Repairs | about $8,000 |
| Commissions | about $13,800 |
| Closing and holding | about $6,000 |
| You walk away with | about $222,200 |
| In 60 to 90 days | |
Example only. Your numbers depend on your home and market.
If selling is the plan, we'll show you what a cash sale and a listing would each leave after the reverse mortgage is paid off.
Frequently asked questions
Do heirs have to pay the reverse mortgage out of pocket?
Not if they sell. The sale pays the loan, and if the balance is more than the home is worth, heirs won't have to pay more than 95% of the appraised value. Keeping the home means paying off the loan, so ask the servicer for the exact figure.
How long do heirs have to sell?
Not long. HUD's guidance starts at 30 days, and lenders can approve 90-day extensions when you're actively working on a sale, so contact the servicer right away.
What if the house is worth more than the loan?
The sale pays off the balance and the rest goes to the owner or the estate.
Who are you?
We are real estate investors based in Baltimore, helping homeowners since 2016. We buy houses directly for cash. We are not a licensed real estate brokerage and do not list homes ourselves; if listing could get you more, we show you the math so you can choose.