The HECM (Home Equity Conversion Mortgage) is the only federally insured reverse mortgage program, and it is what Abide Senior Mortgage specializes in. Here is every requirement you need to know, with clear explanations of what each one means for local homeowners.
HECM Reverse Mortgage Requirements — Complete List
Age: 62 or Older
The most fundamental requirement. Every borrower named on the loan and on the title must be at least 62 years old. If you are married, the loan is based on the age of the youngest borrower on the loan.
Non-Borrowing Spouse protection: If your spouse is under 62, they can be designated as an "Eligible Non-Borrowing Spouse." In this case, if you pass away first, they may be able to remain in the home without making payments — but they cannot receive additional funds from the loan. This is a critical detail to discuss with us if your spouse is under 62.
Primary Residence Only
The home must be your primary residence — the place where you actually live the majority of the year. You must live in the home for at least 183 days per year.
This means: vacation homes, second homes, rental properties, and investment properties do not qualify. However, if you have a 2-to-4 unit property in Northern California and you live in one unit, the entire property may qualify.
If you need to leave for more than 12 consecutive months (for example, for extended medical care), the loan becomes due — so this is an important consideration for health planning.
Sufficient Home Equity
You do not need to own your home free and clear. Many local homeowners who still have a mortgage balance successfully get a reverse mortgage — the existing mortgage is paid off at closing with reverse mortgage proceeds.
As a general guideline, you should have at least 50% equity in your home. The exact amount needed depends on your age (older borrowers can have somewhat less equity) and the current interest rate environment.
local homeowners who purchased 10 or more years ago almost universally have strong equity positions, making them excellent candidates.
Eligible Property Types
The following property types qualify for a HECM reverse mortgage:
- Single-family homes — the most common type throughout Sacramento
- FHA-approved condominiums — the condo project must be on FHA's approved list; we can check your specific Sacramento complex quickly
- Townhomes — if FHA-approved or classified as single-family
- 2-to-4 unit properties — if the borrower occupies one unit as their primary residence
- Manufactured homes — built on or after June 15, 1976, on a permanent foundation, meeting specific FHA requirements
Properties that do not qualify: vacation cabins, commercial buildings, cooperative apartments (with limited exceptions), and most mobile homes.
Financial Assessment
This is one of the most misunderstood requirements. There is no minimum credit score for a HECM. However, lenders are required to review your credit history, income, and assets to assess whether you can maintain the ongoing obligations of homeownership: property taxes, homeowners insurance, and HOA fees.
If the financial assessment reveals a concern, lenders may require a "Life Expectancy Set-Aside" (LESA) — an amount withheld from your proceeds to cover future tax and insurance payments. This does not disqualify you; it simply means some of your proceeds are set aside in an escrow account managed by the servicer.
HUD-Approved Counseling
Federal law requires all applicants to complete a counseling session with a HUD-approved, independent counselor before any lender can accept an application. This is a consumer protection — the counselor is not affiliated with Abide or any lender.
How it works: The session is typically done by phone from your local home. It takes about 60–90 minutes. The cost is approximately $125, payable by credit card. You receive a counseling certificate that the lender will need.
We provide you with a list of approved counselors and help you schedule the session. Many clients find the counseling session reassuring — it gives you a second, independent review of all the loan terms.
What Can Disqualify a Sacramento Homeowner?
While most Northern California seniors qualify, here are situations that may disqualify you or require special handling:
Federal Tax Liens or Judgments
Outstanding federal tax liens must be paid off before the loan can close. These can sometimes be paid with reverse mortgage proceeds.
Active Bankruptcy
An open bankruptcy case will typically prevent a reverse mortgage from closing until it is resolved. Completed (discharged) bankruptcies generally do not disqualify you.
Property Not Meeting FHA Standards
The FHA appraiser may require repairs before the loan closes if the property has significant safety or health-related issues. Minor deferred maintenance is usually acceptable.
Not Enough Equity
If your local home's value is too low relative to your existing mortgage balance, proceeds may not cover the payoff. We review this in the free consultation before you invest any time or money in the process.
Common Misconceptions About Reverse Mortgage Requirements
"I need perfect credit to qualify."
False. HECM reverse mortgages do not have a minimum credit score requirement. The financial assessment looks at whether you have a history of paying property taxes and insurance on time — not your credit score. Many local homeowners who would not qualify for a traditional loan or HELOC qualify easily for a reverse mortgage.
"I have to own my home free and clear."
Not true. Many Sacramento clients still have a mortgage balance when they apply. As long as you have sufficient equity, the existing mortgage is paid off at closing with reverse mortgage proceeds, immediately eliminating your monthly payment.
"My income needs to be high enough to qualify."
Income is reviewed during the financial assessment, but there is no specific income threshold. The assessment looks at whether your income (from Social Security, pensions, part-time work, etc.) is adequate to meet ongoing home costs. If there is concern, a Life Expectancy Set-Aside addresses it without disqualifying you.
"The bank will own my home."
False. You retain full title to your local home. The lender has a lien — just like a traditional mortgage — but you own the property. The lender cannot force you out as long as you meet the loan obligations: live in the home, pay taxes and insurance, and maintain the property.
"My heirs will inherit debt."
Not true. HECM loans are non-recourse. When the loan becomes due, your heirs can sell the home to repay the loan and keep any remaining equity. If the loan balance exceeds the home's value, the FHA insurance covers the shortfall — your heirs owe nothing beyond the home itself. No personal liability passes to heirs.
"Counseling is just a formality."
HUD counseling is substantive. The counselor will review the loan terms, your alternatives, the financial implications, and your ongoing obligations in detail. Many clients find it extremely valuable — it gives them a second opinion from a party who has no financial stake in whether you proceed. We encourage you to take it seriously and come prepared with questions.
Find Out in 3 Minutes Whether You Qualify
Our free quiz covers the essential questions and gives you an instant eligibility assessment for your Northern California home.
(925) 287-9697 or Take the Free Eligibility Quiz