How Do You Pay Back a Reverse Mortgage: Repayment Options and Deadlines

You pay back a reverse mortgage when the loan becomes due, which usually happens after the last borrower dies, moves out permanently, or sells the home. At that point the balance — principal, accrued interest, mortgage insurance premiums, and any servicer advances — is settled in one of three ways: selling the property and applying the proceeds, paying the full balance from other funds to keep the home, or signing the deed over to the lender. Borrowers can also make voluntary payments any time before the loan is called due, with no prepayment penalty.¹

What Makes the Loan Due

A Home Equity Conversion Mortgage (HECM) stays deferred as long as at least one borrower lives in the home as a primary residence and keeps up with the loan’s obligations. The deferral ends, and the full balance becomes payable, when any of these happen:

The last surviving borrower dies, unless an eligible non-borrowing spouse qualifies to defer.
Every borrower stops using the home as a primary residence. A borrower who moves into a nursing home or similar facility has a 12-month window; an absence longer than 12 consecutive months due to physical or mental illness, with no other borrower still in the home, triggers the loan.
All borrowers transfer their ownership interest and no one on the loan retains title.
The borrower falls behind on property taxes, homeowner’s insurance, required flood insurance, or reasonable property maintenance.

These triggers are set by federal regulation and appear in the mortgage documents themselves.²

Getting the Payoff Amount

Before you can pay anything off, you need to know what’s owed. Request a payoff statement from the loan servicer. Contact information is on the monthly statements sent to the borrower. The statement itemizes the principal balance, accrued interest, mortgage insurance premiums, and any fees the servicer advanced for taxes or insurance.³

Watch the “good through” date. If your funds arrive after that date, per-diem interest gets added to cover the gap.

If the loan is due because the borrower has died and the family is considering a sale, the servicer must order an appraisal from an FHA-approved appraiser. The servicer pays for it during due-and-payable status but can recover the cost from sale proceeds.⁴ That appraised value tells you whether the home is worth more or less than the balance, which drives which repayment option makes sense.

The Three Ways to Repay

Sell the Home

Selling is the most common way a reverse mortgage gets paid off. The proceeds clear the lien, and any remaining equity goes to the borrower or the estate.

If the balance has grown larger than the home is worth, the non-recourse feature of a HECM kicks in. Heirs can sell the property for at least 95% of its current appraised value, and FHA mortgage insurance covers the shortfall. Closing costs on the sale cannot exceed the greater of 11% of the sales price or a fixed amount set by HUD.⁴ The estate and the heirs are not personally on the hook for the difference.

Pay the Balance to Keep the Home

To keep the property, someone has to pay the full outstanding balance, including accrued interest, mortgage insurance premiums, and any servicer advances.⁴ The money can come from savings, life insurance, or a new conventional mortgage taken out by the heir keeping the home. A refinance replaces the reverse mortgage with a standard loan carrying monthly payments, so the person taking on that debt has to qualify on their own income and credit.

When the balance is higher than the home’s value, paying it off means paying more than the property is worth. Many families sell instead and let the non-recourse protection absorb the loss, but heirs who want a family home badly enough sometimes pay the full amount anyway. Once the servicer receives payment in full, it issues a lien release and the heirs hold clear title.

Deed in Lieu of Foreclosure

If no one wants the home and no one wants to manage a sale, heirs can sign the title over to the lender. This is a deed in lieu of foreclosure, and it satisfies the mortgage without a formal sale or foreclosure.⁵ Any remaining equity is forfeited, so it usually only makes sense when the home is underwater or needs repairs the estate can’t afford. Because HECMs are non-recourse, the lender cannot pursue the estate for a remaining balance after taking the deed.

Deadlines You Cannot Miss

Once the loan is called due, the servicer sends a notice explaining the options.⁵ Heirs then have 30 days to respond with a letter of intent stating how they plan to resolve the debt.⁴ Miss that window and you lose control of the process. Even if the plan is not final, respond with your best current intent. You can change direction later.

The servicer must begin foreclosure within six months of the due date unless HUD approves more time.⁴ In practice, servicers can request up to two additional 90-day extensions from HUD, pushing the total to about a year. Extensions require proof of real progress: a signed listing agreement, an active refinance application, or comparable documentation. Silence is what leads to foreclosure. If the estate has to go through probate before anyone has authority to sell, tell the servicer right away. Probate delays are exactly the kind of evidence HUD accepts for extensions.

Paying Down the Loan Early

Borrowers can pay a reverse mortgage down or off at any time without a prepayment penalty. Most don’t, because avoiding monthly payments is the point of the loan. But partial payments reduce the interest that compounds against the balance, and some borrowers send interest-only payments to preserve equity for their heirs. There is no minimum amount and no set schedule. Payments go directly to the servicer. Partial payments are applied per the promissory note’s terms, and any insurance or condemnation proceeds on the property automatically reduce both the principal limit and the outstanding balance.¹

If Taxes or Insurance Have Lapsed

Unpaid property taxes or homeowner’s insurance are among the most common reasons a reverse mortgage goes into default while the borrower is still alive. When the servicer advances money to prevent tax liens or coverage gaps, those advances get added to the loan balance. If the situation continues, the loan can be called due.

Before that happens, HUD requires servicers to evaluate loss mitigation options. A repayment plan is one of them: the servicer calculates whether the borrower has enough surplus monthly income to pay back the advances over a period of up to 60 months, using 25% of that surplus as the payment.⁶ If the numbers don’t work, the servicer checks whether a higher percentage is realistic before moving toward due-and-payable status. Contact the servicer early. A repayment plan is far better than acceleration.

If You Are a Surviving Spouse Not on the Loan

A spouse whose name is not on the reverse mortgage may still be able to stay in the home after the borrower dies, through HUD’s Eligible Non-Borrowing Spouse deferral. Qualifying requires that you were married to the borrower at closing and stayed married for the rest of their life, that your name and age were disclosed to the lender at origination, and that you were specifically named as an eligible non-borrowing spouse in the loan documents. Within 90 days of the last borrower’s death you must establish legal ownership or another ongoing legal right to remain in the home for life.⁷

After that, you have to keep living there as your primary residence and keep taxes and insurance current. If any condition lapses, the deferral ends and the loan becomes due. A non-borrowing spouse in deferral cannot receive further loan advances; any credit line or payment stream stops when the last borrower dies.

Proprietary Reverse Mortgages Are a Separate Story

Everything above describes HECMs, which are FHA-insured and cover the vast majority of reverse mortgages. Proprietary (sometimes called “jumbo”) reverse mortgages issued by private lenders have similar repayment triggers, but the safety net is different. HECM non-recourse protection is backed by FHA insurance; on a proprietary loan, any non-recourse protection comes from the lender’s own contract, and terms vary by product. Before paying off a proprietary reverse mortgage or negotiating a sale, read the loan documents to confirm exactly what protections apply.

1
eCFR. 24 CFR Part 206 – Home Equity Conversion Mortgage Insurance
2
GovInfo. 24 CFR 206.27 – Mortgage Provisions
3
U.S. Department of Housing and Urban Development. How Do I Request a Payoff Statement of a HECM Reverse First Mortgage Assigned to HUD
4
eCFR. 24 CFR 206.125 – Acquisition and Sale of the Property
5
U.S. Department of Housing and Urban Development. Mortgagee Letter 2022-15 – Update to HECM Program Requirements for Notice of Due and Payable Status
6
U.S. Department of Housing and Urban Development. Mortgagee Letter 2023-23 – Updates to the HECM Program
7
eCFR. 24 CFR Part 206 Subpart B – Eligibility; Endorsement