Tom Selleck Reverse Mortgages: Costs, Payouts, and Trade-Offs

The Tom Selleck reverse mortgage commercials pitch a real, federally insured loan called a Home Equity Conversion Mortgage, or HECM. Selleck is a paid spokesperson for American Advisors Group (AAG), not a financial advisor, and the product he’s promoting lets homeowners aged 62 and older convert part of their home equity into cash without making monthly mortgage payments. The loan is legitimate and regulated by the Federal Housing Administration. It’s also expensive, compounds against your equity every month, and carries obligations the ads don’t spend much time on. Here’s what you’re actually looking at.

What Selleck Is Actually Selling

Selleck reads scripts for a for-profit lender. The commercials use phrases like “it’s not too good to be true” and frame the HECM as a straightforward retirement tool. The loan behind that pitch is the Home Equity Conversion Mortgage, the only reverse mortgage insured by the federal government and available only through FHA-approved lenders.¹ Instead of you paying the lender each month, the lender pays you, drawing on the equity in your home. Interest and fees accumulate on the balance, and repayment is deferred until you leave the home.

One meaningful protection sets the HECM apart from most loans: the non-recourse clause. You, your spouse, and your heirs will never owe more than the home’s value at the time it’s sold, even if the loan balance has grown past that number. If the sale falls short of what’s owed, FHA insurance covers the gap.² No other assets from the borrower’s estate can be pulled in to cover the debt. That’s a real safeguard. It doesn’t erase the trade-offs below.

Who Can Actually Get One

You have to be at least 62. You must either own your home outright or have a mortgage balance small enough that the reverse mortgage proceeds can pay it off at closing.³ No specific equity percentage is written into law, but borrowers with thin equity get less money and may not have enough to cover the payoff and closing costs.

The home has to be your primary residence, meaning where you live most of the year.⁴ Single-family homes qualify, so do two-to-four unit properties where you occupy one unit, and FHA-approved condos. Vacation homes and rental properties don’t.

The lender will review your income, assets, and credit to confirm you can keep paying property taxes, homeowner’s insurance, and maintenance.⁵ If your finances raise concerns, the lender may set aside part of your proceeds in a reserve account earmarked for those charges.

Before closing, every applicant must complete a session with a HUD-approved housing counselor. It isn’t optional. The counselor walks through costs, alternatives, and obligations, and you’ll receive a counseling certificate (HUD Form 92902) that has to be submitted to the lender. A lender pushing you past this step is a red flag.

If your spouse is younger than 62, they can’t be a borrower. For loans with FHA case numbers assigned on or after August 4, 2014, an eligible non-borrowing spouse can remain in the home after the borrower dies without repaying the loan, so long as they were married at closing, are named in the HECM documents, occupy the home as their principal residence, and keep taxes and insurance current.⁶ Marrying the borrower after the loan closes doesn’t qualify a spouse for these protections. Including a younger non-borrowing spouse also reduces the loan amount available, because the principal limit calculation uses the younger age.

What It Costs

Reverse mortgages are expensive to set up. Most fees can be rolled into the loan balance instead of paid at closing, which softens the sting but means those fees start earning interest immediately.

Upfront mortgage insurance premium: 2% of either your home’s appraised value or the HECM maximum claim amount, whichever is less. The 2026 maximum claim amount is $1,249,125. On a $400,000 home, the upfront MIP is $8,000.⁷
Annual mortgage insurance premium: 0.5% of the outstanding loan balance each year, added to what you owe.
Origination fee: the greater of $2,500 or 2% of the first $200,000 of the maximum claim amount plus 1% of any amount above $200,000, capped at $6,000.⁴
Third-party closing costs: appraisal, title insurance, recording fees, and similar charges that vary by location.

Because the balance grows each month, an $8,000 upfront MIP financed into the loan can cost substantially more over 15 or 20 years. Every interest and MIP charge gets added to the balance, and next month’s interest is calculated on that higher balance. A modest initial draw can more than double over a decade at 5-6% interest. This isn’t a defect in the product. It’s how compound interest works on a loan with no required payments. The ads don’t mention it, and it’s the single most important thing to understand before signing.

How You Get the Money

The disbursement options depend on whether you pick a fixed or adjustable interest rate.⁸ A fixed-rate HECM limits you to a single lump sum at closing. That’s the only option on that side. Adjustable-rate HECMs open up more:

Tenure payments: fixed monthly payments for as long as you live in the home as your principal residence.
Term payments: fixed monthly payments for a set number of years you choose.
Line of credit: a pool you draw from when you want. The unused portion grows over time at the same rate the loan balance grows, so waiting increases your borrowing power.
A combination of monthly payments plus a line of credit.

The line of credit growth feature is unusual in consumer lending. Open a $150,000 line and leave it untouched for five years, and the available amount will be larger regardless of what happened to your home’s market value. Financial planners who are otherwise cautious about reverse mortgages often point to the standby line as the most defensible use of the product, particularly as a buffer during down markets in retirement.

What You Still Have to Do as a Homeowner

A HECM doesn’t cancel your homeowner obligations. You still owe property taxes, homeowner’s insurance, and HOA fees, paid on time.⁹ You have to keep the home in reasonable repair. The lender can inspect the property with notice and direct specific repairs, typically giving you 60 days to begin.

Falling behind on taxes or letting insurance lapse can trigger a default that makes the entire loan balance due immediately.¹⁰ This is where borrowers most often run into trouble. If the lender advances money to cover unpaid taxes on your behalf and you can’t repay it, that alone can push the loan into due and payable status.⁴ Selleck’s line about keeping the title to your home is technically accurate but incomplete: title or not, you can still lose the home to foreclosure over unpaid property charges.

When the Loan Has to Be Repaid

Repayment is triggered when the last surviving borrower (or eligible non-borrowing spouse) dies, when the home is sold, or when the borrower permanently moves out. Federal regulations define permanent departure as being away from the property for more than 12 consecutive months due to physical or mental illness when no other borrower remains in the home.⁴ A move to assisted living lasting longer than a year will trigger repayment even if you intended to come back.

If you’ll be away for more than two months but less than six and no co-borrower lives in the home, notify your loan servicer in writing so the absence isn’t misread as a permanent move.⁹

What Your Heirs Inherit

After the last borrower dies, the lender sends a due and payable notice. From that notice, heirs have 30 days to decide whether to buy the home, sell it, or turn it over to the lender.¹¹ Extensions of up to six months are possible if the heirs are actively working to sell or arrange financing.

If the home sells for less than the loan balance, heirs owe nothing beyond the sale proceeds. FHA insurance absorbs the loss.² If it sells for more, the heirs keep the difference. Heirs who want to keep the home can pay off the loan at 95% of the home’s appraised value, which can be worth doing in a rising market. For loans with case numbers assigned on or after August 4, 2014, an eligible surviving non-borrowing spouse may be able to stay in the home without repaying the loan, provided they continue to meet HUD’s occupancy and property charge requirements.¹²

The Trade-Offs the Ads Skip

The FTC states the core trade-off plainly: a reverse mortgage increases your debt and can use up your equity.¹³ You get cash now, but interest starts compounding immediately and doesn’t stop. For someone who stays in the home another 20 years, the loan can consume nearly all the equity that took decades to build.

The loan can also narrow your future options. If you later need to move, downsize, or relocate to be closer to family, you’ll have less equity, or none, to fund that transition. The upfront costs make it a particularly poor fit if you end up selling within a few years of closing.

A HECM isn’t automatically a bad decision. For homeowners who are house-rich and cash-poor, plan to stay put for the long term, and don’t need to preserve the home’s full equity for heirs, it can provide real financial breathing room. The line of credit option has legitimate strategic uses. But the choice deserves more scrutiny than a 60-second commercial can give it, no matter who’s on screen.

1
U.S. Department of Housing and Urban Development. Home Equity Conversion Mortgages for Seniors
2
U.S. Department of Housing and Urban Development. Home Equity Conversion Mortgage Handbook 4235.1
3
Consumer Financial Protection Bureau. Can Anyone Take Out a Reverse Mortgage Loan
4
eCFR. 24 CFR Part 206 – Home Equity Conversion Mortgage Insurance
5
HelpWithMyBank.gov. What Are the Requirements for a Federal Housing Administration (FHA) Home Equity Conversion Mortgage (HECM)
6
U.S. Department of Housing and Urban Development. Can I Stay in My Home if My Spouse Had a Reverse Mortgage and Has Passed Away
7
U.S. Department of Housing and Urban Development. HUD’s Federal Housing Administration Announces Loan Limits
8
Consumer Financial Protection Bureau. How Much Money Can I Get With a Reverse Mortgage Loan, and What Are My Payment Options
9
Consumer Financial Protection Bureau. What Are My Responsibilities as a Reverse Mortgage Loan Borrower
10
HelpWithMyBank.gov. Who Is Responsible for Upkeep on the Home on a Home Equity Conversion Mortgage (HECM)
11
Consumer Financial Protection Bureau. With a Reverse Mortgage Loan, Can My Heirs Keep or Sell My Home After I Die
12
Consumer Financial Protection Bureau. What Happens to My Reverse Mortgage When I Die
13
Federal Trade Commission. Reverse Mortgages