Can You Leave a Home With a Reverse Mortgage to Your Heirs?

If you take out a reverse mortgage, you can leave your home to your heirs when you die. But you'll leave less of an asset to them because your heirs will need to repay the reverse mortgage. Otherwise, the lender will likely foreclose.

Once you learn more about this kind of loan and the issues your heirs might face if they want to keep the property, you might think twice about getting one.

Who Owns the House in a Reverse Mortgage?

A "reverse" mortgage is a loan in which older homeowners get payments from the lender based on the home's equity. (The more payments you get, the less equity you have.) The most popular type of reverse mortgage is the FHA-insured Home Equity Conversion Mortgage (HECM). The insurance protects the lender, not the borrower.

If you have a reverse mortgage on your home, you continue to own the property, but like with a regular, forward mortgage, the lender gets a lien on the property. So, you can leave a home with a reverse mortgage to your heirs. But they'll have to deal with the outstanding reverse mortgage debt.

What Happens to a Reverse Mortgage When the Borrower Dies?

With a HECM, the loan typically has to be repaid when the borrower dies, or another specific event happens, such as the borrower moves to another home or leaves due to health reasons for 12 consecutive months or longer.

So, when a person with a reverse mortgage dies, the heirs can inherit the house. But they won't receive title to the property free and clear because the property is subject to the reverse mortgage lien.

Timeline of What Happens to a Reverse Mortgage After the Borrower Dies

Within 30 days of a reverse mortgage borrower's death, the lender issues a due and payable notice to the borrower's estate or heirs. This notice informs the heirs of their options for repaying the reverse mortgage (see below). The lender will have the property appraised within 30 days. (24 C.F.R. § 206.125(a),(b) (2025).)

Under U.S. Department of Housing and Urban Development (HUD) (the regulator of HECMs) guidelines, if the balance remains unpaid, the lender must complete the first legal foreclosure action (initiate foreclosure) within six months. (24 C.F.R. § 206.125(d) (2025).) Exactly what constitutes the "first legal" depends on the state. It might be the filing of a foreclosure complaint in a judicial foreclosure or the filing of a notice of default in a nonjudicial foreclosure. HUD penalizes the lender financially through a "debenture interest curtailment" if they miss the first legal deadline (that is, HUD reduces the money they get from the FHA insurance). So, lenders are pretty serious about foreclosing if the outstanding reverse mortgage debt isn't resolved.

You can get two 90-day extensions (delays) of foreclosure if you're making progress to resolve the debt, such as by selling the home or trying to get financing to pay off the loan.

How Heirs Can Repay a Reverse Mortgage (and Avoid Foreclosure)

Under the terms of a HECM, those who inherit a home subject to a reverse mortgage get four options.

• Pay back the loan. Generally, with a HECM, the heirs may pay the lesser of the mortgage balance or 95% of the current appraised value of the home. FHA insurance will cover the remaining loan balance.
• Sell the home and use the proceeds to repay the reverse mortgage. With a HECM, the heirs can sell the property for the full amount of debt owed on the loan or an amount that is at least 95% of the current appraised value of the property. (24 C.F.R. § 206.125(a) (2025).)
• Deed the home to the lender. With this option, the heirs sign the property's title over to the lender, and the lender becomes the home's new owner.
• Do nothing and let the lender foreclose. If the heirs do nothing, the lender will begin a foreclosure and sell the property in a foreclosure sale to repay the debt.

Reverse Mortgage Problems for Heirs

Heirs who want to pay off a reverse mortgage and keep the home sometimes face months of red tape and frustration when dealing with the loan servicer. Shoddy loan servicing practices can hinder what should be routine paperwork, debt calculations, and communications with borrowers or heirs. For example, in one case of an inherited reverse mortgage, the daughter of one reverse mortgage borrower sent in a form indicating she wanted to purchase the property and was approved for traditional financing. But she still received a notice of default, the first step in a California nonjudicial foreclosure. The servicer also designated the home as vacant, turned off the water in the name of property preservation, and scheduled a foreclosure sale. This situation isn't uncommon. You might lose the home to foreclosure before you can work out another option.

Also, while you face delays or roadblocks due to an issue with the property's title, an impending foreclosure, or a lack of information from the servicer, you'll have to pay for the home's upkeep, taxes, and insurance. Interest and fees will continue to accrue on the debt while you try to work out any of the above options.

How to Protect Your Heirs If You Have a Reverse Mortgage

If you have a reverse mortgage and want to leave your home to your children, communicate with them about the loan and their repayment options. Giving them details about the loan, including the loan balance, interest rate, and what will happen when you die, will help them decide what to do with the house. You should also inform your heirs about their options, such as repaying the loan balance or selling the property to pay off the debt.

You might also consider talking to a professional about creating an estate plan. For example, you might want to get a life insurance policy sufficient to pay off the reverse mortgage balance when you die.

Talk to Your Heirs and Explore All Options Before You Apply

Reverse mortgages are complicated and often not the best option for older homeowners seeking access to extra cash. Before taking out a reverse mortgage and tapping into your home equity, you should explore all available options. For instance, you might qualify for a state or local program to lower your bills or consider downsizing to a more affordable home. You can learn more about reverse mortgages and other options for older homeowners at AARP's website at www.aarp.org/revmort.

Even though you'll have to complete a counseling session with a HUD-approved counselor to get a HECM, it's also highly recommended that you consider talking to a financial planner, an estate planning attorney, or a consumer protection lawyer before taking out this kind of loan. Again, keep your heirs information about your situation.

If you inherited a home subject to a reverse mortgage and the lender has started a foreclosure (or you're having trouble dealing with the loan servicer), talk to a foreclosure lawyer to learn about your rights and options.