Reverse Mortgage Rules: A Plain-Language 2026 Guide

The reverse mortgage rules that govern a HECM come down to six things: you have to be old enough and the home has to be your primary residence, you keep the title, you keep paying property taxes and insurance and upkeep, HUD caps how much you can draw in the first year, the loan is non-recourse, and it becomes due when the last borrower dies, sells, or moves out for good. Everything else is detail hanging off those six.

I get asked about the rules more often than about the money, and I think that is the right instinct. Most people I sit with in Bend already have a rough idea of what a reverse mortgage pays. What keeps them up is the part nobody explains well: what they are agreeing to, what could go wrong, and who decides. So this page is the rulebook, in order, without the softening.

This material is not from HUD or FHA and was not approved by HUD or a government agency. A reverse mortgage is a loan that must be repaid, not a government benefit. Program rules are set by HUD and FHA and can change; the figures below reflect the 2026 program year.

The Reverse Mortgage Rules That Matter Most, at a Glance

If you read nothing else, read this table. These are the reverse mortgage rules that decide whether the loan works for you and whether it stays working.

Reverse Mortgage Rules for Who Can Get One

Eligibility is the shortest part of the rulebook. You need to be at least 62 for a HECM, the home has to be your primary residence, and you need meaningful equity, because the loan has to pay off any existing mortgage at closing before a dollar reaches you.

The property has to be an eligible type: a single-family home, a two-to-four unit where you occupy one unit, an FHA-approved condominium, or a manufactured home meeting FHA standards. Condominiums are the common snag in Central Oregon, and a proprietary product can sometimes finance a condo without FHA project approval when a HECM cannot.

There is also a financial assessment. It is not a credit-score contest, but the lender does look at whether you have paid property taxes and insurance on time and whether your income covers your ongoing obligations. If that review raises a concern, the fix is usually a life expectancy set-aside, which carves out part of your proceeds to pay taxes and insurance going forward. Full detail sits on the reverse mortgage requirements page, and the honest list of hard stops is on what disqualifies you from a reverse mortgage.

The Rules You Live By: Borrower Obligations

This is the section I slow down for. Everything above happens once, at closing. The obligations below apply every year the loan is outstanding, and they are the only realistic way a homeowner gets into trouble with a reverse mortgage.

• Pay your property taxes. In Deschutes County that means the November statement, and if you are used to it coming out of an escrow account on your old mortgage, notice that a reverse mortgage usually does not escrow. The bill becomes yours to track.
• Keep homeowners insurance in force. A lapsed policy is a default, and in a wildfire-exposed market like Central Oregon, a carrier nonrenewal you ignore for a few months is a real risk rather than a theoretical one.
• Pay any HOA dues and special assessments. Same logic. These are property charges under the loan.
• Maintain the home in reasonable repair. Not perfection. But a roof left to fail or a code violation left unaddressed can trigger a servicer inspection and, eventually, a default.
• Occupy it as your primary residence. Discussed in its own section below, because the details surprise people.
• Answer the annual occupancy certification. Your servicer mails one every year. It takes two minutes and returning it is not optional. Unreturned mail is one of the more common ways a perfectly healthy loan gets flagged.

You remain responsible for paying property taxes, homeowners insurance, and any HOA dues; for maintaining the home; and for occupying it as your primary residence. Failure to meet these obligations may cause the loan to become due and payable. That sentence is boilerplate in my industry, and I would rather you read it as a to-do list than as fine print.

Reverse Mortgage Rules on How Much You Can Take in Year One

Among the reverse mortgage rules people have never heard of before we meet, this one leads the list. HUD limits what you can draw during the first twelve months after closing, and the limit is not a formality.

The math works like this. The lender calculates your principal limit, which is the total the loan can support based on your age, your home value up to the lending limit, and the expected interest rate. During the first twelve months you can generally access up to 60 percent of that principal limit. If you have mandatory obligations that exceed 60 percent, most often an existing mortgage that has to be paid off, you may draw what those obligations require plus an additional 10 percent of the principal limit.

Two practical consequences follow. First, if you were counting on a large lump sum in month one, run the number before you plan around it. Second, drawing above 60 percent of the principal limit raises your upfront mortgage insurance premium, so taking more early has a real cost attached rather than being a neutral choice. The reverse mortgage calculator will get you in the neighborhood, and the mechanics behind the number are on how does a reverse mortgage work.

The 2026 maximum claim amount is $1,249,125, per HUD's 2026 loan limit announcement. A HECM calculates against that ceiling regardless of what your home appraises for above it, which in the upper end of the Bend market is exactly when a proprietary or jumbo reverse becomes worth pricing alongside the HECM.

The Non-Recourse Rule and What It Actually Protects

A HECM is a non-recourse loan: you or your heirs will never owe more than the home is worth at the time the loan is repaid. If the balance has grown past the value of the house, FHA mortgage insurance covers the difference. That is what the insurance premiums you pay are buying.

What non-recourse does not do is worth stating plainly, because I have watched people over-read it. It does not suspend your obligations. It does not mean the loan cannot become due. It does not protect your other assets from anything except a shortfall on this particular loan. And it does not mean you cannot lose the home, because a default on taxes, insurance, or occupancy can still put the loan in a due and payable status. Non-recourse governs the size of the debt, not whether the debt comes due.

Reverse Mortgage Rules for When the Loan Becomes Due

The loan becomes due and payable when a maturity event occurs. There are four, and knowing them removes most of the vague dread people carry about this product.

1. The last surviving borrower dies. Eligible non-borrowing spouse protections may defer repayment, covered in the next section.
2. The home stops being the primary residence. Selling, or moving out permanently, ends the loan.
3. An absence exceeds twelve consecutive months. This is the one that catches families off guard. A move into assisted living or a nursing facility does not trigger anything at month two or month six. Once the absence passes twelve consecutive months, the home is no longer your principal residence under the program and the loan matures. A winter in Arizona is not a problem. A year in a care facility is.
4. A borrower obligation goes unmet. Unpaid property taxes or insurance, serious disrepair, or a failure to certify occupancy.

If a default does happen, it is rarely instantaneous. Servicers have loss mitigation options, repayment plans exist for delinquent property charges, and the earlier you call the more of them stay available. The genuinely bad outcome comes from silence, not from the rule.

Reverse Mortgage Rules That Protect a Non-Borrowing Spouse

A common Central Oregon situation: one spouse is 68, the other is 59. Only the older spouse can be a borrower on a HECM, which raises the obvious question of what happens to the younger one.

The rules address it directly. A spouse who is not a borrower can be designated an eligible non-borrowing spouse, and if they meet the conditions, repayment is deferred after the borrowing spouse dies and they may remain in the home. The conditions are not automatic: they have to have been married at closing and remain the spouse, they have to have been disclosed as a non-borrowing spouse at the time of the loan, they have to continue occupying the home as a principal residence, and they have to keep the property charges current and establish legal ownership or the right to remain within the required window.

Two things worth knowing before you sign. The younger spouse's age affects the calculation and generally reduces how much the loan will provide. And the protection depends on paperwork completed at closing, which is why the non-borrowing spouse attends the counseling session. If you are in this situation, raise it in the first conversation rather than the last.

What the Rules Mean for Your Heirs

Nothing about a reverse mortgage disinherits anyone, and the rules for heirs are more generous than the reputation suggests.

After a maturity event, the servicer sends a due and payable notice, and heirs have 30 days to indicate their intent to buy the home, sell it, or turn it over to the lender. From there the timeline can extend up to six months to sell or arrange financing, and the lender may approve additional 90-day extensions with documentation that a sale or payoff is genuinely in progress. HUD's guide for families, Inheriting a Home Secured by an FHA-insured HECM, lays out the sequence.

The number that matters most: if heirs want to keep the home, they repay the lesser of the full loan balance or 95 percent of the home's appraised value, as the Consumer Financial Protection Bureau explains. So even in a market that turns against the estate, a family that wants the house is never asked for more than 95 percent of what it appraises for. And if the home sells for more than the balance, the remaining equity belongs to the estate, not the lender. The family-side view of all of this is on the guide for adult children.

Reverse Mortgage Rules in Bend and Central Oregon

The reverse mortgage rules are federal, so nothing in the HECM rulebook changes at the Oregon border. What changes is which rules bind hardest here.

About 21.8 percent of Deschutes County residents are 65 or older according to U.S. Census Bureau QuickFacts, well above the national share, so this is a conversation happening in a lot of local households at once. Three local notes I give clients here.

Insurance is the obligation to watch. Wildfire exposure across Central Oregon has made renewals less predictable than they were a decade ago, and a policy that lapses because a carrier declined to renew is treated the same as one that lapsed because a bill went unpaid. Open that mail.

Home values push more Bend homeowners against the $1,249,125 lending limit than most markets, which makes the HECM versus proprietary comparison a live question rather than an academic one. And if you are carrying a low first-mortgage rate you do not want to give up, a reverse second mortgage follows a different rulebook and is often the better shape of the same idea.

I work with homeowners across Bend, Redmond, Sunriver, Sisters, La Pine, Prineville, and Madras from my office at 601 NW Harmon Blvd. For more, the Bend reverse mortgage guide covers local equity, reverse mortgage in Oregon covers the statewide picture, reverse mortgage counseling covers the required session, and the full lineup sits on the reverse mortgage programs page. If you want the case against, read the downside of a reverse mortgage before you read anything else of mine.

Reverse Mortgage Rules: Frequently Asked Questions