What happens to a reverse mortgage when you die? The loan usually comes due when the last borrower dies, unless an eligible non-borrowing spouse can stay. Heirs can sell and keep any leftover equity, or hand the home to the lender. To keep it, they pay the lesser of the balance or 95% of its appraised value.
- The loan typically becomes due when the last borrower dies, or when an eligible non-borrowing spouse's deferral period ends.
- Heirs can sell, refinance, pay off the loan, or turn the home over to the lender. They keep any equity left after repayment.
- Heirs who want to keep the home can pay the lesser of the loan balance or 95% of the current appraised value. They are not personally liable for a shortfall (24 CFR 206.27(b)(8)).
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Get your free guideWhen does the loan come due?
A HECM generally becomes "due and payable" when the last surviving borrower dies or permanently moves out. If there is an eligible non-borrowing spouse, repayment may be deferred so they can stay in the home. To qualify, the spouse generally must have been married to the borrower at closing, be named in the loan documents, and continue living in the home and meeting the loan terms.
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Try the estimate calculatorWhat are the options for heirs?
- Sell the home, repay the loan, and keep any remaining equity.
- Keep the home by paying off the loan, using savings or a new mortgage. Heirs can pay the lesser of the full balance or 95% of the home's current appraised value.
- Sign a deed in lieu of foreclosure if the home is worth less than the loan. Thanks to FHA insurance, heirs generally owe nothing more.
How long do heirs have?
The servicer must give heirs 30 days from its due-and-payable notice to choose an option, and it generally must start foreclosure within six months of the due date unless HUD approves more time (24 CFR 206.125(a)(2) and (d)(1)). Extensions may be available with HUD approval when heirs are actively working to sell or refinance. Exact timelines depend on the servicer and HUD rules in effect, so contact the loan servicer as soon as possible.
Can heirs owe more than the home is worth?
HECMs are non-recourse loans. Neither the estate nor the heirs will owe more than the home is worth when it is sold to repay the loan. FHA mortgage insurance covers the difference.
How to prepare now
- Bring adult children or other heirs into the conversation, and to counseling if you're comfortable with that.
- Keep the loan documents and the servicer's contact information with your estate papers.
- Consider talking with an estate-planning or elder-law attorney.
How does the 95% sale option work?
Heirs can sell the home for at least an amount HUD sets, which can't be more than 95% of the appraised value, and the net proceeds go toward the loan.
The rules set out the sale option, and closing costs on that sale can't exceed the greater of 11 percent of the sales price or a fixed dollar amount HUD sets by notice (24 CFR 206.125(a)(2)(ii)). A transfer of title "by operation of law" also counts as a sale. Because a HECM is non-recourse, the lender can't collect the shortfall from the estate or the heirs (24 CFR 206.27(b)(8)).
What must a spouse who isn't on the loan do to stay?
An eligible non-borrowing spouse can stay only if they meet every qualifying rule, keep living in the home and keep up with the loan's terms.
To qualify, the spouse must have been married to the borrower at closing and for the rest of the borrower's life, must be named in the loan documents as an eligible non-borrowing spouse, and must live in the home as a principal residence (24 CFR 206.55(c)). After the borrower dies, the spouse must get ownership or another legal right to stay for life (24 CFR 206.41(b)(2)). If a spouse was not eligible at closing, they can't become eligible later.
What should heirs gather first?
Gather the loan's latest statement, the servicer's contact details, the deed, and the estate papers, then call the servicer.
The servicer's notice starts a 30-day clock to choose an option (24 CFR 206.125(a)(2)). Having those papers ready makes it easier to decide whether to sell, refinance or hand over the deed. A HUD-approved housing counselor (hud.gov/counseling) can explain the options at no or low cost.
Rules in this section checked against the current eCFR text on October 31, 2026.
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Frequently asked questions
Do heirs have to pay back a reverse mortgage?
The loan must be repaid when it comes due, usually by selling the home. Heirs are not personally liable beyond the home's value, and they keep any equity left after repayment.
Can my children keep the house after a reverse mortgage?
Yes, if they pay off the loan. They can pay the lesser of the loan balance or 95% of the home's current appraised value, often by refinancing.
What happens to my spouse if they are not on the reverse mortgage?
An eligible non-borrowing spouse may be able to stay in the home after the borrower dies, if they meet HUD's requirements and continue meeting the loan terms. Ask a lender and counselor to confirm before closing.
Who wrote this guide
This guide is written and maintained by the Clear Reverse editorial team from the primary sources listed below. The "Last updated" date at the top shows when it last changed. Clear Reverse is an education service, not a lender or mortgage broker, and nothing here is legal, tax or financial advice. Spotted an error? Email [email protected]. How we research and update our guides.
Sources
- HUD: HECM program page (maximum claim amount table) (lists the 2026 limit of $1,249,125, valid through Dec 31, 2026; accessed Oct 30, 2026)
- HUD Mortgagee Letter 2025-22 (2026 HECM limit) (dated Dec 11, 2025; limit applies to FHA case numbers assigned Jan 1 through Dec 31, 2026; accessed Oct 30, 2026)
- CFPB: Reverse mortgages (consumer tools) (accessed Oct 30, 2026)
- 24 CFR 206.27 (when the loan is due; non-recourse; tax deferral), eCFR (current text accessed Oct 31, 2026)
- 24 CFR 206.125 (sale of the property; heirs' deadlines), eCFR (current text accessed Oct 31, 2026)
- 24 CFR 206.55 (eligible non-borrowing spouse), eCFR (current text accessed Oct 31, 2026)
- 24 CFR 206.41 (counseling), eCFR (current text accessed Oct 31, 2026)
- HUD: Find a HUD-approved housing counselor (accessed Oct 30, 2026)
Program rules change, so confirm details with a HUD-approved counselor and a licensed lender.