What Is a Home Equity Conversion Mortgage (HECM)?
A home equity conversion mortgage (HECM) is a type of reverse mortgage that is insured by the Federal Housing Administration (FHA) and allows seniors to convert the equity in their homes into cash. Borrowers must be at least 62 years old, and the amount that may be borrowed is based on the appraised value of the home, subject to FHA limits. Interest accrues on the outstanding loan balance, but no payments must be made until the home is sold, the borrower(s) dies, or the borrower(s) moves out of the property.
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