Reverse Mortgage Texas: A Guide to Home Equity Loans

In Texas, homeowners 62 and older can tap into their home's equity through a reverse mortgage. This type of loan allows homeowners to borrow money using the value of their home as collateral.

To qualify, homeowners must own their home outright or have a low balance on their mortgage. They also must occupy the home as their primary residence.

A reverse mortgage in Texas can provide a lump sum, monthly payments, or a line of credit - the choice is up to the homeowner.

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A reverse mortgage is a type of loan that allows homeowners aged 62 and older to borrow money using the equity in their home as collateral.

The loan does not require monthly mortgage payments, but interest and fees are added to the loan balance over time. In Texas, a reverse mortgage is also known as a Home Equity Conversion Mortgage (HECM).

Homeowners can use the borrowed funds for any purpose, such as paying off existing debts, covering living expenses, or making home improvements. The loan amount is based on the home's value, the borrower's age, and current interest rates.

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The borrower must occupy the home as their primary residence to be eligible for a reverse mortgage. In Texas, the property must also be owner-occupied, meaning the borrower must live in the home and intend to continue doing so.

The loan does not affect the borrower's Social Security or Medicare benefits, but it does require the borrower to pay property taxes and insurance.

In Texas, you can borrow up to 50% of your home's value with a reverse mortgage.

You must be at least 62 years old to qualify for a reverse mortgage in Texas.

The loan amount is based on the lesser of the home's value or $765,600, which is the maximum limit for a reverse mortgage in the US.

You can choose from three different types of reverse mortgages: Home Equity Conversion Mortgage (HECM), Home Equity Loan, and Reverse Mortgage.

The HECM is the most popular type of reverse mortgage in Texas, accounting for about 90% of all reverse mortgages.

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You can use the loan proceeds to pay off any outstanding mortgage balance on your home, or to make home repairs, or to cover living expenses.

The lender will hold a lien on your home until the loan is repaid, which can happen when you sell your home, move away, or pass away.

You will not make any monthly mortgage payments with a reverse mortgage in Texas, but you must still pay property taxes and insurance.

The loan will accrue interest over time, and the interest will be added to the loan balance.

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To qualify for a reverse mortgage in Texas, you'll need at least 50 percent equity in your home, which will be appraised as part of the application process. You'll also need to be 62 or older and own significant equity in your home.

A financial assessment will be conducted to ensure you have the financial resources to pay for property taxes, insurance, and maintenance. You'll also need to demonstrate that you're not in default status on any federal debt, such as income taxes or student loans.

Here are the key eligibility requirements for a reverse mortgage in Texas:

If you already have a reverse mortgage, you could be eligible to refinance your loan. This can be a great opportunity to access additional equity in your home.

Higher home values and increased lending limits can make it possible to tap into more of your home's value. Upfront fees may even be reduced based on what you paid when you originally completed your loan.

The terms of a reverse mortgage are quite different from traditional loans. The loan doesn't need to be repaid until the last borrower moves out of the home permanently, the home is sold, or homeowners fail to meet the terms of the loan obligations.

To qualify for a reverse mortgage, you'll need to meet certain requirements. At least one applicant must be 62 or older, and you'll need to own significant equity in your home, typically at least 50 percent.

You'll also need to demonstrate that you have the financial resources to pay for property taxes, homeowner's insurance, and HOA fees. A lender will require you to keep up with the financial obligations of home ownership.

Not all types of property are eligible for a reverse mortgage. If your home is a single-family or multi-family residence, manufactured homes, or HUD-approved condos, you should qualify. Vacation homes and second homes are not eligible.

You'll need to have a financial assessment taken to ensure you can meet the obligations of your property taxes, homeowner's insurance, and basic needs to maintain the home. This is known as "residual income", and it's a much lower income amount than is needed to meet traditional mortgage requirements.

Here are the key requirements to qualify for a reverse mortgage:

In Texas, you have several options for reverse mortgages, each with its own features and benefits.

Home Equity Conversion Mortgages (HECMs) make up the majority of reverse mortgage loans, accounting for approximately 95 percent of outstanding reverse mortgage loans. You or a co-borrower must be at least age 62 to qualify. You’re also required to receive counseling from a HUD-certified reverse mortgage counselor, which typically costs around $125.

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HECMs offer certain protections, including the guarantee that the borrower or their heir will never owe more than the home is worth, even if the home's value decreases or the lender goes out of business.

Proprietary reverse mortgages have fees and terms that can vary by lender, and may offer higher loan amounts, with some lenders offering loans of over $1 million. However, these loans "are not insured if a lender goes out of business", so it's essential to exercise caution when considering them.

You can borrow up to a certain amount with a reverse mortgage, but it's not as straightforward as it seems. The maximum loan limit in 2025 is $1,209,750 with a HECM.

The actual amount you can borrow depends on your principal limit factor, or PLF. This is a percentage of your home's value that you can access using a HECM.

Your PLF is determined by your age and the current interest rate. For example, a 62-year-old borrower with a 7.25 percent mortgage rate has a PLF of 0.301.

This means that for a home valued at $500,000, the borrower could access around $150,000. But don't forget, there are closing costs, mortgage insurance, and origination fees to consider.

After including these costs, the borrower's available funds drop to $130,000.

Home Equity Conversion Mortgages (HECMs) are the most common type of reverse mortgage, making up about 95 percent of outstanding loans. They're insured by the Federal Housing Administration (FHA).

You'll need to be at least 62 years old to qualify for a HECM, and you'll also need to receive counseling from a U.S. Department of Housing and Urban Development (HUD)-certified counselor. This counseling session typically costs around $125.

HECMs offer some great protections, including that you'll never owe more than the value of your home. If your home's value decreases or the lender goes out of business, you're covered.

Single-purpose reverse mortgage loans are also available, often offered by states or local governments. These loans are usually used for specific purposes, such as paying property taxes or covering home repairs.

Proprietary reverse mortgages have variable fees and terms, and some lenders offer loan amounts of over $1 million. But be cautious, as these loans aren't insured if the lender goes out of business.

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Most HECMs have adjustable interest rates, meaning the rate can change monthly or annually, based on economic conditions. Lenders set a "cap" that limits rate increases in a given month or year and over the life of the loan.

HECMs have a 2 percent annual cap and a 5 percent lifetime cap. This means your rate won't skyrocket out of control, but it can still fluctuate.

Adjustable HECM interest rates include two components: the actual market interest rate plus a margin added by the lender. The margin amount is fixed for the life of the loan.

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Refinancing your Reverse Mortgage can be a smart move if you're looking to save money or tap into your home's equity. To determine if refinancing is right for you, it's essential to talk to a Reverse Mortgage professional, also known as your loan officer.

They'll confirm if you meet the loan requirements, which vary depending on the type of reverse mortgage you're applying for. Your loan officer will guide you through the loan application process, which includes getting an appraisal for your home and providing necessary financial documentation.

Once your loan is approved, you'll review your final loan documents and choose how you'll receive your funds. This is an exciting step, as it's a chance to create a plan for your future financial needs.