The Homebuyer’s Corner
How Reverse Mortgages and HECMs Work for California Homeowners
Written by Armando Novelo, NMLS 237243, a mortgage loan officer in West Covina with over 20 years of experience helping Southern California buyers.
A reverse mortgage lets homeowners age 62 and older access a portion of the equity they have built in their home without selling it, without making monthly mortgage payments, and without giving up ownership of the property. The fear that a reverse mortgage means signing your house over to the bank is one of the most persistent misconceptions I run into, and it is simply not how a properly structured reverse mortgage works.
You keep title. You keep ownership. You keep the right to stay in your home. What changes is how the equity in that home is accessed
What a HECM Actually Is
The most common type of reverse mortgage is the HECM, which stands for Home Equity Conversion Mortgage. It is an FHA-insured program available to homeowners age 62 and older who own their home as a primary residence and have substantial equity, typically 45 to 60 percent or more depending on age and current rates.
The 2026 HECM lending limit is $1,249,125. That is the maximum home value FHA uses when calculating how much a borrower can access. For most homeowners in the San Gabriel Valley where median values sit in the $800,000 to $900,000 range, the standard HECM covers the full property value without needing a jumbo product.
Unlike a traditional mortgage, there is no required monthly principal and interest payment. Interest and mortgage insurance premiums accrue and are added to the loan balance over time. The loan does not come due until the last borrower sells the home, permanently moves out, or passes away. Before closing, every HECM borrower is required to complete HUD-approved housing counseling, the same type we covered for homebuyers in this article, in the section explaining what the counseling covers and how to complete it.
What You Still Owe as the Homeowner
A reverse mortgage removes the monthly mortgage payment obligation but it does not remove the other responsibilities of homeownership. This is the part most people do not fully absorb until they are sitting with the paperwork.
Property taxes must be kept current. Homeowners insurance must stay in force. The home must be maintained in reasonable condition. And the property must remain your primary residence. If any of those conditions are not met, the loan can become due.
For seniors on a fixed income, falling behind on property taxes or insurance is the most common way a reverse mortgage goes wrong. It is also entirely preventable with proper planning and a clear-eyed look at the ongoing obligations before committing.
The financial assessment the lender conducts before approval reviews whether you have adequate residual income to cover those ongoing obligations. There is no minimum credit score for a HECM but that assessment is real and it matters.
When the Loan Is Repaid and What Happens to the Heirs
A HECM becomes due and payable when the last surviving borrower sells the home, permanently moves out, or passes away. At that point the loan balance, which includes the original amount borrowed plus accrued interest and mortgage insurance premiums, must be repaid.
Here is the protection most people do not know about until it is explained to them. HECMs are non-recourse loans. That means the borrower or their heirs will never owe more than the home is worth at the time of repayment. If the loan balance has grown larger than the home's value, the FHA insurance covers the difference. The lender cannot pursue the estate or the heirs for the shortfall.
If there is equity remaining after the reverse mortgage is paid off, that equity belongs to the homeowner's estate. The heirs can sell the home, pay the loan balance, and keep the difference. Or in some cases they can keep the home by paying the required amount under HECM guidelines.
The assumption that a reverse mortgage means the children receive nothing is not accurate. It depends entirely on how much the loan balance has grown relative to what the home is worth when the loan comes due.
How You Can Receive the Money
A HECM does not have one fixed structure. How you access the equity depends on what you are trying to accomplish.
A line of credit is one of the most flexible options. You draw from it when you need it and pay interest only on what you have used. One interesting feature of the HECM line of credit is that the unused portion grows over time at the same rate as the loan interest, which means the amount available to you can actually increase as the years go by.
Monthly payments are another option, either for a set period or for as long as you remain in the home. For homeowners who want to supplement a fixed income with a predictable monthly amount, this structure works well.
A lump sum is available under certain circumstances, typically with a fixed-rate HECM, though the amount accessible upfront is subject to first-year limits under current program rules.
Most borrowers end up with a combination approach, taking some funds upfront to handle an immediate need and maintaining a line of credit for future use. The right structure depends on what the homeowner is actually trying to accomplish, which is why I never approach reverse mortgages as a one-size product.
The Types of Reverse Mortgage Programs
HECM is the most widely used program but it is not the only option.
The HECM for Purchase is a program that allows an eligible buyer to use a reverse mortgage when buying a new primary residence. Instead of taking out a traditional mortgage and making monthly payments, the buyer puts a portion of the purchase price down and uses the reverse mortgage to cover the rest. For older buyers downsizing or relocating within California, this can be a powerful way to move into a new home without taking on a monthly payment. We covered how buying before you sell works for other buyer scenarios in this article, and the HECM for Purchase offers a version of that flexibility specifically designed for older buyers.
Proprietary or jumbo reverse mortgage programs are private products available for higher-value homes that exceed the HECM lending limit, or for homeowners as young as 55 who do not yet meet the HECM age requirement. In California, where many homes in Los Angeles County exceed $1.25 million, jumbo programs are relevant. Some go up to $4 million in loan proceeds and do not carry FHA mortgage insurance premiums.
Single-purpose reverse mortgages are less common and typically offered through government agencies or nonprofit organizations for a specific use such as home repairs or property tax assistance. They are more limited in scope but can be useful for homeowners with a single well-defined need.
At Super Mortgage Bros we can fund reverse mortgages in-house but we also broker these loans to seven different reverse mortgage investors. That matters because reverse mortgage guidelines vary meaningfully between programs and lenders. The loan structure that works best for one homeowner may not be available at every investor. Having access to multiple options lets me compare programs rather than fitting every homeowner into a single product.
Who a Reverse Mortgage Actually Makes Sense For
A reverse mortgage is not the right tool for everyone and I want to be direct about that.
It makes the most sense for homeowners who are 62 or older, have significant equity, plan to stay in their home long term, and have a specific financial goal that accessing that equity would serve. Whether that is eliminating an existing mortgage payment, supplementing retirement income, creating a financial cushion through a line of credit, or funding home improvements that make aging in place more comfortable.
It does not make sense for homeowners who are planning to move in the near term, who have heirs who are counting on the full equity value of the home, or who have difficulty maintaining the ongoing obligations of taxes, insurance, and maintenance. The loan growing over time is not a problem if the homeowner understands it and plans accordingly. It can become a problem if it is not understood going in.
I worked with a homeowner in the SGV who had paid off her mortgage years ago and was sitting on substantial equity but struggling to manage monthly expenses on a fixed income. She was not interested in selling or moving. What she needed was access to some of what she had built without creating a new monthly obligation. A HECM line of credit gave her exactly that. She drew from it when she needed to, the unused portion continued growing, and she stayed in her home on her terms. That is what the product is designed for and that is the version of this conversation that makes sense.
For homeowners thinking about how their equity might be used in other ways, whether to help a child purchase a home or to access funds through a cash-out refinance, this article covers the full range of equity access options, in the section comparing HELOC, cash-out refinance, and other approaches.
The Most Important Thing to Understand Before Moving Forward
Reverse mortgages have significant federal protections built in. The non-recourse guarantee, the FHA insurance, the required counseling, and the strict program guidelines are all consumer protections. But those protections only help you if you understand how the loan works before you commit.
The balance grows. The ongoing obligations remain. The structure of how you receive the funds matters. And the impact on your estate and your heirs is worth a real conversation with both your lender and your family before you sign anything.
For the right homeowner with the right situation, a reverse mortgage is a practical, lender-approved way to use what you have spent decades building. For the wrong homeowner without full information, it can create complications that are hard to unwind.
If you are a homeowner in the San Gabriel Valley and you are thinking about whether this makes sense for your situation, reach out directly. Bring your questions, your numbers, and your goals. That is where the conversation starts.
Armando Novelo, NMLS 237243, is a mortgage loan officer at Super Mortgage Bros, powered by Golden Empire Mortgage. He has been helping Southern California buyers and homeowners since 2002. His office is located in West Covina, CA.
Article Published: September 10, 2026
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Armando Novelo
NMLS 237243
Super Mortgage Bros
1900 W. Garvey Ave S. #100
West Covina, CA 91790
Phone: (626) 200-1838
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