When a loved one passes away, there are many emotional and financial questions to navigate. If they had a reverse mortgage, you might be wondering: What happens now? This guide explains the process clearly, compassionately, and without jargon—so you and your family can make informed decisions during a difficult time.
Understanding Reverse Mortgages and Death
A reverse mortgage is a loan available to homeowners aged 62 and older that lets them convert a percentage of their home equity into tax-free cash. The loan doesn’t need to be repaid until the borrower:
- Moves out of the home permanently
- Sells the home
- Or passes away
When the borrower dies, the reverse mortgage becomes due. But that doesn’t mean the family is left with debt or unexpected consequences.
Do Heirs Inherit the Debt?
No. Reverse mortgages are non-recourse loans. That means the borrower (or their estate) never owes more than the home’s market value—even if the loan balance is higher.
So if the home is sold for less than the loan amount, the FHA (Federal Housing Administration) mortgage insurance covers the difference.
Your family is protected.
What Happens Next? A Step-by-Step Overview
Here’s what typically happens when a borrower with a reverse mortgage passes away:
- The lender is notified of the death.
This often happens automatically when the borrower’s Social Security number is flagged as deceased. It can also be triggered when a death certificate is submitted by a family member, executor, or the estate. - The loan becomes due and payable.
Heirs are generally expected to provide a “letter of intent” within 30 days. This letter outlines their plan—such as selling the home or refinancing the loan—to resolve the balance. - Heirs choose how to proceed.
They can:- Sell the home to repay the loan and keep any remaining equity
- Refinance into a traditional mortgage if they want to keep the home
- The lender recovers the loan amount.
This is done through the home sale. If the sale doesn’t cover the full loan, FHA mortgage insurance covers the shortfall.
Timeframes and Deadlines to Know
- Notification period: Heirs should notify the lender as soon as possible.
- Resolution period: Lenders typically allow 30 days to share intentions, with up to 6 months to repay or sell.
- Extensions: Can be requested, especially if heirs show good faith efforts to resolve the loan.
Key Protections for Families and Heirs
- No personal liability for reverse mortgage debt
- Right to keep the home by repaying the loan or refinancing
- Option to sell the home and keep remaining equity
Remember: The reverse mortgage is secured by the home, not the estate or the heirs’ finances.
What If There’s No Equity Left?
If the home’s value is less than the loan balance:
- Heirs can walk away
- The estate can turn the property over to the lender
- FHA insurance pays the difference—not your family
Tips for Planning Ahead
If you or your loved one currently has a reverse mortgage:
- Communicate with heirs about the loan and their options
- Keep important documents like loan statements and contact info organized
- Consult with a financial advisor or estate planner
Being proactive helps reduce stress later.
Helpful Resources
- Explore our full guide to how reverse mortgages work
- Schedule a Call with Our Team to ask questions and plan confidently
Final Thought
Losing a loved one is never easy. But navigating a reverse mortgage after death doesn’t have to add confusion or fear. With the right information, your family can make choices that honor their wishes and protect their legacy.
Have questions about what happens after a reverse mortgage ends?
Our reverse mortgage experts are here to help—no pressure, just clarity.
