Reverse Mortgage Property Requirements
A HECM, the reverse mortgage FHA insures, must be secured by a home that is your principal residence. The home has to meet FHA’s property standards, be appraised by an FHA-approved appraiser, and stay insured for the life of the loan.
Quick answer
Saxton Mortgage does. At least one HECM program we offer accepts 1-4 unit homes, condos, manufactured homes and PUDs, as long as the home is your owner-occupied primary residence. Homes in the Coastal Barrier Resource System are not eligible, and any PACE obligation must be paid off at closing. Repairs that threaten health and safety must be finished before closing, and required repairs estimated at more than 15% of the maximum claim amount should also be completed first.
Homes that do not qualify
These homes cannot secure a HECM under FHA rules.
- Second homes, vacation homes and rental properties you do not live in. The home must be the principal residence of every borrower, and a person can have only one principal residence at a time.
- Cooperative units (co-ops), boarding houses, bed and breakfasts, hotels, motels and condotels, and other transient housing.
- Commercial enterprises, private clubs, tourist houses, and fraternity or sorority houses.
- Homes that will stay tied to a PACE clean energy assessment. The PACE balance must be paid off in full at or before closing.
- Homes in the Coastal Barrier Resources System, or in a FEMA special flood hazard area where the community does not take part in the National Flood Insurance Program.
- Homes whose water comes from a mechanical chlorinator, springs, lakes, rivers, sand-point wells or artesian wells.
Homes you do not live in
Co-ops and transient housing
Commercial and club properties
Unpaid clean energy assessments
Coastal barrier and flood gaps
Certain water sources
How FHA Judges The Home
Every HECM home is held to FHA’s Minimum Property Requirements, which means the home must be safe, sound and secure.
FHA insures HECMs on one- to four-unit homes where you live in one unit as your principal residence. That includes detached and semi-detached homes, townhouses and row houses. A one-unit home with a single accessory dwelling unit (ADU) still counts as one unit. Our reverse mortgage program accepts 1-4 unit homes, condos, manufactured homes and PUDs. With our reverse mortgage program, a condo unit must be in an FHA-approved project or otherwise meet FHA’s condo approval rules. A manufactured home must carry the HUD certification label or a label verification letter, and our program adds its own size minimums. The condo and manufactured home pages below cover those details.
An FHA-approved appraiser looks at the home. Each living unit needs safe water, a safe way to dispose of sewage, heat, hot water, electricity, at least one bathroom with a toilet, sink, and tub or shower, and a kitchen area with a sink and a stove hookup. The structure and foundations must be serviceable for the life of the HECM, and the home must be free of termites and other wood-destroying insects. Leased solar panels or a power purchase agreement can be acceptable only if they do not restrict your right to sell the home, and leased equipment is not counted in the home’s value. If FHA’s review of the appraisal calls for a second appraisal, it comes from a different appraisal company, the lower of the two values is used, and its cost can be financed in closing costs.
When the appraisal calls for repairs, problems that threaten your health and safety or the soundness of the home must be fixed before closing. Our program lists mold and water heater strapping among them. Other required repairs may be finished after closing through a repair set-aside when the estimate is no more than 15 percent of the maximum claim amount. Repairs estimated above that must be done before closing. A set-aside is held back from your loan proceeds, is larger than the repair estimate, and the work must be finished within the time set in the repair rider you sign. If a defect cannot be corrected, the home cannot be approved. For age, counseling and the other borrower rules, see our reverse mortgage requirements page.
Why choose Saxton before your appraisal
This page is for homeowners 62 and older, and the adult children helping them, who want to know whether the home itself will qualify.
We Plan Repairs With You
Once the appraisal lists required repairs, we work out with you whether they happen before closing or through a set-aside. Health and safety repairs always come before closing.
No Shopping For Value
A lender cannot order another appraisal just to get a higher value or to make required repairs go away.
A Set-Aside Has Limits
A set-aside works only for repairs that are not health and safety items and only when the estimate is no more than 15 percent of the maximum claim amount. It does not rescue a home with a defect that cannot be corrected.
You May Hire A Contractor
You may hire a general contractor for the required repairs. Set-aside funds are released after an inspection confirms the work is complete.
Insurance Stays In Place
You must insure all improvements against hazards, including fire and flood, as the lender requires. In a FEMA special flood hazard area, flood insurance must be kept for the life of the HECM.
Upkeep Is Still Yours
If the home’s condition slips, the lender must give you 60 days to begin repairs. If you do not start, or do not make good progress, the lender must move ahead under FHA’s due and payable rules.
Hear From Homeowners Like You
Frequently Asked Questions
Plain answers about which homes can secure a reverse mortgage.
Saxton Mortgage does. At least one HECM program we offer accepts 1-4 unit homes, condos, manufactured homes and PUDs, as long as the home is your owner-occupied primary residence. Homes in the Coastal Barrier Resource System are not eligible, and any PACE obligation must be paid off at closing. Repairs that threaten health and safety must be finished before closing, and required repairs estimated at more than 15% of the maximum claim amount should also be completed first.
Our reverse mortgage program accepts one- to four-unit homes where you live in one unit, plus condos, manufactured homes and PUDs. FHA lists detached and semi-detached homes, townhouses and row houses. A one-unit home with a single ADU still counts as one unit. Condos and manufactured homes have extra rules, covered on their own pages.
Repairs for problems that threaten health and safety or the soundness of the home must be done before closing. Other required repairs may be finished after closing through a repair set-aside when the estimate is no more than 15 percent of the maximum claim amount. Above that, they must be done before closing. On a HECM for Purchase, the seller must complete the health, safety and soundness repairs before closing.
Lead-based paint rules apply. If the appraiser notes paint deficiencies on a home built before 1978, they must be repaired before closing when a young child lives there or is expected to. On a HECM for Purchase, the seller must fix lead-based paint deficiencies before closing.
Only if the PACE balance is paid off in full at or before closing. You may use HECM proceeds to pay it off. On a HECM for Purchase, the seller must pay it off.
It can affect the value. Under our program, if your lot is larger than typical for the neighborhood, the appraiser describes the extra land but does not assign it value. A farm that produces income is not acceptable.
Possibly. FHA allows some mixed-use one- to four-unit homes when the commercial use does not affect the health and safety of the people living there. Our program is stricter: commercial space cannot exceed 25 percent of the home’s total gross living area.
Yes, through a HECM for Purchase, but construction must be finished. The home is inspected for FHA’s property standards, and the lender must certify it is 100 percent complete and meets HUD’s property requirements.
Find out what you qualify for
Tell us about your home, its condition and what you want the money to do, and we will walk through how it fits our program.
Get Pre-Qualified- U.S. Department of Housing and Urban Development, FHA and housing resources
- U.S. Department of Housing and Urban Development, FHA mortgage insurance premiums
Loan amounts, rates, terms, and eligibility are subject to credit approval, asset and income verification, appraisal, and program guidelines. Program availability varies by state. Not all applicants will qualify. Saxton Mortgage, LLC is an Equal Housing Lender.