How is the age requirement for a reverse mortgage defined?

The age requirement for a reverse mortgage is defined as being at least 62 years old. This stipulation is based on the guidelines set by the Federal Housing Administration (FHA) for Home Equity Conversion Mortgages (HECM), which is the most common type of reverse mortgage.

The rationale behind setting the minimum age at 62 is tied to the demographic that typically benefits from this financial product; it is aimed at older homeowners who want to access home equity without having to make monthly mortgage payments. By setting the age at 62, the program ensures that borrowers are primarily retirees, who are often looking for ways to supplement their income or reduce financial burdens in later life.

This age requirement helps to align the risk associated with the longevity of the borrower with the financial structure of the mortgage, as the lender must consider life expectancy when underwriting reverse mortgages.