Reverse Mortgage in Tempe, AZ | HECM Options & Guidance

Q: What happens if the reverse mortgage balance becomes greater than the home's value?

FHA-insured HECMs are non-recourse loans. FHA rules limit repayment responsibility according to the value of the property and applicable HECM requirements.

Q: What happens to my home when I die?

The lender does not automatically become the owner. The property remains part of the estate subject to the HECM lien, and heirs may have options to repay the loan, refinance, sell the property or use other options available under HECM servicing rules.

Q: Can my children keep the house after a reverse mortgage?

Potentially. Under applicable FHA HECM rules, qualifying heirs wishing to retain the property after the loan becomes due following the borrower's death may generally satisfy the debt for the lesser of the outstanding balance or 95% of the property's current appraised value.

A Guide To Reverse Mortgages

The Lowdown on Reverse Mortgage Loans...

Reverse Mortgage in Tempe, AZ: The Quick Answer

A reverse mortgage allows an eligible homeowner to access a portion of the equity in a primary residence without making required monthly principal and interest payments on the reverse mortgage. The most common type is the Home Equity Conversion Mortgage, or HECM, which is insured by the Federal Housing Administration (FHA).

For an FHA HECM, at least one borrower must generally be age 62 or older. The home must be a primary residence, the borrower must meet FHA financial and property requirements, and required HECM counseling must be completed.

The homeowner continues to own the home. However, the homeowner must continue to meet the obligations of the loan, including paying property taxes, maintaining required homeowners insurance, maintaining the property, and paying applicable HOA or other property charges.

For Tempe homeowners who have built substantial equity, a reverse mortgage may provide another way to manage housing expenses, retirement cash flow, an existing mortgage balance, home improvements or other financial needs.

Reverse Mortgage Guide

What Is a Reverse Mortgage?

A reverse mortgage is a loan secured by your home that allows eligible homeowners to convert a portion of their home equity into available funds.

Unlike a traditional mortgage, where the homeowner normally sends a monthly principal and interest payment to the lender, a reverse mortgage allows the loan balance to remain outstanding while the borrower continues living in the home and meeting the requirements of the loan.

The most common reverse mortgage is the FHA-insured Home Equity Conversion Mortgage (HECM).

A HECM can potentially be used to:

Pay off an existing mortgage
Reduce required monthly housing debt payments
Establish a line of credit for future needs
Receive monthly advances
Access funds for home repairs or improvements
Supplement retirement cash flow
Pay medical or other major expenses
Purchase another primary residence using a HECM for Purchase

A reverse mortgage does not mean selling your home to the lender. You retain title to the property.

How Does a Reverse Mortgage Work?

A reverse mortgage uses a portion of your existing home equity to establish a loan. The amount available to you is called the principal limit.

The amount you may be able to access is influenced by several factors, including:

The age of the youngest borrower or eligible non-borrowing spouse
The home’s appraised value
Current HECM interest rates
The FHA HECM maximum claim amount
Your existing mortgage and other liens
Loan costs and required set-asides, if applicable

If you currently have a mortgage on the property, that mortgage is generally paid off as part of the reverse mortgage transaction. Any remaining proceeds may then be available according to the payout option you select and applicable HECM disbursement rules.

Important: A Reverse Mortgage Does Not Eliminate Every Housing Expense

Although HECMs generally do not require monthly principal and interest payments, homeowners must continue paying property taxes, homeowners insurance, applicable HOA charges and other required property expenses. The property must also be maintained according to FHA requirements.

Who Qualifies for a Reverse Mortgage in Tempe, Arizona?

HECM qualification is different from qualification for a traditional mortgage. FHA considers the borrower, the property and the homeowner’s ability to continue meeting required property obligations.

1. Age Requirement

At least one HECM borrower must generally be 62 years of age or older.

If a spouse will not be a borrower, special FHA rules concerning an eligible or ineligible non-borrowing spouse may apply. This is an important issue to review carefully before closing.

2. The Home Must Be Your Primary Residence

A HECM is intended for a borrower’s principal residence. It is not generally used to borrow against a vacation home or traditional investment property.

3. You Need Sufficient Home Equity

There is no single equity percentage that qualifies every homeowner. The amount required depends on age, property value, interest rates, existing mortgage debt and other factors.

Homeowners with substantial equity - and homeowners who own their homes free and clear - may have more options because less of the available HECM proceeds must be used to pay off existing liens.

4. Financial Assessment

HECM lenders perform a financial assessment. This can include reviewing income, assets, credit history and the borrower’s history of paying property-related expenses.

The purpose is not simply to determine whether you can make a traditional mortgage payment. It is also intended to determine whether you are likely to be able to continue paying expenses such as property taxes and homeowners insurance.

Depending on the financial assessment, a portion of the available reverse mortgage proceeds may need to be reserved to pay certain future property charges. This is commonly called a Life Expectancy Set-Aside, or LESA.

5. Eligible Property

Eligible HECM properties may include:

Single-family residences
Certain two-to-four-unit properties when the borrower occupies one unit
FHA-eligible condominium units
Certain manufactured homes meeting FHA requirements

The property must also meet applicable FHA property standards.

6. HUD-Approved HECM Counseling

HECM borrowers must complete counseling with an approved HECM counselor. The counselor is independent from the lender and discusses the HECM program, costs, alternatives, financial implications and borrower responsibilities.

You can learn more about counseling through the U.S. Department of Housing and Urban Development housing counseling program.

Want to Know Whether You May Qualify?

Start with Galaxy Lending Group’s free Reverse Mortgage Qualifier. We’ll review your age, approximate home value, current mortgage balance and goals to help determine what options may be available.

Check My Reverse Mortgage Options

Prefer to talk with someone? Call/Text Galaxy Lending Group at 602-539-2488.

How Much Money Can You Get From a Reverse Mortgage?

A reverse mortgage does not allow a homeowner to borrow 100% of the home’s value. FHA uses a formula to determine the initial principal limit.

Generally, the amount available depends heavily on three factors:

Age: The age of the youngest borrower or eligible non-borrowing spouse is an important factor.
Home value: Your home’s appraised value is used in determining the maximum claim amount.
Interest rates: Current HECM rates affect the principal limit calculation.

Your existing mortgage balance also matters because existing liens generally must be satisfied as part of the HECM transaction.

Simple Example

Suppose a Tempe homeowner has a home worth $600,000 and owes $75,000 on the existing mortgage.

The reverse mortgage calculation first determines the homeowner’s available principal limit based on age, interest rates and property value. The existing $75,000 mortgage would normally need to be paid from available proceeds or other permitted funds before the homeowner could access the remaining proceeds.

This is why two homeowners with identical home values can receive very different HECM results.

The most accurate way to determine what may be available is to run a personalized calculation rather than relying on a generic percentage of your home’s value.

What Is the 2026 FHA Reverse Mortgage Limit?

For FHA case numbers assigned during calendar year 2026, the nationwide HECM maximum claim amount is $1,249,125.

This does not mean a homeowner can automatically borrow $1,249,125.

The maximum claim amount is one component of FHA’s HECM calculation. Your actual available proceeds can be substantially less and depend on the borrower’s age, current interest rates, appraised value and other factors.

Because FHA changes the HECM maximum claim amount periodically, homeowners should use the current limit when evaluating a reverse mortgage.

Can You Get a Reverse Mortgage If You Still Have a Mortgage?

Yes. You do not necessarily need to own your home free and clear to obtain a reverse mortgage.

However, existing liens generally must be paid off when the HECM closes.

For many homeowners, this is one of the primary reasons they consider a reverse mortgage.

For example, a retired Tempe homeowner might still have a $1,500 monthly mortgage payment. If sufficient HECM proceeds are available to pay off that mortgage, the homeowner may be able to eliminate the required monthly principal and interest payment associated with the old mortgage.

The homeowner would still remain responsible for property taxes, insurance, maintenance and other required property expenses.

If your primary goal is simply replacing your current mortgage with another traditional loan, you may also want to compare a reverse mortgage with a conventional home refinance.

How Can You Receive Reverse Mortgage Funds?

One of the distinctive features of an adjustable-rate HECM is the ability to choose among several payout structures.

Option	How It Works	Potential Use
Line of Credit	Access available funds when needed, subject to HECM terms and available principal.	Future expenses, emergency reserves or planned purchases.
Tenure	Provides equal monthly advances for as long as the borrower occupies the property as a principal residence and meets loan requirements.	Supplementing monthly retirement cash flow.
Term	Provides equal monthly advances for a specific period selected by the borrower.	Creating additional cash flow for a defined number of years.
Modified Tenure	Combines monthly tenure advances with a line of credit.	Monthly cash flow plus funds available for future needs.
Modified Term	Combines term advances with a line of credit.	Temporary monthly cash flow while maintaining a reserve.
Lump Sum	A single initial disbursement. Fixed-rate HECMs generally use a single-disbursement structure.	Paying an existing mortgage or another significant obligation.

HECM Line of Credit Growth

An unused HECM line of credit can increase the amount of borrowing capacity available over time according to the program’s credit-line growth provisions.

This should not be described as earning interest. The homeowner is not earning investment income. Instead, the amount the homeowner may be able to borrow increases according to the HECM formula.

Your Galaxy Lending Group mortgage professional can illustrate how different payout strategies affect the amount available initially and in future years.

What Does a Reverse Mortgage Cost?

Reverse mortgages have closing costs just like traditional mortgages, and understanding those costs is an important part of determining whether a HECM makes sense.

Potential HECM costs can include:

FHA upfront mortgage insurance premium
Ongoing FHA mortgage insurance premium
Loan origination fee
Home appraisal
Title and settlement charges
Recording and other third-party fees
Interest on the outstanding loan balance
Potential repair or property-charge set-asides

FHA Mortgage Insurance

The FHA HECM program currently uses an initial mortgage insurance premium equal to 2% of the maximum claim amount and an annual mortgage insurance premium of 0.5% of the outstanding loan balance.

HECM Origination Fee

HUD’s HECM rules generally permit an origination fee based on the maximum claim amount, subject to a maximum of $6,000. A lender may charge less.

Many HECM closing costs can be financed as part of the loan rather than paid entirely out of pocket. Financing costs, however, reduces the amount of equity remaining in the home and the net proceeds available to the borrower.

Compare More Than the Interest Rate

When evaluating reverse mortgage quotes, compare the interest rate, lender credits, origination charges, mortgage insurance, available proceeds, payout structure and long-term projected loan balance. The lowest advertised rate does not necessarily produce the best overall result for every borrower.

Do You Make Monthly Payments on a Reverse Mortgage?

HECM borrowers are generally not required to make monthly principal and interest payments on the reverse mortgage.

That is different from saying the house becomes free to own.

The homeowner remains responsible for expenses including:

Property taxes
Homeowners insurance
Flood insurance when required
HOA dues, when applicable
Home maintenance
Other applicable property charges

Failing to meet these obligations can create a default under the HECM.

Borrowers may generally choose to make voluntary payments toward the reverse mortgage balance if they wish. There is no requirement that a borrower wait until the home is sold to reduce the balance.

Why Does a Reverse Mortgage Balance Increase?

With a traditional mortgage, monthly principal payments generally reduce the loan balance over time.

A reverse mortgage works differently.

If the homeowner does not voluntarily make payments, interest and applicable mortgage insurance charges are added to the outstanding balance. Additional advances taken by the homeowner also increase the balance.

As a result:

The reverse mortgage balance can increase over time
The homeowner’s remaining equity can decrease
Future increases in the home’s value may offset some or all of the decline in equity
The eventual amount available to heirs depends partly on the future home value and reverse mortgage balance

This tradeoff is one of the most important factors to consider before obtaining a reverse mortgage.

When Does a Reverse Mortgage Become Due?

A HECM generally becomes due and payable following certain events, including when:

The last surviving borrower dies and no applicable eligible non-borrowing spouse protection applies
The home is sold
The property is no longer the borrower’s principal residence
Applicable occupancy requirements are no longer met
Required property taxes or insurance are not maintained
The borrower fails to meet other obligations under the mortgage

Specific servicing rules and protections can depend on the circumstances, particularly when an eligible non-borrowing spouse is involved.

What Happens to a Reverse Mortgage When the Homeowner Dies?

A common misconception is that the lender automatically takes ownership of the home when a HECM borrower dies.

That is not how the program works.

The home remains part of the homeowner’s estate, subject to the reverse mortgage lien.

Depending on the circumstances, heirs may generally have options such as:

Paying off the reverse mortgage and keeping the home
Refinancing the balance into another mortgage
Selling the property and using the sale proceeds to satisfy the loan
Allowing the property to be transferred according to applicable HECM servicing procedures

The HECM Non-Recourse Protection

HECM loans contain an important non-recourse feature.

Generally, neither the borrower nor the borrower’s estate is required to repay more than permitted under FHA’s HECM non-recourse rules based on the property’s value.

If qualifying heirs want to keep the property after the HECM becomes due following the borrower’s death, FHA rules may allow the debt to be satisfied for the lesser of:

The outstanding HECM balance, or
95% of the home’s current appraised value

Because deadlines apply after a borrower dies, heirs should contact the HECM servicer promptly to understand their available options.

Are Reverse Mortgage Proceeds Taxable?

According to the IRS, reverse mortgage proceeds are generally considered loan proceeds rather than taxable income.

That means receiving money from a reverse mortgage does not normally create federal taxable income simply because the funds were received.

However, tax situations vary, and homeowners should consult a qualified tax professional regarding their individual circumstances.

Will a Reverse Mortgage Affect Social Security or Medicare?

HUD states that HECM proceeds generally do not affect basic Social Security or Medicare benefits because those programs are not based on income and assets.

Needs-based programs can be different.

For programs such as Supplemental Security Income or Medicaid, HECM funds retained in an account may potentially be counted as available resources. Homeowners receiving needs-based benefits should discuss the potential impact with their benefits adviser and HECM counselor before deciding how and when to receive proceeds.

Reverse Mortgage Benefits and Important Considerations

A reverse mortgage can be a valuable financial tool in the right circumstances, but it is not automatically appropriate for every homeowner age 62 or older.

Potential Benefit	Important Consideration
No required monthly principal and interest payment while HECM obligations are satisfied.	Taxes, insurance, maintenance and other property expenses still must be paid.
Can pay off an existing mortgage.	Using proceeds to pay the mortgage reduces the amount remaining for other purposes.
Multiple payout options may be available.	Different payout choices can materially affect long-term borrowing capacity and loan balance.
Homeowner retains ownership of the property.	The reverse mortgage remains a lien against the home.
HECM proceeds are generally not taxable income.	Holding proceeds may affect certain needs-based government benefits.
Non-recourse protection limits repayment exposure under FHA rules.	The increasing loan balance can reduce the equity eventually available to heirs.
A HECM line of credit may provide access to funds in the future.	Interest and mortgage insurance accrue on amounts actually borrowed.

When Might a Reverse Mortgage Make Sense?

A reverse mortgage may be worth evaluating when a homeowner plans to remain in the home and has significant equity but wants greater flexibility with retirement cash flow.

Examples may include a homeowner who wants to:

Eliminate an existing required mortgage payment
Establish a reserve for future expenses
Improve monthly cash flow during retirement
Delay drawing from other assets
Make home repairs or accessibility improvements
Handle a large one-time expense
Create a monthly income supplement

It may be less attractive when the homeowner expects to move soon, wants to preserve as much home equity as possible for heirs, cannot reliably maintain required property expenses or has a less expensive alternative available.

The decision should be based on the homeowner’s complete financial situation rather than the availability of equity alone.

Reverse Mortgage vs. Selling Your Home

A reverse mortgage is often considered by homeowners who want to remain in their current home. Selling and downsizing can be another option.

For some Tempe homeowners, selling may release more equity because there is no continuing mortgage balance against the old home. However, selling introduces other considerations such as moving expenses, purchasing or renting another residence, transaction costs and leaving a familiar neighborhood.

A HECM allows an eligible borrower to remain in the home while accessing part of the equity.

Neither approach is automatically better. The right choice depends on your housing plans, available equity, monthly expenses, family goals and retirement strategy.

Can You Buy a Home With a Reverse Mortgage?

Yes. FHA’s HECM for Purchase program allows eligible borrowers to purchase a new principal residence using a reverse mortgage.

The borrower contributes a portion of the purchase price from permitted funds and the HECM finances the remaining eligible amount.

This can be useful for homeowners who want to sell their current house and move to another home while avoiding a traditional required monthly principal and interest mortgage payment on the new property.

If you are considering moving within Tempe, elsewhere in the Phoenix metro area or to another eligible property, ask us to compare a traditional home purchase mortgage with a HECM for Purchase.

The Reverse Mortgage Process in Tempe, AZ

At Galaxy Lending Group, we help homeowners understand each step before moving forward.

Initial consultation: Tell us about your age, home value, mortgage balance and goals.
Reverse mortgage analysis: We estimate potential HECM proceeds and compare available structures.
HECM counseling: Complete the required session with an independent HUD-approved HECM counselor.
Application: Complete the formal reverse mortgage application and required disclosures.
Financial assessment: Income, assets, credit history and property obligations are reviewed.
Appraisal: An FHA appraisal determines the property’s eligible appraised value and identifies applicable property requirements.
Underwriting: The complete loan package is reviewed for FHA HECM eligibility.
Closing: Final documents are signed and applicable existing liens are satisfied.
Disbursement: Funds become available according to the HECM payout structure and applicable disbursement requirements.

Our goal is to make sure you understand what the reverse mortgage does, what it costs, how the loan balance may change and what obligations continue after closing.

See Whether a Reverse Mortgage Could Work for You

If you’re 62 or older and own a home in Tempe, Phoenix, Chandler, Mesa, Gilbert, Scottsdale or elsewhere in Arizona, we can help you evaluate your options.

There is no reason to guess how much equity you may be able to access.

Start My FREE Reverse Mortgage Analysis

Call/Text 602-539-2488

About Galaxy Lending Group

Galaxy Lending Group LLC is a Tempe-based mortgage brokerage helping homeowners understand their residential financing options.

Our office is located at 6515 S Rural Rd, Suite 104, Tempe, AZ 85283. Rather than assuming a particular mortgage product is right for you, our goal is to explain the available choices, compare the numbers and help you understand how each option may affect your finances.

Authoritative Reverse Mortgage Resources

Important: This information is provided for general educational purposes and is not tax, legal or financial-planning advice. Reverse mortgage eligibility, proceeds, rates, fees and program requirements depend on individual circumstances and current FHA guidelines. Mortgage programs and government requirements may change. Consult the appropriate licensed or qualified professional regarding your individual situation.

Frequently Asked Questions

What age do you have to be for a reverse mortgage?

For an FHA-insured HECM, borrowers generally must be age 62 or older. Special rules can apply when one spouse is younger than 62 and is treated as a non-borrowing spouse.

Do I give ownership of my home to the bank?

No. You retain title to your home. The reverse mortgage creates a lien against the property in much the same way that another mortgage creates a lien.

Can I get a reverse mortgage if I still owe money on my house?

Yes, provided sufficient proceeds or other permitted funds are available to satisfy the existing mortgage and other required obligations at closing.

Do I have to make monthly mortgage payments?

HECM borrowers generally do not have required monthly principal and interest payments. However, homeowners remain responsible for property taxes, homeowners insurance, maintenance and other applicable property charges.

How much equity do I need for a reverse mortgage?

There is no single equity percentage that applies to everyone. The amount needed depends on age, interest rates, property value, existing mortgage debt and the amount of HECM proceeds available.

Does my credit score matter?

A HECM does not qualify borrowers exactly like a traditional mortgage, but FHA requires a financial assessment that includes a review of credit history, income, assets and the borrower’s history of meeting financial obligations.

Can I use reverse mortgage money for anything I want?

After required liens, closing costs and any required set-asides are addressed, available HECM proceeds generally can be used for a wide variety of purposes. Borrowers should consider how different uses affect their remaining equity and long-term finances.

Are reverse mortgage proceeds taxable?

The IRS generally considers reverse mortgage advances to be loan proceeds rather than taxable income. Individual circumstances can vary, so consult a qualified tax professional for personal tax advice.

What happens if the reverse mortgage balance becomes greater than the home's value?

FHA-insured HECMs are non-recourse loans. FHA rules limit the repayment responsibility of borrowers and estates based on the value of the property and applicable HECM requirements.

What happens to my home when I die?

The lender does not automatically become the owner of the property. The home remains part of the estate subject to the HECM lien, and heirs may have options to repay the loan, refinance, sell the property or use other options available under HECM servicing rules.

Can my children keep the house?

Potentially, yes. Under applicable FHA HECM rules, heirs wishing to retain the property after the loan becomes due following the borrower’s death may generally satisfy the debt for the lesser of the outstanding balance or 95% of the property’s current appraised value.

Do I have to complete reverse mortgage counseling?

HUD-approved HECM counseling is generally required. The independent counseling session helps borrowers understand the costs, alternatives, obligations and financial implications of the loan.

Can I sell my home after getting a reverse mortgage?

Yes. You continue to own the property and may sell it. The reverse mortgage balance and other liens are generally paid from the sale proceeds, with remaining equity belonging to you.

Can I pay off a reverse mortgage early?

Yes. A HECM can generally be repaid voluntarily without waiting until the home is sold or another maturity event occurs.

Can I refinance a reverse mortgage?

Potentially. Some homeowners refinance an existing HECM when property values, interest rates, available proceeds or borrower circumstances change. FHA requirements apply and refinancing must provide an appropriate benefit to the borrower.

What is the FHA reverse mortgage limit for 2026?

<p>The nationwide HECM maximum claim amount for FHA case numbers assigned in 2026 is $1,249,125. This is not the amount every borrower can receive; actual proceeds depend on age, interest rates, property value and other factors.</p>
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Does Galaxy Lending Group offer reverse mortgages in Tempe?

Galaxy Lending Group is located in Tempe, Arizona and helps eligible Arizona homeowners evaluate reverse mortgage and HECM options. Start with our free Reverse Mortgage Qualifier or call 602-595-1233 to discuss your situation.

Why a Reverse mortgage?

A reverse mortgage pays off your existing mortgage, should you have one, by allowing you access to the home equity you've worked so hard to build. Any money left after paying off your existing mortgage is available to use as you see fit.

Reverse Mortgage Qualifier

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