HECM

HECM stands for Home Equity Conversion Mortgage. It is the federally insured reverse mortgage program administered under the U.S. Department of Housing and Urban Development (HUD) and insured by the Federal Housing Administration (FHA).

A HECM lets an eligible homeowner age 62 or older convert part of their home equity into loan proceeds while continuing to live in the home as their principal residence. Borrowers may receive proceeds as a lump sum, monthly advances, a line of credit, or a combination, depending on program rules and the chosen product.

Like any mortgage, a HECM is a loan secured by the home. It generally becomes due when the last surviving borrower no longer lives in the home, sells the home, passes away, or does not meet ongoing loan obligations such as paying property taxes, homeowners insurance, HOA dues when applicable, and maintaining the property.

Because HECMs are FHA-insured, they include borrower protections such as required HUD-approved counseling, non-recourse limits on repayment, and standardized cost disclosures.