State and Local Reverse Mortgage Programs

Depending on how much you need and what you want to use the proceeds for, you may be eligible for one of several reverse mortgages offered by state and local government agencies. These programs, usually designed for low-income senior citizens, have the lowest fees involved of any type of reverse mortgage, and sometimes may have no loan fees at all. Interest rates are also usually low. However, the proceeds are often restricted; most of these types of programs are designed to be used for home repairs or for paying past due property taxes.

In that respect, they can be very useful to a senior who is living in a home that needs substantial repairs, or is in danger of losing his or her home due to past due property taxes. If you are in this situation, one of these municipal reverse mortgage programs may be the best option; check with your city and state government offices for more details.

These mortgage programs are usually publicly funded and managed, as opposed to an HECM, which is funded and managed by private banks and mortgage companies. Not everybody that qualifies for a HECM loan or Fannie Mae Home Keeper loan will qualify for one of the specialized programs, since there are usually income qualifications. HECM and Fannie Mae loans do not have any income guidelines.

For those who just want a monthly supplement to their income, or even some fun money to take that world cruise you’ve been promising yourself all those years, the state or local program is probably not for you. The HECM and Fannie Mae reverse mortgages, on the other hand, does not restrict you in how to use the proceeds.