If you're 62 or older and have accumulated substantial equity in your home, your house may represent one of your largest retirement assets.

But there's an important problem: home equity doesn't automatically help pay your monthly expenses.

You can own a $700,000 home and still feel financially squeezed every month by a mortgage payment, rising living expenses, medical costs, insurance, home repairs, or simply the desire to make retirement income last longer.

That's where a reverse mortgage may be worth understanding.

A reverse mortgage isn't appropriate for everyone, but for the right homeowner it can convert part of accumulated home equity into usable funds without requiring the traditional monthly principal-and-interest mortgage payments associated with a forward mortgage.

Here are seven things California homeowners should understand before deciding whether one belongs in their retirement strategy.

1. The FHA reverse mortgage is called a HECM

The federally insured reverse mortgage is the Home Equity Conversion Mortgage, usually called a HECM.

The program is insured by the Federal Housing Administration and is available through FHA-approved lenders.

HUD describes the HECM as a way for eligible senior homeowners to withdraw a portion of their home equity for uses such as home maintenance, repairs, or general living expenses.

HUD's official HECM information for homeowners

2. You generally must be at least 62

For an FHA-insured HECM, the minimum borrower age is 62.

HUD also confirms that the amount available through a HECM depends partly on the age of the youngest borrower or eligible non-borrowing spouse, current interest rates, and the applicable property-value calculation.

This is important because two homeowners with similarly valued houses may not qualify for identical amounts.

Age, equity, existing mortgage debt and current HECM pricing all matter.

3. The 2026 HECM maximum claim amount increased

This is one of the important updates for homeowners considering a reverse mortgage this year.

For calendar year 2026, HUD's HECM maximum claim amount is $1,249,125, up from $1,209,750 in 2025.

That figure is not the amount every homeowner can borrow.

Actual available proceeds depend on the borrower's circumstances, including age, interest rates, property value and existing liens.

But the higher 2026 maximum can be particularly relevant for homeowners in higher-value California markets.

4. You can use a HECM to pay off an existing mortgage

Here's one of the most misunderstood uses of a reverse mortgage.

You don't necessarily need to own your home free and clear.

If you have an existing mortgage, HECM proceeds can potentially be used to pay it off at closing, provided sufficient proceeds are available.

HUD states that existing mortgage liens generally must be satisfied as part of the HECM transaction.

Consider a retired homeowner who still owes $150,000 on a conventional mortgage.

If the homeowner has sufficient equity and qualifies for enough HECM proceeds, part of those proceeds could potentially eliminate that existing mortgage.

That could remove the homeowner's required monthly principal-and-interest payment on the old mortgage.

However, that does not mean homeownership becomes expense-free.

5. You still have important homeowner responsibilities

This point needs to be crystal clear.

With a HECM, borrowers must continue meeting the loan requirements, including maintaining the home as their principal residence and keeping required property charges current.

That includes obligations such as property taxes and homeowners insurance, along with maintaining the property according to program requirements.

Failing to meet HECM obligations can cause the loan to become due and payable.

That's why I don't describe a reverse mortgage simply as a loan with “no payments.”

A better description is:

There are generally no required monthly principal-and-interest mortgage payments while the borrower continues to meet the loan terms.

Interest and applicable charges accrue to the loan balance instead.

6. You remain the owner of your home

Another common misconception is:

“If I get a reverse mortgage, the bank owns my house.”

That's incorrect.

The homeowner retains title to the property.

HUD explains that a HECM borrower retains ownership and may sell the property and move, keeping remaining sales proceeds after satisfying the reverse mortgage and other applicable obligations.

A reverse mortgage is a loan secured by the property, not a sale of the house to the lender.

The balance typically becomes due when a triggering event occurs, such as the last eligible borrower permanently leaving the property or dying, subject to HECM rules and applicable protections.

7. Independent counseling is part of the HECM process

One consumer protection built into the HECM program is required counseling.

HUD requires prospective HECM borrowers to participate in counseling with a HUD-approved HECM counselor.

The counselor is independent from the mortgage lender and helps the homeowner understand the program, alternatives, costs and responsibilities.

I consider that a good thing.

A reverse mortgage is a major financial decision. You and your family should understand exactly how it works before moving forward.

A reverse mortgage should be evaluated as a retirement tool

The question isn't simply:

“Can I qualify for a reverse mortgage?”

A better question is:

“Would using part of my home equity improve my retirement?”

For one homeowner, the goal might be eliminating an existing mortgage payment.

For another, it might be establishing a line of credit.

Someone else may want additional monthly cash flow, funds for home improvements, or additional financial flexibility during retirement.

HECM proceeds can be structured differently depending on the selected program and individual circumstances.

There's even a HECM for Purchase, which can allow an eligible homeowner to use a reverse mortgage when purchasing a new principal residence while contributing the required funds toward the transaction. HUD specifically recognizes this use of the program.

Let's determine whether a reverse mortgage actually makes sense

If you're 62 or older and own a home in Murrieta, Temecula, Riverside County, or elsewhere in California, you don't need to commit to a reverse mortgage just to learn what it could do.

We can start by looking at your age, approximate property value, current mortgage balance, and retirement goals.

Then we can estimate the available options and determine whether a HECM deserves further consideration.

Sometimes the answer will be yes.

Sometimes keeping the existing mortgage or considering another strategy will make more sense.

The goal is to make an informed decision—not simply obtain another loan.

John F. Lawrence
Premiere Capital Mortgage
Murrieta, California
951-634-9284
PCMloans.net

This article is for educational purposes only and is not a commitment to lend or a guarantee of financing. Reverse mortgage proceeds, costs, interest rates, eligibility and program requirements vary by borrower and are subject to change. HECM borrowers remain responsible for meeting all loan obligations, including applicable property taxes, homeowners insurance, property maintenance and occupancy requirements. HECM counseling through a HUD-approved counselor is required.