Reverse Mortgages in California: What They Are and Who They Fit

A reverse mortgage lets California homeowners 62 or older turn home equity into cash with no monthly payments. It's not free money — it's a loan against your house that comes due when you sell, move out, or pass away.

I'm Bill McCoy, a California mortgage broker (CA DRE #01212512). I've seen reverse mortgages work well for some clients and blow up for others. Here's what you need to know.

How It Works

With a regular mortgage, you pay the lender every month and your balance goes down. A reverse mortgage flips that. The lender pays you, and your balance goes up as interest accrues.

You still own the home. Your name stays on the title. But you're responsible for property taxes, insurance, and maintenance. Fall behind on those and the loan gets called due.

The HECM: What 90% of Borrowers Use

Most California reverse mortgages are HECMs (Home Equity Conversion Mortgages), backed by FHA. The 2026 loan limits are $832,750 in standard counties and $1,249,125 in high-cost areas like LA, SF, and San Diego.

HECMs come with real protections. You can't owe more than the home's value when it sells (non-recourse). Your spouse has protections even if they're not on the loan. And you're required to complete HUD-approved counseling before closing — about 90 minutes, $125-$200.

If your home's worth over $1M, proprietary (jumbo) reverse mortgages go up to $4M+, but with higher fees and fewer consumer protections.

Requirements

• Age 62+ (younger spouse can be a non-borrowing spouse, but it reduces your loan amount)
• Primary residence — no investment properties
• Significant equity — if you still have a mortgage, the reverse pays it off first, reducing your available cash
• Financial assessment — lenders check that you can cover taxes, insurance, and HOA fees
• Property standards — home must meet FHA minimums

How Much You Can Borrow

Your age drives the math. At 62, expect roughly 40-50% of your home's value. At 72, 50-60%. At 82, 60-70%. Lower interest rates and higher home values help.

Example: A 70-year-old with a $700,000 LA County home and $150,000 remaining mortgage might qualify for ~$350,000. After paying off the existing mortgage and ~$20,000 in closing costs, that's about $180,000 in available cash.

Five Ways to Get Paid

1. Lump sum — all at once, fixed rate
2. Tenure payments — equal monthly payments for life
3. Term payments — monthly payments for a set period
4. Line of credit — draw as needed (unused balance grows over time)
5. Combination — mix monthly payments with a credit line

The line of credit is the most flexible. Unused funds grow at the loan's interest rate — a feature unique to HECMs.

Who Should Actually Consider This

Good fit: You're 70+, plan to stay in the home 10+ years, have 50%+ equity, need retirement income, can cover taxes and insurance, and aren't worried about leaving the house to your kids.

Bad fit: You're under 65, might move within 5 years, want to preserve inheritance, or can't afford property taxes and insurance on your own.

Real Example

Margaret, 75, owns an $850,000 home in Ventura County free and clear. Her Social Security covers $2,400/month but expenses run $3,800. She took a reverse mortgage — $50,000 lump sum plus $1,400/month for life. She stays in her home. The tradeoff: her heirs inherit less.

The Full Picture

Reverse mortgages are expensive and the interest compounds fast. Before you decide, understand the real costs — I break those down in Reverse Mortgage Costs: What You'll Actually Pay. And if you're not sure a reverse mortgage is right, check out Alternatives to a Reverse Mortgage in California.

Get a free consultation to review your options

Better Offers Inc | CA DRE #01212512
Serving California seniors since 2011