Types of Reverse Mortgages

Home Equity Conversion Mortgage (HECM)
HECM's are insured by the Department of Housing and Urban Development (HUD). They represent about 95% of the reverse mortgage market. HECM's can be used for any purpose and have either monthly adjustable or annually adjustable interest rates. Some lenders offer fixed rate HECM's that typically are only used by borrowers wishing to draw down 100% of the available proceeds at closing.

Propriety Reverse Mortgage
These reverse mortgages are not insured by HUD and also can be used for any purpose. They are typically designed for borrowers with high value homes.

Single Purpose Reverse Mortgage
These reverse mortgages are usually available through state and local government agencies to be used for only specific purposes such as for home repairs or property tax deferral. The state housing finance agency in the borrower's area can provide more information on these programs.