Reverse Mortgages in Arizona

For a HECM, the FHA-insured reverse mortgage that nearly all Arizona borrowers use, the youngest borrower must be at least 62 years old, and there is no maximum age. If you are married, both spouses should be on the loan to protect a non-borrowing spouse’s right to remain. Some proprietary reverse mortgages, which private lenders insure themselves, may have different age requirements, but they lack FHA protections and HUD does not regulate them.

No. HUD sets no fixed minimum equity. The requirement is mechanical: any existing mortgage or lien must be paid off at closing with your reverse mortgage proceeds, so you need enough equity for the loan to cover the payoff and still leave funds for you. The more equity you have, the more you can access.

Eligible properties include single-family homes, 2-4 unit properties where you live in one unit, condominiums with FHA approval, and manufactured homes built on or after June 15, 1976 that meet HUD construction standards and sit on a permanent foundation as real property. The home must be your primary residence: vacation homes and investment properties do not qualify.

No minimum credit score applies to a HECM. Lenders instead run HUD’s financial assessment, which reviews whether you can keep paying property taxes, insurance, and upkeep. If your history looks shaky, the lender can require a Life Expectancy Set-Aside (LESA), a portion of the loan reserved to pay those property charges. The set-aside covers taxes and hazard or flood insurance only.

HUD-approved counseling is a mandatory session with an independent counselor who explains how reverse mortgages work, what they cost, and what the alternatives are. The counselor works for you, and federal law keeps lenders from requiring you to buy other financial products as a condition of the loan. Sessions run in person or by phone and typically cost around $125, sometimes more. You can finance the fee into the loan, and counselors cannot turn you away if you cannot afford it.

Call HUD’s toll-free number, 1-800-569-4287, or use HUD’s online counseling search to find approved agencies serving Arizona. You can also call the Arizona Foreclosure Help Line at (877) 448-1211 or dial 2-1-1 for 211 Arizona’s free referrals. And take HUD’s own scam warning seriously: never pay thousands of dollars for “free” information about reverse mortgages.

Most Arizona reverse mortgages close in about 30 to 45 days, a typical market estimate rather than a HUD standard. The counseling certificate comes first: HUD will not process the application or issue a case number without it, and the certificate stays valid for 180 days. After the appraisal and underwriting comes closing, and most reverse mortgages include a 3-business-day right to cancel before funds are released.

Three inputs drive the number: the age of the youngest borrower (older means more), the lesser of your home’s value or the 2026 HECM maximum claim amount of $1,249,125, and current interest rates (lower means more). HUD’s formula turns those into your principal limit. No fixed percentage of home value applies to everyone, so treat any rule-of-thumb range you see in an ad as marketing.

The loan becomes due and payable when the last borrower dies, the home is sold or transferred, or loan terms are violated. Moving works differently depending on why you leave. If you simply move and live somewhere else for most of the year, principal-residence status ends with no grace period. If illness moves you into a hospital, rehab, nursing home, or assisted living and no co-borrower lives in the home, the loan comes due after you have been away more than 12 consecutive months. You can also repay early at any time with no prepayment penalty.

You can stay in your home for life, even if the loan balance eventually outgrows the home’s value, as long as you meet your loan obligations: property charges, upkeep, and occupancy. If you chose tenure payments or a credit line, those continue even when the balance passes the home’s worth. HUD’s insurance fund makes up the difference, and that backstop is exactly what the mortgage insurance premiums pay for.

No. Proceeds are loan advances, not income, so they are generally not taxable, and they do not affect Social Security or Medicare. Watch the benefits edge: if you receive Medicaid or Supplemental Security Income, any proceeds you keep past the month you receive them count against the program asset limits ($2,000 for an individual, $3,000 for a couple). Talk to a benefits counselor before drawing large amounts.

Five, alone or in combination: a line of credit you draw as needed (the most popular choice), term payments for a set number of years, tenure payments designed to last as long as you live in the home, a lump sum at closing, or a combination. The lump sum is the only option paired with a fixed interest rate and usually costs the most, since interest accrues on the full balance from day one.

No. You keep full ownership and the title. The lender holds a lien, the same as with any mortgage, and you can sell, make improvements, or leave the home to your heirs. The loan is repaid from the home’s sale, not from your other assets.

The premiums buy specific protections. The FHA mortgage insurance premium funds the guarantee that neither you nor your heirs can owe more than the lesser of the loan balance or 95% of the home’s appraised value, and it keeps your authorized payments or credit line flowing even if your balance outgrows the home’s value or your lender runs into trouble. Origination and servicing fees compensate lenders for years of servicing a loan with no monthly payment coming in. The costs are real, and so are the protections they pay for.

Upfront you pay an origination fee capped at $6,000, upfront mortgage insurance equal to 2% of the maximum claim amount (not your full home value, which matters on higher-priced homes), ordinary closing costs such as appraisal and title, and the counseling fee, which typically runs around $125 and can be financed into the loan. Closing cost totals vary by lender and property, so compare loan estimates side by side rather than trusting a range.

After closing, interest accrues on your balance, annual FHA mortgage insurance runs 0.5% of the outstanding balance, and a servicing fee of $30 or $35 per month is set at closing and stays for the life of the loan (the higher figure applies to monthly-rate loans). You also keep paying property taxes, homeowner’s insurance, and upkeep yourself. When the loan advances money to cover them, those advances join the balance and shrink your equity.

Any unused portion of a HECM credit line grows over time at the same rate your loan accrues interest (the note rate plus the annual mortgage insurance). If you have $100,000 available and leave it alone, that $100,000 keeps climbing even if home values stagnate. HUD is careful about the language: the credit line grows, it does not earn interest the way a savings account does.

Yes, and you should. Rates, fees, and servicing terms vary by lender, so get loan estimates from at least three FHA-approved lenders. Every HECM estimate must include the Total Annual Loan Cost (TALC) disclosure, which projects the loan’s cost over time under different assumptions, and the reverse mortgage disclosures make clear that you are not obligated to complete the transaction merely because you signed an application.

Your heirs choose: pay off the loan and keep the home, sell it and keep any equity above the balance, or sign the title over with no personal liability. The servicer must notify heirs within 30 days of the loan becoming due, and the notice gives them 30 days to pick an option. HUD generally allows up to six months to complete, plus two 90-day extensions while the home is actively for sale. Doing nothing is the one path that ends in foreclosure.

This is the 95% rule, and it is the core protection of the program. Heirs can satisfy the loan by paying the lesser of the full balance or 95% of the home’s current appraised value at repayment; FHA insurance covers whatever remains. Nobody in the family pays more than that out of pocket, and if the home sells for less than the amount due, the insurance fund takes the loss.

Yes, if both spouses are on the loan. The surviving borrower keeps the home and the loan continues on the same terms. If your spouse is under 62 at closing, they can be listed as an Eligible Non-Borrowing Spouse and stay after your death, though no new funds are advanced during the deferral period. The stay continues as long as the home remains their primary residence and they keep paying property charges and upkeep; if those obligations lapse, the loan comes due.

We recommend it. The decision is yours, but a reverse mortgage changes what your family inherits, and adult children often have misconceptions about how these loans work. HUD counselors welcome family members in the counseling session, which is usually the fastest way to replace fear with facts.

Not necessarily. Heirs inherit whatever equity remains after the loan is settled, and if the home appreciates faster than the balance grows, there can still be meaningful equity left. The honest framing: a reverse mortgage does reduce the inheritance compared with owning the home free and clear, because the balance grows every month. That trade-off is worth a family conversation before you sign.

Arizona’s reverse mortgage law is Title 6, Chapter 17 of the Arizona Revised Statutes (A.R.S. §§ 6-1701 through 6-1708), enacted in 2010 as House Bill 2242 (Laws 2010, Chapter 127). The chapter regulates non-FHA reverse mortgages and expressly excludes FHA-insured HECMs (§ 6-1701(5)(d)), so HECMs run on federal HUD and FHA rules everywhere, including Arizona. For the loans it covers, the chapter requires HUD-approved counseling before a final application or any fees, a written statement of total liability at least 10 days before closing, written cost disclosures, and a no-deficiency guarantee.

Arizona’s property taxes are among the lowest in the country, at an average effective rate of about 0.48% of home value, which helps borrowers who must keep paying them. Two state programs can stretch that further. The senior valuation protection program can freeze the limited property value of your home at 65 or older, subject to income limits, and the property tax deferral program lets qualifying homeowners 70 and older postpone taxes. Note that the deferral statute counts reverse mortgage liens toward its cap of 90% of the home’s full cash value (A.R.S. § 42-17304). Your county assessor administers both.

Start with 211 Arizona (dial 2-1-1), the Arizona Department of Housing at housing.az.gov, and the Area Agencies on Aging that serve every Arizona county. The Arizona Foreclosure Help Line at (877) 448-1211 helps homeowners already in trouble. HUD’s counseling search lists every approved agency serving Arizona, and HUD’s toll-free line, 1-800-569-4287, answers questions at no cost.

Yes, with conditions. The manufactured home must have been built on or after June 15, 1976, meet HUD construction standards, sit on a permanent foundation, be classified as real property rather than personal property, and meet FHA minimum property requirements. Many manufactured homes in Arizona’s senior communities meet all five.

HOA and condo dues are your ongoing responsibility, and a HECM cannot pay them automatically. The mandatory set-aside, when one applies, covers property taxes and hazard or flood insurance only. Falling behind on dues creates a lien, and unpaid property charges are one of the main reasons HECM borrowers end up in default and foreclosure. Budget for dues alongside taxes and insurance, especially in Arizona’s many 55+ communities.

If illness moves you into a nursing home, assisted living, or another care facility and no co-borrower lives in the home, the loan comes due after you have been away more than 12 consecutive months. The 12-month clock applies only to illness-related stays: deciding to live somewhere else for most of the year, such as moving in with family, ends principal-residence status without a grace period. A spouse who remains in the home keeps the loan going. If a care move looks likely soon, work through it with a counselor before applying.