Reverse Mortgages in Massachusetts: What a HECM Is, What It Costs, and Who It Suits

Many older Massachusetts homeowners have most of their wealth in their house and a fixed income that has not kept pace with the tax bill. A reverse mortgage turns some of that equity into money without selling or making a monthly loan payment. It is a legitimate product with real uses and real costs, and it is sold with enough enthusiasm that the costs deserve to be stated plainly.

Nearly all reverse mortgages are the federally insured Home Equity Conversion Mortgage, or HECM. In brief: a homeowner aged 62 or older borrows against the house; no monthly mortgage payment is required; the balance grows with interest and insurance; and the loan is repaid when the last borrower dies, sells or moves out, normally from the sale of the house. The borrower must keep paying property tax and insurance and must maintain the house. Massachusetts adds a counselling requirement and a seven-day period to reconsider after accepting the lender's commitment.

How a HECM works

Eligibility: at least one borrower 62 or older, living in the house as their principal residence, with substantial equity. An existing mortgage is paid off from the proceeds.
The amount depends on the youngest borrower's age, interest rates and the home's value up to the national FHA limit. Older borrowers can draw a larger share.
How the money is taken: a lump sum, a line of credit, monthly payments for a term or for life, or a combination. An unused line of credit grows over time, which is one of the product's genuine advantages.
Title stays with the owner. The lender does not take the house.
The loan is non-recourse. Neither the borrower nor the heirs owe more than the house is worth when the loan is repaid.

What the borrower must keep doing

This is where reverse mortgages go wrong. The loan can be called if the borrower:

Stops paying property taxes or homeowner's insurance.
Lets the house fall into disrepair.
Stops living there, including an absence of more than twelve months in a care facility.

Lenders assess whether a borrower can keep paying taxes and insurance, and may require part of the proceeds to be set aside to pay them. A borrower struggling with the tax bill should look first at the town's relief programmes, which property tax relief for older homeowners covers.

The costs, stated plainly

HECMs are expensive to take out. As of 2026 the costs include:

An origination fee, capped by HUD.
An upfront mortgage insurance premium of 2% of the home's value up to the FHA limit, and an annual premium of 0.5% of the balance, which accrues with the interest.
Ordinary closing costs: appraisal, title insurance, attorney's fees, recording.
Interest, compounding on everything drawn.

Because nothing is paid monthly, the balance rises steadily and the equity left falls. Over a decade or more that compounding is large, which is why a reverse mortgage suits someone who intends to stay put and is poor value for someone likely to move within a few years.

The Massachusetts rules on top of the federal ones

Under M.G.L. c. 167E, reverse mortgage lending in Massachusetts carries state requirements beyond HUD's:

Counselling. A borrower must receive counselling from an approved counsellor independent of the lender before the loan. Since a 2024 change it may be done by live video or telephone.
Seven days to reconsider. A borrower is not bound for seven days after accepting the lender's written commitment in writing.
Approved lenders and programmes, overseen by the Division of Banks, which publishes guidance on the state's reverse mortgage rules.

Use the counselling session properly. Bring the questions in this article, and a family member if you want one.

What happens to the house afterwards

When the last borrower dies or permanently moves out, the loan becomes due. The heirs have three choices:

1.Keep the house by paying off the loan. Under HUD's rules heirs can do so for the lesser of the balance or 95% of the home's appraised value.
2.Sell the house and keep anything left after the loan is paid.
3.Hand the house to the lender if it is worth less than the balance. Because the loan is non-recourse, the heirs owe nothing more.

There are deadlines for notifying the servicer and completing a sale, with extensions available. A spouse who is not a borrower on the loan, for example one younger than 62 at closing, can have protections allowing them to stay, but only if specific conditions are met when the loan is made. Couples should settle this at the outset. Passing on a Massachusetts home covers the wider estate picture.

Who a reverse mortgage suits, and who it does not

It can suit someone who:

Intends to stay in the house for many years.
Has substantial equity and limited income.
Can keep up taxes, insurance and maintenance.
Is content for less of the house's value to pass to heirs.

It usually does not suit someone who:

Expects to move, into assisted living or nearer family, within a few years.
Has heirs who want the house and cannot or will not buy it out.
Already struggles with the tax bill and upkeep.

Alternatives worth comparing: a home equity line, if income supports payments (home equity explained); a tax deferral from the town; and selling to move somewhere smaller, which downsizing covers.

Buying with a reverse mortgage

A less known version, the HECM for Purchase, lets a buyer 62 or older buy a new home with a large down payment and a reverse mortgage for the rest, with no monthly mortgage payment afterwards. It is mostly used by people moving to a smaller house or a 55+ community, and it carries the same costs and obligations as any HECM.

General information as of 2026, not financial or legal advice. HECM limits, premiums and rules are set by HUD and change; Massachusetts requirements are those of chapter 167E and the Division of Banks. Independent counselling is required and worth taking seriously.