Short answer: a reverse mortgage has no monthly payments, but the balance grows each month as interest and fees are added, and it is repaid when you no longer live in the home (CFPB). A personal loan has a fixed monthly payment and a set end date, and your home does not secure it. The rules below are for the federally insured reverse mortgage, the Home Equity Conversion Mortgage (HECM). This is general information, not legal or tax advice.
How a HECM works
- The youngest borrower must be 62 or older at closing (24 CFR 206.33), and the home must be each borrower's principal residence (24 CFR 206.39).
- Before the loan, the borrower, any non-borrowing spouse and any non-borrowing owner must receive counseling, and the lender must give you a list of HUD-approved HECM counselors (24 CFR 206.41). You can also search for a housing counselor through the CFPB (CFPB).
- The title stays in your name. You make no monthly mortgage payments; interest and fees are added to the balance each month, so what you owe goes up and your equity goes down (CFPB).
- You still pay property taxes and homeowners insurance, and flood insurance where it applies, and you must keep the home in good repair (24 CFR 206.205; 24 CFR 206.27).
When the loan comes due
The full balance comes due when a borrower dies and the home is not the principal residence of another surviving borrower, subject to a deferral for an eligible non-borrowing spouse, or when the last borrower gives up title. With HUD's approval it can also come due if the home stops being a borrower's principal residence, if a borrower is away for more than 12 months in a row because of illness and no other borrower lives there, if property charges are not paid, or if another obligation under the mortgage is not met (24 CFR 206.27(c)).
You or your heirs then have 30 days from the lender's notice to pay the balance, sell the home for at least the amount HUD sets (which cannot exceed 95% of the appraised value), give a deed in lieu of foreclosure, or fix the problem that made the loan due, if the cause was not the death of the last borrower (24 CFR 206.125). You have no personal liability for the balance: the lender can collect only through the sale of the home and cannot get a deficiency judgment (24 CFR 206.27(b)(8)).
What a reverse mortgage costs
The CFPB says a reverse mortgage is typically more expensive than other home loans (CFPB). The costs it lists for a HECM:
| When | Costs |
|---|---|
| Upfront | Origination fee ($6,000 or less, paid to the lender), closing costs paid to third parties (such as appraisal, title search, recording fees and credit checks), and an initial mortgage insurance premium paid to the FHA |
| Ongoing, added to the balance | Interest, servicing fees, and an annual mortgage insurance premium equal to 0.5% of the outstanding balance |
| Ongoing, paid by you | Property taxes and homeowners insurance, and flood insurance if it applies |
| Counseling | A reasonable fee may be charged, but not if you cannot afford it |
Source for the table: CFPB. Upfront costs can be paid from the loan, which leaves less for you to use. The larger the balance and the longer you keep the loan, the more you pay in ongoing costs, so the CFPB suggests borrowing only as much as you need (CFPB).
The personal loan side
Example only, our calculation: $10,000 borrowed and repaid in 24 equal monthly payments, no fees, at the August 2026 average of 11.90% for a 24-month personal loan (Federal Reserve G.19). Your own rate depends on your credit and the lender.
| Monthly payment | Interest | Total repaid | |
|---|---|---|---|
| Personal loan, 11.90% APR, 24 months | $470.27 | $1,286.48 | $11,286.48 |
Loan payment: P x r / (1 - (1 + r)-n), r = APR / 12, rounded to the cent. Unlike a reverse mortgage, the payment has to fit your monthly budget from the start; see how to budget for a loan payment. If you can make monthly payments and want to borrow against your home, compare a home equity line of credit in HELOC vs personal loan.
Scams and pressure to watch for
- The CFPB warns about contractors who approach you about a reverse mortgage to pay for repairs, and says not to let yourself be pressured into one (CFPB).
- The VA does not offer reverse mortgages. The CFPB warns of ads that falsely promise veterans special deals, imply VA approval or offer a no-payment reverse mortgage (CFPB).
- HECM counseling must cover whether you signed a contract with an estate planning service firm that charges a fee at or after closing, and whether those services may be available at little or no cost elsewhere (24 CFR 206.41(b)).
- With most reverse mortgages you can cancel within three business days after closing, for any reason, by writing to the lender. The CFPB suggests certified mail with a return receipt (CFPB).
Related: HELOC vs personal loan, a personal loan on Social Security income and paying for home care for a parent.
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Disclosure: Modern Lending Solutions is not a lender, loan broker or agent for any lender or loan broker, and does not make credit decisions. Any compensation we receive is paid by participating lenders, only for advertising services. This guide is general information, not financial or legal advice.
Sources
- CFPB: What is a reverse mortgage? (reviewed August 28, 2026)
- CFPB: How much does a reverse mortgage loan cost? (reviewed May 28, 2024)
- 24 CFR 206.33: HECM age of borrower
- 24 CFR 206.39: HECM principal residence
- 24 CFR 206.41: HECM counseling
- 24 CFR 206.27: HECM mortgage provisions (when the loan comes due, no personal liability)
- 24 CFR 206.125: HECM acquisition and sale of the property
- 24 CFR 206.205: HECM property charges
- CFPB: Find a housing counselor
- Federal Reserve: G.19 Consumer Credit (released October 7, 2026), terms of credit, August 2026: credit card plans and 24-month personal loans