Reverse Mortgages and Assisted Living: What Happens When a Borrower Moves

A reverse mortgage is a loan against a home that does not require monthly mortgage payments. The Consumer Financial Protection Bureau (CFPB) explains that interest and fees are added to the balance each month, so the amount owed goes up over time and the owner's equity goes down. The National Institute on Aging says the option is available only to people age 62 or older.

The U.S. Department of Housing and Urban Development (HUD) says the only reverse mortgage insured by the federal government is the Home Equity Conversion Mortgage, or HECM, and that it is available only through a lender approved by the Federal Housing Administration. The CFPB calls HECMs the most common type. The rules on this page are the HECM rules. A reverse mortgage that is not a HECM follows its own contract, so ask the lender.

The CFPB lists three ongoing duties for a HECM borrower: pay property taxes and homeowners insurance on time, keep the house in good condition, and use the home as a principal residence. Failing any of them can lead to foreclosure.

The CFPB defines a principal residence as the place where the borrower spends the majority of the year, and says a person can have only one at a time. A move to assisted living puts that requirement in question. The CFPB's page on borrower responsibilities, last reviewed in August 2024 and read in October 2026, gives these periods for a borrower with no co-borrower living in the home:

What happens depends on whose names are on the loan.

If the spouse at home is a co-borrower, the CFPB says that person can stay in the home and continue to receive loan disbursements, as long as the ongoing obligations of the loan are met. The move of one borrower does not make the loan due.

If the spouse at home is not a borrower, the answer is harder. The CFPB says a non-borrowing spouse may be able to stay without paying off the loan after the borrower has been in a health care facility for more than 12 consecutive months, depending on when the loan was made and whether the spouse qualifies as an Eligible Non-Borrowing Spouse under HUD's rules. For HECMs with FHA case numbers assigned on or after August 4, 2014, the CFPB lists these conditions:

• The spouse was married to the borrower when the loan documents were signed and has stayed married to the borrower.
• The spouse was identified in the loan documents as a non-borrowing spouse.
• The spouse lived in the home at loan closing and continues to live there as a principal residence.
• The loan requirements continue to be met, so the loan does not become due for another reason.

The CFPB says an Eligible Non-Borrowing Spouse will not get any money from the reverse mortgage. A couple that has relied on monthly loan payments or a line of credit should plan for that income to stop.

For older HECMs, with case numbers assigned before August 4, 2014, the CFPB says the lender or servicer can choose between a process that lets an eligible spouse stay in the home and foreclosure. The bureau also says qualifying can be difficult, and suggests the spouse contact an attorney or a HUD-approved housing counseling agency. Our guide for couples paying for assisted living covers the wider picture of two households on one income.

The CFPB recommends calling the loan servicer to confirm which names are on the loan and asking for the answer in writing. The servicer's phone number is on the loan statement.

When the borrower lives alone, the move starts a clock. These steps follow from the CFPB's description of the rules:

1. 1

   Find the loan statement and call the servicer

   Ask whether the loan is a HECM, who is listed as a borrower, and what the servicer needs to be told about the move.

2. 2

   Note the date of the move

   For a HECM, the health care period the CFPB describes is more than 12 consecutive months. Ask the servicer how it counts the time and what happens if your parent returns home.

3. 3

   Keep paying taxes and insurance and keep up the house

   Those duties continue while the house is empty, and the CFPB says a borrower who does not meet them could lose the home to foreclosure.

4. 4

   Plan how the loan will be repaid

   The CFPB says the most common way to pay back a reverse mortgage is by selling the home. See selling a house to pay for assisted living for the tax and benefit questions a sale raises.

5. 5

   Get independent advice

   A HUD-approved housing counselor or an elder law attorney can read the loan documents with you.

The same rules shape whether a new loan fits. A reverse mortgage depends on a borrower continuing to live in the home, so it works differently for a couple with one spouse staying home than for a single person who is the one moving. Compare it with the other options in how to pay for assisted living in California and with renting out the house.

Counseling comes first. The CFPB says borrowers taking out a HECM must receive counseling from a HUD-approved reverse mortgage counseling agency before receiving the loan. HUD says you can find a counselor through its HECM Counselor Roster or by calling (800) 569-4287. The CFPB also says most reverse mortgages come with a right to cancel within three business days after closing, by written notice to the lender.

How loan proceeds are counted for Medi-Cal or SSI is a question for the county Medi-Cal office or Social Security. This page does not recommend for or against a reverse mortgage.

Hamssa Benrekia is a senior living placement specialist in Torrance who works with families in the South Bay and Harbor area of Los Angeles County. She does not give financial or legal advice and has no connection to any lender. Once a counselor, attorney or adviser has helped you settle the budget, she can shortlist licensed assisted living communities and board and care homes that may fit it. More money topics are in the California Assisted Living Placement Guide. To talk about homes, contact Hamssa.