When a reverse mortgage comes due
A HECM becomes due and payable in three main situations.
- The last borrower dies, unless an eligible non-borrowing spouse qualifies to stay.
- The home is no longer the borrower's principal residence.
- The borrower is away more than 12 consecutive months due to illness, such as a long nursing home stay.
Until the house is transferred, the estate is responsible for property taxes and homeowners insurance. Letting those lapse can create a separate default.
Falling behind on property taxes or insurance can also create problems with the loan. If a parent is alive but in poor health or living elsewhere, ask the servicer how the occupancy rules apply so the loan does not come due unexpectedly.
Collect the latest loan statement early; it shows the servicer's name and the approximate balance.
Heirs' options
Heirs have three main choices once the loan is due.
| Option | What it means | Best when |
|---|---|---|
| Pay off the loan | Pay the full balance, often with a new mortgage, and keep the house | An heir wants to live in or keep the home |
| Sell the house | Sell for at least the lesser of the loan balance or 95% of appraised value | There is equity, or heirs don't want the house |
| Deed in lieu | Sign the house over to the lender | Loan is higher than the value and no one wants to manage a sale |
Whatever you choose, tell the servicer in writing and keep copies. Silence is the most common reason heirs lose time. The servicer can also tell you the current balance, which grows over time as interest and fees add up.
Heirs are not personally required to repay the loan from their own money. The choice is about what happens to the house and whether any equity is left for the family.
The 95% rule and non-recourse protection
HECMs are non-recourse: heirs never owe more than the house brings in a qualifying sale. If the loan balance is higher than the home's value, heirs can sell for at least 95% of the appraised value and the lender accepts the net proceeds as payment in full.
Example: loan balance $260,000, appraised value $200,000. 95% of $200,000 is $190,000. A sale at $190,000 or more satisfies the loan, and heirs owe nothing more. If the house is worth more than the loan, heirs keep the equity after payoff and costs.
The lender typically orders an appraisal to set the 95% figure. If you think the appraisal is too high because of needed repairs, share repair estimates or photos with the servicer. If you plan to sell to a relative, ask the servicer about its rules first.
Reverse mortgage timeline for heirs
The clock starts when the servicer sends notice, so contact the servicer quickly.
| Stage | Timing | What to do |
|---|---|---|
| Loan becomes due | Death or other due event | Notify the servicer; request a payoff statement |
| Initial response period | 30 days from notice | Tell the servicer your plan: pay, sell, or deed in lieu |
| Extensions | 90-day extensions, lender approval | Provide proof of active sale or refinance (listing, contract, loan application) |
| Outer range | CFPB says it may extend up to about 6 months | Keep taxes and insurance paid; keep documenting progress |
If nothing happens, the lender can begin foreclosure. Delaware foreclosure is judicial; see avoiding foreclosure.
Extensions are not automatic. The servicer decides based on your documents, so send proof early and ask for written confirmation of any extension. Keep a simple log of calls, dates, and names to avoid confusion later.
Estate and probate steps
Someone usually needs legal authority to sell, which means opening an estate. If the parent owned the house alone, probate is needed, and the small estate affidavit cannot be used for that real estate. Get Letters from the Register of Wills. If the will grants power of sale, the executor can sell; otherwise a Court of Chancery order may be needed. See our Register of Wills guide.
Heirs generally receive a stepped-up basis to date-of-death value, which can reduce capital gains. See capital gains on a home sale.
An heir who is not yet appointed can still call the servicer to report the death and ask questions. But signing a listing agreement, sales contract, or deed usually requires the personal representative's authority. Starting the estate right away helps you meet the servicer's timelines.
A checklist for heirs
Use this list in the first weeks after the loan comes due.
- Find the loan servicer's name on a recent statement.
- Send the servicer a copy of the death certificate.
- Request a payoff statement and ask about the appraisal.
- Open the estate with the Register of Wills.
- Keep property taxes and insurance paid; secure the house.
- Decide on paying off, selling, or a deed in lieu.
- Send proof of listing, a signed contract, or a loan application to request extensions.
Surviving spouses and co-borrowers
If a spouse or co-borrower is still living in the home, the loan may not be due yet. A HECM stays in place while any borrower still lives in the home as a principal residence. An eligible non-borrowing spouse may also be able to stay after the borrower dies, if they meet HUD's requirements.
If you are a surviving spouse or co-borrower:
- Call the servicer right away and report the death.
- Ask whether you qualify to stay and what documents are needed.
- Keep paying property taxes and homeowners insurance.
- Get legal help if the servicer says the loan is due and you believe you qualify to stay.
If staying is not an option or not affordable, the same choices apply: pay off, sell, or deed in lieu. A surviving spouse who sells may also be able to use the $500,000 federal home sale exclusion if the sale is within 2 years of the spouse's death.
Selling quickly within the deadline
Because the deadlines are short, heirs often need a buyer who can close on time. Listing may bring a higher price if the house shows well and the timeline allows. A cash offer can close quickly and as-is, but it is below retail, and when the loan exceeds value, the price must still meet the 95% rule.
If the house needs work and there is equity, Fix & List may net more. Read selling an inherited house or call (302) 798-8655.
General information, not legal or tax advice.
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Get My Written Offer Call (302) 798-8655Frequently asked questions
How long do heirs have to pay off a reverse mortgage?
Heirs get notice and 30 days to respond. The lender may approve 90-day extensions with proof of an active sale or refinance, and the CFPB says the timeline may extend up to about 6 months.
Do heirs have to pay back more than the house is worth?
No. HECMs are non-recourse. Heirs can sell for at least 95% of appraised value and the lender accepts the net proceeds in full.
What is the 95% rule on a reverse mortgage?
To satisfy the loan, heirs must sell for at least the lesser of the loan balance or 95% of the home's appraised value.
Can I keep my parent's house with a reverse mortgage?
Yes, by paying off the loan balance, often with a new mortgage.
Who pays property taxes after the borrower dies?
The estate is responsible for property taxes and insurance until the house is transferred.
Does a reverse mortgage come due if my parent moves to a nursing home?
It can, if the borrower is away more than 12 consecutive months due to illness or the home is no longer the principal residence.
Sources
General information, not legal, tax, or financial advice. Laws, fees, and schedules change. Confirm with the office named or your attorney.