• Skip to main content
  • Skip to primary sidebar
  • Skip to footer
(877) 816-6706 PARTNER SITE CLIENT LOGIN
Search Icon

Smartfi Corporate

  • About Us
  • Clients
  • Contact Us
Calculators
Woman Couch Computer 1281725866 800x533

Reverse Mortgage Credit Score Requirements

June 25, 2022 by Josh Evink

Unlike other traditional loan and financing arrangements, the FHA insured reverse mortgage does not have a minimum FICO score requirement. However, the FHA and most proprietary reverse mortgages still undergo a financial assessment of the borrower to ensure this is the right loan for them. Unlike the FHA insured reverse mortgage, most proprietary reverse mortgage may have a minimum FICO score.

Since there’s no minimum credit score requirement for taking out these home equity loans. Lenders are more concerned with whether the borrower can meet the ongoing property-related expenses needed to keep the home in good condition.

Borrowers with good credit history and no late payments for homeowner’s insurance, taxes, and mortgage payments in the last 24 months will typically have an easier journey through the financial assessment. Borrowers who have experienced financial hardships are still eligible for a reverse mortgage, but may undergo some loan structuring requirements. Lenders may take into account the borrower’s life expectancy when determining the structuring components of the loan if necessary.

Before we look at the credit score requirements for a reverse mortgage, let’s dive deeper into the different types of reverse mortgage loans.

What Is a Reverse Mortgage Loan?

A reverse mortgage is financing that allows a property owner to borrow against their homeowner’s equity. These loans can be government-insured or private and are available to property owners living in their own homes aged 62 years and above.**

Reverse mortgage borrowers can opt to take out their loan proceeds from a reverse mortgage as a lump sum payment, line of credit, fixed monthly payment, or a combination of all three.

In modified tenure mortgages, however, borrowers can receive their money as both a line of credit and fixed monthly payment. This type of arrangement gives them smaller payments, but allows for intermittent use of the remaining line of credit, compared to straight tenure mortgages.

Loan proceeds can be used to meet a wide variety of needs and expenses, including:

  • Increased liquidity and monthly cash flow
  • Funding home improvements or repairs
  • Purchasing gifts
  • Improving your lifestyle
  • Paying off an existing mortgage
  • Paying homeowners insurance premiums
  • Paying medical bills or in-home care
  • Paying property taxes
  • Paying utility and credit card bills
  • Paying for travel

Borrowers are not required to make regular monthly payments like a traditional mortgage,* however, they may elect to make any type of repayment towards a reverse mortgage that fits their needs. The total or remaining loan balance is due when the last borrower leaves the home.

Borrowers can take out reverse mortgages on single-family properties, 2-4 unit multifamily and HUD-approved condominiums; with the stipulation that the property must be the borrower’s primary residence.

Types of Reverse Mortgage Loans

HECM Reverse Mortgage

The most common reverse mortgage is a HECM (Home Equity Conversion Mortgage) because it can provide the most cash for homes valued under $970,800, normally has a lower interest rate than a jumbo reverse mortgage and may be easier to qualify. However, HECM’s are limited to factoring in a maximum home value of $970,800. That means if your house is appraised at $1,500,000, the loan amount will only be calculating the home’s value using the $970,800 limit.

HECM for Purchase

The HECM for Purchase allows you to buy a home using the equity in the home you are purchasing. Some people use a Reverse Mortgage for Purchase when they are purchasing a new home to downsize from their existing property. Many retirees also use it to relocate closer to friends and family or to warmer weather. A Reverse Mortgage for Purchase requires a down payment, which in many cases can be covered by the proceeds from the sale of the former house and/or savings or other means. The down payment, combined with the Reverse Mortgage for Purchase loan, can be used to buy the new home. That means no monthly mortgage payments* are required, which can leave more money in the borrower’s pocket and improve cash flow.

The CHOICE jumbo reverse mortgage loan is ONLY available at Smartfi Home Loans, LLC.

CHOICE Jumbo Reverse Mortgage – Only at Smartfi Home Loans, LLC!
If your home is valued above the HECM limit ($970,800) and you want to get a higher loan amount by accessing more of your home’s equity, then consider Smartfi Home Loan, LLC’s Choice Jumbo Reverse Mortgage. The Smartfi Choice has no home value limit and can loan up to $4,000,000!

How Will My Lender Examine My Credit History for a Reverse Mortgage?

For a borrower to qualify, the lender must first carry out a credit check to ascertain the borrower’s credit history with the relevant credit agencies. However, this process is not the same as taking out a traditional mortgage.

Lenders will examine a borrower’s payment history for:

  • Previous or current mortgage balance/mortgage insurance debt
  • Previous or current property-related expenses
  • Revolving accounts
  • Installment debts

Other factors lenders consider include a good credit profile, the appraised value of the property, and annual taxes.

So, can a reverse mortgage affect your credit? The answer is no. However, using the funds to pay off other debts may positively affect your credit reports and can boost your credit score.

Reverse mortgages traditionally do not have any effect on Social Security or Medicare.

How Lenders Review Reverse Mortgage Credit Score History

Before lenders approve loans, they will examine a borrower’s credit history and credit report. However, the Department of Housing and Urban Development (HUD) does not require a specific FICO for borrower to prove satisfactory credit to get a reverse mortgage. Instead they look at the borrowers overall payment history and affordability.

If you have poor credit or bad credit history, lenders will conduct further financial assessments to determine why you had accounts in default or late payments and if any extenuating circumstances apply.

Get Help with Reverse Mortgages Today

Although requirements for these mortgages are not as strict as for traditional mortgages, borrowers must still must meet some criteria before they can be approved. These lending criteria can be challenging to understand without the help of a qualified specialist.

Smartfi Home Loans, LLC is a lender providing seniors with flexible, affordable, and convenient financing options. We have unique financial products to meet every need and budget designed to improve our customers’ financial situation.

Call (877) 816-6706 or contact us online to learn more about getting a reverse mortgage and to see if you meet the credit requirements for a reverse mortgage loan.

*Borrower must pay property taxes, insurance, HOA fees and maintain the property.
**Age requirements differ by product and state.
These materials are not from, and have not been approved by, HUD, FHA, or any government agency.
Smartfi Home Loans, LLC does not guarantee the accuracy of any information. These materials do not pre-qualify you for any loan program and details should be verified independently with one of our Loan Consultants. All home lending products are subject to credit and property approval. Rates, program terms and conditions are subject to change without notice. Not all products are available in all states or for all amounts. Other restrictions and limitations apply.
Share this post:
  • Facebook
  • Pinterest
  • Twitter
  • Linkedin

Primary Sidebar

Categories

  • First Time Home Buyer
  • Home Maintenance
  • Home Owner Tips
  • Mortgage News
  • Real Estate Tips
Smartfi footer logo
National Reverse Mortgage Lenders Association logo
San Diego HQ
3636 Nobel Dr.
Suite 330
San Diego, CA 92122
Medina Office
1113 Medina Road
Suite 400
Medina, OH 44256
Contact
(877) 816-6706
info@smartfihomeloans.com
Equal Housing Lender logo white
Secured by Sectigo logo
Smartfi Home Loans, LLC BBB Business Review

Privacy Policy  |  State Licensing   |  Web Accessibility  |   Sitemap

2022 Smartfi Home Loans LLC (In Ohio only, does business under the trade name Bankers Guarantee Mortgage Company), Company NMLS 1862952.

These materials are not from, and have not been approved by, HUD, FHA, or any government agency. Subject to Credit Approval. For licensing information, go to: NMLS Consumer Access.

*Borrower must pay property taxes, insurance, any HOA fees and maintain the property.

** Age requirements differ by product and state.

Copyright © 2023 Smartfi Home Loans, LLC. All Rights Reserved. Developed by TinyFrog Technologies.

This website uses cookies to improve your experience. Accept All Reject All
Manage consent

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary
Always Enabled
Necessary cookies are absolutely essential for the website to function properly. These cookies ensure basic functionalities and security features of the website, anonymously.
CookieDurationDescription
cookielawinfo-checkbox-analytics11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Analytics".
cookielawinfo-checkbox-functional11 monthsThe cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Functional".
cookielawinfo-checkbox-necessary11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookies is used to store the user consent for the cookies in the category "Necessary".
cookielawinfo-checkbox-others11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Other.
cookielawinfo-checkbox-performance11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Performance".
viewed_cookie_policy11 monthsThe cookie is set by the GDPR Cookie Consent plugin and is used to store whether or not user has consented to the use of cookies. It does not store any personal data.
Functional
Functional cookies help to perform certain functionalities like sharing the content of the website on social media platforms, collect feedbacks, and other third-party features.
Performance
Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors.
Analytics
Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics the number of visitors, bounce rate, traffic source, etc.
Advertisement
Advertisement cookies are used to provide visitors with relevant ads and marketing campaigns. These cookies track visitors across websites and collect information to provide customized ads.
Others
Other uncategorized cookies are those that are being analyzed and have not been classified into a category as yet.
SAVE & ACCEPT

"*" indicates required fields

Become a Partner

* indicates required field
Name*
Consent*
This field is for validation purposes and should be left unchanged.

"*" indicates required fields

Connect With Us

* indicates required field
Name*
Consent*
This field is for validation purposes and should be left unchanged.
Fillable Flyers

Real Reverse Possibilities

SMARTFI CHOICE vs. FHA HECM

USING A HECM TO PURCHASE

WHY REVERSE?