The 5 new reverse mortgage rules
You might receive less money
Under the new rules, the former "standard" and "saver" options will be rolled into a single product.
While the amount a homeowner can borrow remains tied to their age, current interest rates and the value of their home, the FHA has cut the percentage of equity you can remove from your home through a reverse mortgage. The new limit went into effect Sept. 30.
A 65-year-old borrower with a home worth $100,000 and an interest rate of 5% could withdraw $54,100 – about 15% less than the limit for the former Standard product, according to Peter Bell, president and CEO of the National Reverse Mortgage Lenders Association.
"(Borrowers) who need the whole amount of money to pay off debts won’t be able to use a reverse mortgage to do it," Bell says.