What's the reverse mortgage income minimum?
Yes, HUD and other reverse mortgage program utilise income to determine eligibility. There's a reason no payment is necessary.
HUD doesn't want borrowers to secure a loan if they can't live comfortably in the home thereafter.
HUD given by Reverse Mortgage Lenders has analysed hundreds of thousands of reverse mortgages and found that there is still a risk of default for borrowers unable to pay their taxes and insurance (which is a loan default causing the lender to initiate foreclosure proceedings) even after they receive their reverse mortgage.
Qualify? Replace
As harsh as it seems, it's best for the borrower if they must make other arrangements, such as downsizing, relocating, or renting a room, before getting a reverse mortgage and using their equity. Nothing is worse than a borrower using their equity to stay in their property for several more years, only to realise they can't afford it and have no equity to relocate. If you can afford the home and its bills after the loan, a lender can assist you fulfil the residual income requirements.
What's residual income?
HUD employs the residual income strategy to quickly qualify most borrowers. After paying your mortgage, taxes, insurance, HOA dues, and 14 cents per square foot for utilities, you must have a particular amount of money left to live on each month based on your location and family size. After housing fees, taxes, insurance, and utilities, you need $529 to $589 a month to live on since you have no debts. This isn't much money to pay for transportation, insurance, food, or anything else, thus HUD is already being lax on qualification.
Residual income asset dissipation
To make it easy for consumers, reverse mortgage lenders might utilise assets as income even if you aren't using them that way (knowing you can if you need to). HUD enables a procedure called asset dissipation, in which the lender thinks you consume a specific amount of your assets monthly and adds that amount to your income. They can use loan proceeds.
To qualify, pay off debt
If you pay off the loan before using it, you won't have to repay it and interest won't accrue. Imagine having a $10,000 credit card but only spending $5,000 before closing it. You must repay $5,000 plus interest, but not the entire $10,000 line because you didn't utilise it. Unused LESA funds are similar. If you don't utilise the money, you don't owe anything.
Did your lender use all these strategies to qualify you? Your credit score shouldn't exclude you. No minimum credit score is necessary for a reverse mortgage, although bad credit in the last 24 months could hurt your application. Another lender's opinion never hurts. If the lender considered all these techniques and there's no way to meet HUD criteria, you must make tough choices. Is downsizing, which may require a move, in your best interest?
Other
You may be able to use a reverse mortgage to buy a less expensive property if its location and functioning are better. Is your home big enough for a roommate? Do you have family/heirs who might support a familial reverse mortgage (paying you a monthly stipend with the property as repayment)? These are all choices, and it's great to check with family or a financial advisor to see what else is available.
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