Trusted Reverse Mortgages in Texas

Key Takeaways

Texas reverse mortgages allow homeowners aged 62+ to convert home equity into tax-free cash without monthly mortgage payments while maintaining ownership and residence rights.

Texas offers unique constitutional protections for reverse mortgage borrowers, including mandatory counseling, a 12-day cooling-off period, and specific closing location requirements.

Homeowners can choose from lump sum disbursements, monthly payments, growing lines of credit, or combination plans to match their specific retirement needs.

Costs include origination fees (capped at $6,000), mortgage insurance (2% upfront + 0.5% annually), interest (5.5-8.25%), and closing costs, which can be rolled into the loan.

Most Texas homeowners can access 40-60% of their home's value, with the exact amount determined by age, property value, interest rates, and existing mortgages.

Understanding Reverse Mortgages in Texas

A reverse mortgage in Texas offers homeowners aged 62 and older a unique financial tool to convert their home equity into usable funds without selling their property or taking on monthly mortgage payments. Unlike traditional loans, a Texas reverse mortgage provides funds to you rather than requiring payments, creating financial flexibility during retirement.

How Reverse Mortgages in Texas Work

A reverse mortgage in Texas allows homeowners 62 and older to convert part of their home equity into cash without selling their home or making monthly mortgage payments. Unlike traditional mortgages where you pay the lender, with a reverse mortgage, the lender pays you. The loan balance grows over time as interest accrues on the amount borrowed, and the full loan becomes due when you move out, sell your home, or pass away.

In Texas, reverse mortgages follow specific state regulations under Section 50(a)(7) of the Texas Constitution. The process begins with mandatory counseling from a HUD-approved counselor who explains the costs, terms, and alternatives. Once approved, you can receive funds as a lump sum, monthly payments, a line of credit, or a combination of these options.

The loan is secured by your home's equity, and you retain ownership and title to your property. As long as you live in the home as your primary residence, maintain the property, and stay current on property taxes and homeowners insurance, you won't have to make any monthly mortgage payments.

Types of Reverse Mortgages in Texas:

Texas homeowners can access several types of reverse mortgages to meet their specific needs:

1. HECM (Home Equity Conversion Mortgage): The most common, federally insured by the FHA, with flexible payment options and loan limits of $1,089,300 (2023). Requires mortgage insurance.
   
   
2. Proprietary Reverse Mortgages: Offered by private lenders for higher-value homes exceeding FHA limits, typically for luxury properties in cities like Houston, Dallas, and Austin.
   
   
3. Single-Purpose Reverse Mortgages: Provided by state and local agencies for specific uses, such as home repairs or taxes, with lower costs but limited availability.
   
   

Benefits for Texas Seniors:

Reverse mortgages provide several advantages for Texas seniors looking to enhance their retirement finances:

• Tax-Free Income: No tax on the funds received.
  
  
• No Monthly Mortgage Payments: Free up cash flow (property taxes, insurance, and maintenance still required).
  
  
• Home Retention: Stay in your home as long as it remains your primary residence.
  
  
• Protection Against Market Fluctuations: Non-recourse loan ensures you won’t owe more than the home’s value.
  
  
• Flexible Fund Use: Can be used for healthcare, home improvements, or daily expenses.

Texas-Specific Regulations:

Texas maintains some of the nation's strongest consumer protections for reverse mortgage borrowers:

• 12-Day Cooling-Off Period: A waiting period before closing.
  
  
• Spousal Protection: Non-borrowing spouses can remain in the home after the borrower’s death.
  
  
• Counseling Requirement: Mandatory HUD-approved counseling before taking out a reverse mortgage.
  
  
• Property Tax and Insurance Provisions: Lenders verify the borrower’s ability to meet tax and insurance obligations.

Reverse Mortgages in Texas Eligibility

Reverse mortgages have specific eligibility requirements based on age, property type, and home equity. Here’s a breakdown of the key factors:

Age Requirements: To qualify for a reverse mortgage in Texas, borrowers must meet certain age criteria:

• Primary Borrower: At least 62 years old
  
  
• Co-borrowers: All titleholders must be 62+
  
  
• Non-borrowing Spouse: Can be under 62, but specific protections apply; cannot receive additional funds.
  
  
• Impact of Age: Older borrowers typically qualify for larger loan amounts due to their shorter life expectancy.
  
  

Property Eligibility: Not all properties are eligible for a reverse mortgage. Eligible properties must meet certain criteria outlined below:

• Primary Residence: The property must be the borrower’s primary home.
  
  
• Condition: It must meet FHA’s minimum property standards; significant repairs may be required.
  
  

Home Equity Requirements:

The amount you can borrow depends largely on the equity in your home. Here’s what lenders look for:

• Minimum Equity: No specific percentage, but substantial equity is required.
  
  
• Existing Mortgages: Must be paid off with reverse mortgage funds.
  
  
• Maximum Claim Amount: Based on the lower of the appraised value or the FHA limit ($1,089,300 in 2023).
  
  

Available Loan Amount: Most homeowners can access 40-60% of their home’s value through a reverse mortgage, depending on their age and the value of the property.

Financial Assessment: A financial assessment is required to ensure that you can meet the ongoing homeownership costs. Lenders will review your ability to maintain the property, including:

• Income Verification: Social Security, pensions, part-time work, and other income sources.
  
  
• Credit Requirements: Payment history, outstanding debts, and timely tax and insurance payments.
  
  
• Property Charge Requirements: Proof that you can pay for property taxes, insurance, and maintenance.
  
  
• LESA (Life Expectancy Set-Aside): If there are concerns about your ability to maintain property charges, lenders may require a fully or partially funded LESA.

This financial evaluation ensures that you can continue to live in and maintain your home throughout the life of the loan.

Reverse Mortgages in Texas Payment Options

Texas homeowners can choose from several reverse mortgage payment options, each catering to different financial needs. Here’s an overview of the most common options:

Lump Sum Disbursements:

What it is: You receive the full loan amount upfront when the loan closes.

• Ideal for: Large immediate expenses like paying off a mortgage, major home repairs, medical bills, or making significant purchases.

Example: The Garcias used a $150,000 lump sum to pay off their mortgage and replace their roof, eliminating monthly payments and enhancing their retirement security.

• Considerations: Interest begins accruing on the entire amount immediately. A lump sum may affect eligibility for programs like Medicaid, so consulting a financial advisor is advised.
  
  

Monthly Payment Options:

There are two types of monthly payment plans available, each offering different benefits depending on your needs:

Example: Martha, a retired teacher, opted for $1,200 monthly tenure payments to supplement her pension, ensuring financial independence while living in her home for over 40 years.

Line of Credit Reverse Mortgages:

What it is: A flexible option that allows you to access funds as needed, with interest only accruing on the amount you use.

• Ideal for: Those who want to retain access to equity without withdrawing all funds upfront.
  
  

Example: Bob set up a $200,000 line of credit, using it occasionally for medical bills and car repairs. His unused credit grows over time, and he only pays interest on the amount borrowed.

This option is perfect for seniors looking for financial flexibility and security, with the added benefit of growing unused credit.

Combination Payment Plans for Texas Seniors

Not sure which option is best? Combination plans let you mix and match payment methods:

Real Example: The Wilsons took a $50,000 lump sum to pay off debt, then set up monthly payments of $800 with a $75,000 line of credit for unexpected expenses.

Combination plans offer the most flexibility, allowing you to customize your reverse mortgage to meet both immediate and long-term needs. Many Texas seniors choose this option to create financial security while maintaining access to emergency funds.

Costs of Reverse Mortgages in Texas

Reverse mortgages in Texas come with several costs you should understand before applying.

Origination Fees for Texas Reverse Mortgages

What it is: The fee lenders charge to process your loan.

For HUD-backed Home Equity Conversion Mortgages (HECMs) in Texas:

• 2% of the first $200,000 of your home's value
• 1% of the value above $200,000
• Maximum cap of $6,000

In Plain English: For a $300,000 home, the maximum origination fee would be $5,000 ($4,000 for the first $200,000 + $1,000 for the additional $100,000).

Some Texas lenders charge less to stay competitive or offer credits to offset these fees. You can shop around to find the best terms, as origination fees can vary significantly between lenders.

Mortgage Insurance Premiums in Texas

What it is: Insurance that protects both you and the lender.

All FHA-insured reverse mortgages require two types of Mortgage Insurance Premium (MIP):

1. Initial MIP at closing: 2% of your home's appraised value
   For a $300,000 home: $6,000 one-time payment
   
   
2. Annual MIP: 0.5% of the outstanding loan balance
   On a $150,000 balance: About $750 per year, added to your loan
   
   

This insurance ensures you'll never owe more than your home is worth and guarantees you'll receive all promised loan funds, even if your lender faces financial difficulties.

Interest Rates for Texas Reverse Mortgages

Texas reverse mortgages offer:

Fixed Rates: Unchanging interest rate (typically 6-8%), available only for lump sum payments

Adjustable Rates: Rates that change periodically (currently 5.5-8.25%), available for all payment options

Current rates in Texas for 2025 typically range from 5.5% to 8.25%, depending on market conditions and your circumstances. (Note: 2025 interest rate estimates are based on projected market trends and may vary)

Interest accrues only on the amounts you've borrowed, not on unused credit line portions. This is particularly advantageous for line of credit options, where you might draw funds gradually over time.

The Texas Reverse Mortgage Application Process

Required Documentation for Texas Seniors

To start your reverse mortgage application, you'll need to gather several documents:

Personal Identification:

• Government-issued photo ID (driver's license, passport)
• Social Security cards for all borrowers
• Birth certificates or other proof of age
• Contact information (phone, email, address)

Property Documentation:

• Current mortgage statement (if applicable)
• Homeowners insurance policy
• Property tax statements
• HOA information (if applicable)
• Deed or title information

Financial Information:

• Recent bank statements (typically 2-3 months)
• Proof of income (Social Security award letters, pension statements, etc.)
• Most recent tax returns
• List of monthly expenses
• Information on other debts

For Non-Borrowing Spouses:

• Marriage certificate
• Photo identification
• Social Security number

Having these documents organized before applying will streamline the process. Your lender may request additional documentation based on your specific situation.

HUD-Approved Counseling Requirements in Texas

What it is: A mandatory educational session with an independent counselor.

Before applying, you must complete a counseling session with a HUD-approved counselor. This ensures you understand:

• How reverse mortgages work
• Your responsibilities as a borrower
• Available alternatives
• Financial implications

What to Expect:

• Session length: 60-90 minutes
• Format: In-person or telephone
• Cost: $125-175 (some agencies offer free counseling)
• Result: Certificate valid for six months

Find an approved counselor through the HUD Counselor Search Tool or by calling (800) 569-4287.

The counseling requirement is designed to protect seniors from making uninformed decisions. Your counselor works independently from your lender and provides objective information about reverse mortgages and potential alternatives. After completing counseling, you'll receive a certificate that's required for your loan application.

Texas Cities We Serve with Reverse Mortgage Programs

We offer reverse mortgage programs across the state of Texas, helping seniors access their home equity. Our services cover major metropolitan areas and many smaller communities, ensuring that eligible homeowners throughout Texas can benefit from these financial solutions.

Coverage across Texas regions

We provide reverse mortgage services in the following Texas regions and cities:

• Major Metropolitan Areas:
  
  

  • Houston: Including surrounding areas like Sugar Land and The Woodlands

  • Dallas-Fort Worth: Serving Dallas, Fort Worth, Arlington, and Plano

  • San Antonio: Covering San Antonio and nearby communities

  • Austin: Including Austin and its surrounding suburbs

  • El Paso

• Central Texas:
  
  

  • Waco

  • Killeen

  • Temple

• South Texas:
  
  

  • Corpus Christi

  • Laredo

• West Texas:
  
  

  • Lubbock

  • Amarillo

• East Texas:
  
  

  • Tyler

  • Longview

This is not an exhaustive list, and we serve many other communities throughout Texas. If you're a homeowner 62 or older in Texas, please contact us to see how we can assist you. We are dedicated to providing reverse mortgage options to seniors across all regions of Texas.

Learn More About Texas Reverse Mortgages Today

If you're a Texas homeowner aged 62 or older and want to explore your reverse mortgage options, we're here to help. Our experienced team can guide you through the process, answer your questions, and help you determine if a reverse mortgage is right for you.

Call us at (888) 924-2126 today for a free, no-obligation consultation and take the first step toward securing your financial future.

Frequently Asked Questions: Texas Reverse Mortgages

What Happens to My Texas Home After a Reverse Mortgage?

When the last borrower passes away, sells, or moves out, the loan becomes due. Heirs can either:

• Repay the loan and keep the home.
  
  
• Sell the home and keep any excess proceeds.
  
  
• Offer a deed in lieu of foreclosure if the loan exceeds the home’s value.

Heirs are not responsible for the difference if the loan balance exceeds the home’s value, thanks to FHA insurance on HECMs.

Can My Heirs Keep My Home?

Yes, but they must repay the loan, either by refinancing or selling the home. If the home’s value is greater than the loan, heirs keep the difference. If not, they can settle the debt with 95% of the appraised value or the full loan balance.

How Does Texas Protect Seniors?

Texas offers strong protections, including:

• 12-day cooling-off period before closing.
  
  
• Mandatory HUD-approved counseling.
  
  
• Non-recourse protection, ensuring heirs never owe more than the home’s value.

These measures help seniors make informed decisions and safeguard their rights.