Reverse Mortgage Glossary

A
Appraised Value
The estimated market value of your home as determined by a licensed appraiser. This value is used to calculate how much you may qualify for with a Florida reverse mortgage.

Asset Dissipation (Imputed Income)
A Financial Assessment method that converts verified liquid assets into a calculated monthly income stream to help borrowers meet FHA residual income requirements.

B

Borrower
The homeowner (or homeowners) listed on the reverse mortgage loan who meet all eligibility requirements, including age (typically 62+ for HECMs) and primary residence occupancy.

C

Closing Costs
Fees associated with finalizing a reverse mortgage, including appraisal fees, title insurance, recording fees, origination fees, and government charges. Many Florida reverse mortgage borrowers choose to finance these costs into the loan.

Condo Single-Unit Approval (SUA)
An FHA process allowing an individual condominium unit to qualify for a reverse mortgage even if the entire project is not FHA-approved.

Counseling (HUD-Approved)
A mandatory session with an independent, FHA-approved counselor who explains the benefits, risks, and obligations of a reverse mortgage. Required for all FHA HECM reverse mortgages in Florida.
D


Disbursement Options
The ways you can receive your reverse mortgage proceeds, including a lump sum, monthly payments, a line of credit, or a combination of options.



E


Equity
The difference between the home’s market value and the remaining balance on any existing mortgage, which is the amount the homeowner can access through a reverse mortgage.



F


FHA (Federal Housing Administration)
The government agency that insures Home Equity Conversion Mortgages (HECMs), protecting borrowers and lenders in FHA reverse mortgage programs.

Financial Assessment (HECM Financial Assessment)
The Financial Assessment is FHA’s review of a borrower’s income, assets, credit history, and property charge payment history to determine their ability to meet ongoing obligations such as property taxes, homeowners insurance, and HOA dues. Required for all FHA HECM reverse mortgages, it helps determine whether a Life Expectancy Set-Aside (LESA) is needed and ensures the borrower can sustain the home long-term.

G

Growing Line of Credit
A feature of HECM lines of credit where the unused portion increases over time.


H


HECM (Home Equity Conversion Mortgage)
An FHA-insured reverse mortgage designed for homeowners aged 62 and older. HECMs are the most common and widely used reverse mortgages in Florida.

HECM Line of Credit or Reverse Line of Credit
A popular reverse mortgage option that allows borrowers to access funds as needed. The unused portion grows over time, providing increased borrowing power and long-term financial flexibility.

HECM for Purchase or Reverse Purchase
A reverse mortgage program that allows eligible Florida seniors to purchase a new primary residence using a reverse mortgage—without required monthly mortgage payments.

HECM to HECM Refinance
A HECM to HECM refinance replaces an existing FHA reverse mortgage with a new one, typically to access additional funds due to increased home value or improved loan terms. The new loan must meet FHA’s “Net Tangible Benefit” requirement to ensure the refinance provides a meaningful financial advantage.

Home Equity
The portion of your home’s value that you own outright. It is calculated by subtracting any existing mortgage balance from the home’s appraised value.

I


Initial Principal Limit
The amount available to a borrower at closing, determined by the borrower’s age, interest rates, the appraised value, and FHA lending limits.

Interest Rate (Reverse Mortgage)
The rate applied to the outstanding loan balance. Reverse mortgage interest rates may be fixed or adjustable, depending on the product chosen.

J

Jumbo Reverse Mortgage
A proprietary (non-FHA) reverse mortgage designed for high-value Florida homes that exceed FHA lending limits. Some jumbo reverse mortgages are available to borrowers as young as 55.

L


Life Expectancy Set-Aside (LESA)
A portion of reverse mortgage funds set aside to pay future property taxes and homeowners insurance. Required in certain cases based on financial assessment results.

Life Estate
A form of property ownership where an individual retains the right to live in the home for life while ownership passes to another party upon death.

Lady Bird Deed (Enhanced Life Estate Deed)
A Florida-specific deed that allows homeowners to retain full control of their property during life while automatically transferring ownership upon death. Often compatible with Florida reverse mortgages.

Loan Balance
The total amount owed on a reverse mortgage, including disbursed funds, interest, and mortgage insurance premiums. The balance increases over time.

Loan Maturity
The point at which the reverse mortgage becomes due and payable, typically when the borrower sells the home, permanently moves out, or passes away.


M


Mandatory Obligations
Certain debts that must be paid at closing with reverse mortgage proceeds, such as an existing mortgage, delinquent property taxes, or homeowners insurance.

Maximum Claim Amount (MCA)
The lesser of the appraised home value or the FHA lending limit. Used to calculate borrowing limits for HECM reverse mortgages.

Mortgage Insurance Premium (MIP)
An FHA-required insurance fee that protects borrowers and lenders. Includes an upfront MIP and an annual MIP added to the loan balance.

N


Non-Borrowing Spouse (NBS)
A spouse who is not listed as a borrower on the reverse mortgage loan. FHA rules may allow eligible non-borrowing spouses to remain in the home after the borrower’s death.

O

Occupancy Requirement
Borrowers must occupy the home as their primary residence. Extended absences may trigger loan maturity under reverse mortgage rules.

Origination Fee
A lender fee charged for processing and underwriting a reverse mortgage, subject to FHA limits for HECM loans.

P


Principal Limit
The maximum amount available under a reverse mortgage, based on age, interest rates, and property value.

Proprietary Reverse Mortgage
A privately funded reverse mortgage not insured by FHA. Often used for high-value homes or younger borrowers in Florida.

Property Charges
Ongoing homeowner responsibilities, including property taxes, homeowners insurance, HOA dues, and maintenance. Failure to pay can result in loan default.

R

Remainderman
An individual who inherits the property after the death of the life estate holder. In Florida reverse mortgages, remaindermen typically attend counseling but are not borrowers.

Residual Income
The income remaining after paying monthly debts and property charges.

Reverse Mortgage
A loan that allows eligible homeowners to convert home equity into cash without required monthly mortgage payments, while retaining ownership of the home.

Reverse Second Mortgage
A Reverse Second Mortgage is a reverse mortgage placed behind an existing first mortgage, allowing homeowners to access additional equity without paying off their primary loan. These are typically proprietary (non-FHA) products and are less common than standard HECM reverse mortgages.

S


Servicing
The ongoing administration of a reverse mortgage, including disbursements, account statements, escrow payments, and borrower communication.


T


Tenure Payments
Monthly payments provided for as long as the borrower lives in the home and meets loan obligations.

Term Payments
Monthly payments made for a fixed number of years, regardless of how long the borrower occupies the home.

Title Insurance
Insurance that protects against ownership disputes or title defects. Required in Florida reverse mortgage transactions.

Trust Ownership (Reverse Mortgage)
Homes held in certain revocable or qualifying irrevocable trusts may still be eligible for a Florida reverse mortgage, subject to FHA or lender guidelines.

U


Upfront Costs
Closing-related costs, including appraisal fees, title work, origination fees, and upfront mortgage insurance.

Use of Proceeds
Reverse mortgage funds are tax-free and may be used for any purpose, including paying off debt, covering living expenses, home improvements, or supplementing retirement income.

V


Verification of Occupancy
Periodic confirmation that the borrower continues to occupy the home as their primary residence.