Many homeowners and their families want to know what happens to a reverse mortgage when the borrower passes away. It's a caring and practical question. Here's what you need to know: your heirs have options, they're protected by law from owing more than the home is worth, and there's a clear process and timeline to follow.
Heirs Have Options
When the last borrower (or eligible non-borrowing spouse) no longer lives in the home — including after passing away — the reverse mortgage becomes due. The heirs (or the estate) typically have three main options:
- Sell the home. The sale pays off the reverse mortgage balance. Any remaining equity goes to the heirs. This is the most common path.
- Refinance. If an heir wants to keep the home, they can get a traditional mortgage (or another loan) to pay off the reverse mortgage and take title.
- Pay off the loan. Heirs can use their own funds to pay the balance and keep or sell the property as they choose.
Lenders usually allow up to 30 days after the due date to submit a payoff or a plan (e.g., listing the home). In practice, the process often runs on a timeline that gives families time to make decisions. For more on how the loan works in general, see our homeowner guide.
The 6-Month Timeline
After the borrower's death, the servicer will send a due-and-payable notice. The loan doesn't have to be paid the next day. HUD guidelines and servicer practices typically allow a reasonable period — often cited as up to six months or more in many cases — for the estate to sell the home or arrange payoff. If the heir is working in good faith to sell or refinance, extensions may be available. It's important to notify the loan servicer as soon as possible and keep communication open. If you're an heir and have questions, our FAQ covers common questions, and I'm available to point you in the right direction.
FHA Non-Recourse: Heirs Never Owe More Than the Home's Value
This is one of the most important protections. With an FHA-insured HECM, the loan is non-recourse. That means you or your heirs are never required to pay more than the home's value at the time the loan is repaid. If the loan balance has grown larger than what the home sells for, the FHA insurance fund covers the shortfall. Heirs do not have to dig into other assets to make up the difference. So even in a worst-case scenario (e.g., market downturn), the family's liability is limited to the value of the home.
Spouse Protections
If one spouse is on the loan and passes away, the other spouse's situation depends on whether they're a co-borrower or an eligible non-borrowing spouse (NBS). Co-borrowers continue under the same loan. Eligible non-borrowing spouses have specific protections: they can remain in the home for life as long as they meet the loan obligations (taxes, insurance, maintenance, primary residence). The loan does not become due solely because the borrowing spouse passed away. This is a critical safeguard for many couples. Details can be found in our FAQ under spouse and heir questions.
Practical Steps for Families
If you're an heir: (1) Notify the reverse mortgage servicer of the borrower's death and request written information about the balance and process. (2) Order an appraisal or get a broker's opinion if you're considering selling or refinancing. (3) Decide whether to sell, refinance, or pay off, and act within the timeline the servicer provides. (4) If the home is sold, the title company will pay off the loan at closing; any surplus goes to the estate/heirs. If you're planning ahead and want to understand how a reverse mortgage could affect your family, I'm happy to explain the rules in plain language — contact me anytime.
Understanding what happens when a reverse mortgage borrower passes away can bring peace of mind. If you'd like to see how much equity might be available in your situation today, try our calculator, or schedule a call to discuss your options.
Have questions about reverse mortgages or want to see how much you might access? Try our calculator or schedule a conversation with Jerry.