\n\nVeterans of the United States Armed Forces have access to one of the most powerful financial tools in the country: the VA Loan. Because VA loans offer zero-down-payment mortgages with incredible interest rates and no private mortgage insurance, many veterans naturally assume there is an equally amazing "VA Reverse Mortgage" waiting for them in retirement.

Unfortunately, predatory marketers heavily exploit this assumption.

The Truth About VA Reverse Mortgages

Let's be absolutely clear: The Department of Veterans Affairs (VA) does not offer, insure, or guarantee reverse mortgages.

There is no such thing as a "VA Reverse Mortgage."

If you receive a mailer covered in American flags promising a special reverse mortgage program exclusive to veterans, it is a deceptive marketing tactic. The company is simply trying to sell you a standard, civilian FHA Home Equity Conversion Mortgage (HECM) while using your military service as an emotional hook to gain your trust.

Using a HECM to Pay Off a VA Loan

While the VA does not offer reverse mortgages, a veteran can still use the standard FHA HECM program.

If you currently live in a home that you purchased years ago using a traditional forward VA loan, you are perfectly allowed to refinance that property into a reverse mortgage.

When the reverse mortgage closes, the proceeds will be used to completely pay off your existing VA loan balance. Your VA loan is closed out, and you transition into the FHA reverse mortgage ecosystem, eliminating your monthly mortgage payment.

A Warning Regarding VA Disability Income

If you rely heavily on VA disability compensation or a military pension, you must be careful during the Financial Assessment phase of the reverse mortgage application.

While VA disability is excellent, reliable income (and is entirely tax-free), it is a fixed amount. The reverse mortgage underwriter will count this income when determining if you have enough residual cash to pay your property taxes.

However, unlike civilians who might be worried about Medicaid disqualification (a lump sum from a reverse mortgage can disqualify you from Medicaid), VA healthcare and VA disability benefits are generally not means-tested. Taking a large lump sum from a reverse mortgage will not cause you to lose your VA disability compensation or your access to VA hospitals.

Always verify this with a Veterans Service Officer (VSO) before closing the loan.\n