Key Takeaways
- A reverse mortgage cannot be used on a rental property or vacation home.
- You must live in the home for more than six months out of the year.
- If you move into a nursing home for more than 12 consecutive months, the loan becomes due.
\n\nA Home Equity Conversion Mortgage (HECM) is a specialized loan designed to help seniors age in place. Therefore, the most fundamental rule of the program is that the home must be your Primary Residence.
You cannot use a reverse mortgage on a pure investment property, a commercial building, or a summer vacation home.
The Annual Occupancy Certificate
To enforce this rule, your loan servicer will mail you an Annual Occupancy Certificate every year.
You must sign this document, get it notarized (in some cases), and mail it back, legally swearing under penalty of perjury that the home is still your primary residence. If you ignore this letter, the lender will assume you have moved out and will call the loan due and payable.
The 6-Month Rule for Snowbirds
What if you live in New York during the summer and Florida during the winter?
HUD defines a primary residence as the home where you spend the majority of the calendar year. You must live in the home for more than six months (at least 183 days) out of the year.
If you spend seven months in Florida and five months in New York, the New York home is not your primary residence and does not qualify for a reverse mortgage.
The 12-Month Medical Exception
The most common reason a senior leaves their home is for medical care. HUD understands this and provides a specific exception for medical facility stays.
If you are hospitalized or move into a rehab center, assisted living facility, or nursing home for medical reasons, your reverse mortgage remains active.
However, if you are out of the home for 12 consecutive months due to physical or mental illness, the home is no longer considered your primary residence. On day 366, the lender will officially call the loan due and payable. You (or your family) will then have up to six months to sell the house and repay the loan.
If there is a younger Non-Borrowing Spouse who still lives in the home while you are in the nursing home, they are protected and can remain in the property, provided they continue paying the taxes and insurance.\n