A reverse mortgage is a unique type of loan that does not require you to make monthly payments. This makes it an attractive option for those who live on a fixed income, such as retirees. However, there are no specific income requirements for a reverse mortgage. Instead, lenders will look at your debt and other sources of income to determine if you qualify.
If you don't meet the traditional income requirements, there are alternatives that may fit your needs. For example, if you have received notification that you will be receiving Supplemental Security Income (SSI) benefits within the next 12 months, you can use this future income to qualify for a reverse mortgage. In addition to traditional sources of income, such as Social Security or a full-time job, lenders will also consider other types of income. This includes rental income, seasonal work income, and cashback refinance income.
It's important to report all sources of income when applying for a reverse mortgage, as this will help the lender get an accurate picture of your finances. The amount you can borrow with a reverse mortgage depends on your age, current interest rates, and the amount of equity you have in the home. To calculate the principal of a reverse mortgage, lenders often require a professional appraisal to determine the value of the home. HUD recommends that those interested in a reverse mortgage complete counseling in person so they can better understand how it works.
This analysis is used to determine the borrower's ability to meet their financial obligations with their documented income.