Yes — you will have to pay certain fees with an FHA-insured Home Equity Conversion Mortgage (HECM) reverse mortgage, but many of these costs can be financed directly into the loan, minimizing out-of-pocket expenses. The most common reverse mortgage fees include the FHA upfront mortgage insurance premium (UFMIP), which protects borrowers and ensures the loan is non-recourse; standard closing costs such as title insurance, appraisal, recording fees, and credit checks; and the lender’s origination fee, which is regulated by HUD. In addition, HECM borrowers pay a small annual mortgage insurance premium that accrues over time. While these fees may sound similar to those of a traditional mortgage, the key difference is that most reverse mortgage costs are typically rolled into the loan itself, meaning seniors can complete the process with minimal upfront spending. Borrowers are still responsible for ongoing property taxes, homeowners insurance, HOA dues, and home maintenance to keep the loan in good standing. When evaluated alongside the benefit of eliminating monthly mortgage payments and accessing tax-free funds, many retirees find the costs reasonable. Understanding reverse mortgage fees helps seniors plan accurately and make informed decisions about maximizing home equity during retirement.
