Myth or Fact – Can I Get a Reverse Mortgage if I Already Have a Mortgage?

Reverse Mortgage Myth: Cannot get reverse mortgage if already have a mortgage

Reverse Mortgage Fact: False, you can get a reverse mortgage if you have an existing mortgage, often times homeowners get a reverse to pay off their mortgage balance and eliminate monthly payments.

Yes, you can get a reverse mortgage if you already have a mortgage, and the reverse mortgage itself can help you do that—assuming you’ve got enough equity.

Here’s how it works:

• With a reverse mortgage, like the FHA’s HECM (the most common type), you’re borrowing against your home’s equity.
• The lender calculates how much you can get based on your age (62+), home value, interest rates, and current equity.
• If you’ve got an existing mortgage, that balance is part of the equation—it’s a debt against your equity.
• The rule is, the reverse mortgage proceeds must pay off that mortgage in full at closing.
• Whatever’s left after that can provide you with a line of credit, or monthly payments.

Quick Example:

Say your home’s worth $300,000, and you owe $100,000 on your current mortgage. The reverse mortgage might qualify you for $200,000 (depending on your age and rates). At closing, $100,000 goes to pay off  your old loan, leaving you $100,000 to use. 

HUD data shows about 40-50% of HECM borrowers use it to pay off forward mortgages, so it’s common. You need to have enough equity in the home to qualify, FHA says at least 50% equity is typical..

Reverse mortgages can be a useful financial tool for eligible seniors looking to supplement income, pay for healthcare, or cover living expenses, but they also come with complexities that should be thoroughly understood before proceeding.

Learn more about eligibility requirements for a reverse mortgage, situations where a reverse mortgage is best used, and common myths around reverse mortgage that we debunk with facts