The federally-insured reverse mortgage (Home Equity Conversion Mortgages (HECMs)) are insured by the Federal Housing Administration (FHA).
FHA requires a Mortgage Insurance Premium (MIP) to be collected at closing and during the life of the loan. These premiums are charged to the borrower's loan balance. The upfront Mortgage Insurance Premium (MIP) is calculated at 2.0% of your home's appraised value or a maximum of $679,650 (the national lending limit cap of $679,650). For example, a home appraised at $275,000 would have a one-time upfront FHA insurance premium of $5,500. The ongoing FHA insurance premiums are .5% (one-half of one-percent) of each month's calculated outstanding loan balance.
This insurance provides the following protections and peace of mind for borrowers and their children: