Using a Reverse Mortgage to Fund Retirement in Florida

How a Reverse Mortgage Works

A reverse mortgage lets homeowners age 62+ borrow against home equity without making monthly mortgage payments. The loan balance grows over time as interest accrues. You repay the loan when you sell the home, move out permanently, or pass away.

The most common type is a Home Equity Conversion Mortgage (HECM), insured by HUD. Private "jumbo reverse" products exist for higher-value homes (above the HECM limit of $1,209,750 for 2025).

How You Receive the Money

• Lump sum at closing (fixed-rate option)
• Monthly payments for a set number of years, or for as long as you live in the home
• Line of credit you draw against as needed (the unused balance actually grows over time)
• Any combination of the above

The line of credit option is the most popular — and the most strategically powerful — because the available credit grows at the same rate as the loan accrues interest.

How Much You Can Borrow

Three factors set your principal limit:

• Age of the youngest borrower — older borrowers can access a higher percentage of equity
• Home value (up to the HECM limit)
• Current interest rates — lower rates mean higher principal limits

Rough rule: a 70-year-old with a $500,000 home and current rates might access $250,000–$300,000 in initial principal limit.

Costs

• Origination fee: Capped at $6,000 by HUD
• Upfront MIP: 2.0% of home value (financed into loan)
• Ongoing MIP: 0.5% of loan balance annually
• Standard closing costs: appraisal, title, recording, etc.

HECMs are expensive to set up. They're not a good choice if you might move within 5 years.

Your Obligations

You must continue to:

• Live in the home as your primary residence
• Pay property taxes
• Pay homeowner's insurance (and flood insurance where required)
• Maintain the property in good repair

Failure on any of these can trigger default and foreclosure. This is the single biggest source of reverse mortgage horror stories.

When a Reverse Mortgage Makes Sense

• You plan to age in place for at least 7–10 more years
• You're house-rich, cash-poor — most of your wealth is in the home
• You want to delay claiming Social Security — using HECM income to bridge gives larger lifetime benefits
• You want a buffer against sequence-of-returns risk — the line of credit can substitute for investment portfolio withdrawals during market downturns
• You have no heirs counting on inheriting the home, OR your heirs are aligned with the plan

When It Doesn't

• You may move within 5 years
• You can't afford ongoing taxes and insurance
• You have other heirs assuming they'll inherit a debt-free home
• You're using it to fund discretionary spending rather than essential retirement income

Florida-Specific Notes

Florida has the second-largest HECM market in the country after California. Specific items to consider:

• The state has strong consumer protections, and Florida requires HUD-approved counseling before you sign.
• Insurance costs in coastal counties have eaten into the math for many borrowers — verify your insurance is affordable long-term.
• HOA fees on condos are part of the obligation calculation; high HOA can disqualify you.
• The Save Our Homes property tax cap continues to apply on your primary residence with a reverse mortgage.