How Do Reverse Mortgages Work in Florida: Costs, Counseling, and Heirs

A reverse mortgage in Florida lets a homeowner age 62 or older convert part of their home equity into cash without selling the property or making monthly loan payments. The most common version is the Home Equity Conversion Mortgage (HECM), insured by the Federal Housing Administration and capped at a 2026 lending limit of $1,249,125.¹ Instead of paying a lender, the lender pays you, and the balance grows over time until a triggering event, usually the last borrower dying, selling, or moving out, makes the loan due.

Who Can Get One

The youngest borrower on the loan must be at least 62. If both spouses are on the mortgage, the lender uses the younger spouse’s age to calculate how much you can borrow, so a younger co-borrower reduces the available amount.² The home has to be your principal residence, meaning you live there most of the year.³

You also need substantial equity. If a traditional mortgage still sits on the property, its balance must be low enough that the reverse mortgage proceeds can pay it off at closing. Whatever remains after that payoff is your available cash.

Single-family homes qualify without complication. Manufactured homes work only if they were built after June 15, 1976, and carry an affixed HUD certification label on each section.⁴ Condos must either appear on the FHA-approved project list or clear the Single-Unit Approval process. Two-to-four unit properties qualify if you occupy one of the units yourself.

Every applicant goes through a financial assessment that reviews credit, income, and monthly expenses. The lender is trying to confirm you can keep paying property taxes, homeowners insurance, and any flood insurance. If that assessment turns up concerns, the lender must carve out a Life Expectancy Set-Aside (LESA) from your proceeds to pay those bills automatically.⁵ A LESA reduces the cash you can actually use, so clean credit going in matters.

How Much You Can Borrow

Three variables set your borrowing amount: the age of the youngest borrower or eligible non-borrowing spouse, current interest rates, and the lesser of your home’s appraised value or the FHA lending limit.² For 2026 that ceiling is $1,249,125, and the calculation stops there even if your home is worth more.¹

Older borrowers qualify for a higher share of the home’s value, and lower rates raise it too. In practice borrowers typically access between 40% and 70% of the home’s value, not the full equity. Any existing mortgage balance, closing costs, and required set-asides come off the top before you see a dollar.

A federal rule caps first-year draws at 60% of your principal limit.⁶ The main exception is when you have to pay off an existing mortgage or cover closing costs at settlement; those mandatory obligations can push year-one disbursements above the cap.

How You Get the Money

Once the loan closes and the three-day rescission window passes, you choose how the funds come to you.⁷ The options are:

Lump sum. All available funds at once. This is the only option with a fixed rate.
Line of credit. Draw as needed; the unused portion grows over time, giving you access to more money later. Adjustable rate only.
Tenure payments. Equal monthly payments for as long as you live in the home as your principal residence. Adjustable rate.
Term payments. Equal monthly payments for a set number of years you pick. Adjustable rate.

You can combine a line of credit with monthly payments. Every dollar you draw begins accruing interest immediately and reduces the equity remaining in the home.

What It Costs in Florida

Reverse mortgages are expensive to open. Nearly all of the costs can be rolled into the loan balance rather than paid at closing, but they still reduce your available equity.

FHA Mortgage Insurance

Every HECM carries two layers of FHA mortgage insurance. The upfront premium is 2% of the lesser of your home’s appraised value or the FHA lending limit. On a home appraised at $400,000, that’s $8,000 at closing. An ongoing annual premium of 0.5% of the outstanding balance accrues monthly and is added to what you owe.⁸ This insurance is what backs the non-recourse guarantee: if the loan balance eventually exceeds the home’s value, FHA covers the gap.

Origination Fee

Lenders can charge up to 2% of the first $200,000 of your home’s value, plus 1% of the amount above $200,000, capped at $6,000. If that formula comes out below $2,500, the lender may charge up to $2,500 as a minimum. Not every lender charges the maximum, so this is worth comparing.

Florida Taxes and Closing Charges

Florida imposes a documentary stamp tax of $0.35 per $100 on the promissory note.⁹ The state also charges a nonrecurring intangible tax of 2 mills, effectively $2 per $1,000, on the mortgage amount. On a reverse mortgage with a $300,000 maximum claim amount, those two taxes together add roughly $1,650. You’ll also pay for the FHA appraisal, title search, title insurance, and recording fees, all of which vary by county.

The Required HUD Counseling Session

Before a lender can process your application or charge an appraisal fee, you have to complete a one-on-one session with a HUD-certified counselor from the HECM Roster.¹⁰ The counselor walks through the loan’s long-term cost, how it drains equity over time, what your heirs will face, and what alternatives might work instead.

Bring documentation of your income, existing debts, property tax history, homeowners insurance, and any flood insurance certificates. The fee typically runs around $125 and some agencies waive it based on your finances. Your counseling certificate stays valid for 180 days.¹¹ Miss that window and you’ll need another session.

What You Still Have to Pay Every Year

A reverse mortgage has no monthly loan payments, but falling behind on the property itself is the most common way borrowers end up in default, and that default can lead to foreclosure just like on a regular mortgage.

You have to keep paying Florida property taxes, which vary by county. Effective rates across the state run from roughly 0.5% in lower-tax counties to around 1.1% in higher-tax areas, with a statewide average near 0.74%. You need to maintain homeowners insurance, and in coastal Florida wind and hurricane coverage is a significant annual expense on its own. If the property sits in a Special Flood Hazard Area, you’ll need a separate flood policy.

Servicers monitor these payments annually. If you fall behind, the servicer may pay the taxes or premiums for you and add those advances to your loan balance. Repeat failures can trigger the loan becoming due. You’re also responsible for keeping the home in reasonable condition that meets FHA standards.

When the Loan Comes Due

A HECM becomes due and payable when the last surviving borrower dies, sells the home, or conveys title. Moving out for more than 12 consecutive months does it too, even if the absence is a health care facility stay.¹² Failing to pay property taxes, keep insurance in force, or maintain the home can also make the loan callable.

After a triggering event, the servicer notifies the estate and heirs that the mortgage is due. The parties involved then have 30 days from that notice to act: pay the balance in full, arrange to sell, offer a deed in lieu of foreclosure, or fix whatever condition caused the default.¹² Selling a home rarely takes 30 days, and HUD allows servicers to grant up to two additional 90-day extensions when heirs show they are actively working to resolve the debt.

You Never Owe More Than the Home Is Worth

A HECM is a non-recourse loan. You and your heirs will never owe more than the home’s value, even if the loan balance has grown beyond what the property is worth. The lender cannot pursue bank accounts, retirement funds, or any other assets. When sale proceeds fall short, FHA insurance covers the difference.⁸

Heirs Can Keep the Home for 95% of Its Value

Heirs who want to hold onto the property don’t have to pay the full loan balance. Federal rules let them satisfy the debt by paying 95% of the home’s current appraised value, even when the loan balance is higher.¹² If the balance is lower than the appraised value, they pay the balance. In appreciating Florida markets, that rule can leave real equity for the family.

If Your Spouse Isn’t on the Loan

A non-borrowing spouse doesn’t automatically lose the home when the borrower dies. Federal rules create a Deferral Period allowing an eligible non-borrowing spouse to stay in the home, though no further loan disbursements are made. All of these conditions have to be met:¹³

Married to the borrower when the loan closed and remained married through the borrower’s lifetime.
Disclosed to the lender at origination and specifically identified in the mortgage paperwork.
Occupied and continues to occupy the property as their principal residence.
Establishes legal ownership or another ongoing legal right to remain in the home for life within 90 days of the borrower’s death.

The deferral lasts as long as the surviving spouse keeps meeting those conditions and stays current on taxes, insurance, and maintenance. Moving out or falling behind ends the deferral and the loan comes due. Because the surviving spouse is not a borrower, they cannot take further draws during the deferral. If the monthly reverse mortgage payments were a primary income source, losing them alongside a spouse creates real strain worth planning for.

Taxes and Government Benefits

Reverse mortgage proceeds are loan advances, not income, so the IRS does not tax them. Whether you take a lump sum, monthly payments, or line-of-credit draws, none of it lands on your tax return as taxable income. Interest that accrues on the loan isn’t deductible until you actually pay it, which typically happens when the loan is repaid, and even then the deduction may be limited because reverse mortgage debt generally falls under home equity debt rules unless you used the proceeds to buy, build, or substantially improve the home.¹⁴

Social Security retirement and Medicare are unaffected. Means-tested benefits are a different story. For Supplemental Security Income (SSI), reverse mortgage draws are not counted as income in the month received, but any funds still sitting in your account on the first day of the next month become a countable resource.¹⁵ The SSI resource limit for an individual is $2,000.¹⁶ Cross that threshold and you could lose eligibility. The same logic applies to Medicaid for long-term care. If you rely on either program, spending or allocating your draws within the same month you receive them is critical.

1
U.S. Department of Housing and Urban Development (HUD). HECM – Home Equity Conversion Mortgage for Lenders
2
U.S. Department of Housing and Urban Development (HUD). HUD FHA Reverse Mortgage for Seniors (HECM)
3
Consumer Financial Protection Bureau. Can Anyone Take Out a Reverse Mortgage Loan?
4
Department of Housing and Urban Development (HUD). FHA Requirements for Manufactured Homes – Section: Age Requirements
5
HUD.gov. HECM Financial Assessment and Property Charge Guide
6
HUD User. Home Equity Conversion Mortgage Program Analysis
7
Consumer Financial Protection Bureau. How Long Do I Have to Rescind?
8
HUD.gov. HUD Handbook 4235.1 REV-1 – Home Equity Conversion Mortgages
9
Florida Department of Revenue. Documentary Stamp Tax
10
HUD Exchange. Reverse and HECM Counseling – What HUD-Certified Housing Counselors Need to Know
11
HUD.gov. Certificate of HECM Counseling
12
eCFR. 24 CFR Part 206 – Home Equity Conversion Mortgage Insurance
13
eCFR. 24 CFR 206.55 – Deferral of Due and Payable Status for Eligible Non-Borrowing Spouses
14
Internal Revenue Service. For Senior Taxpayers
15
Centers for Medicare & Medicaid Services (CMS). Letter Regarding Treatment of Lump Sum Payments from Home Equity Loans and Reverse Mortgages
16
Social Security Administration. 2026 Cost-of-Living Adjustment (COLA) Fact Sheet