Massachusetts Reverse Mortgage: Rules, Costs, and Protections

To take out a reverse mortgage in Massachusetts, you have to be at least 60 years old (62 for the far more common federal Home Equity Conversion Mortgage, or HECM), occupy the home as your primary residence, complete in-person counseling with a counselor approved by the Executive Office of Elder Affairs, and use a lender whose reverse mortgage program has been approved by the state Division of Banks. The Massachusetts reverse mortgage requirements layer extra borrower protections on top of federal rules, including a seven-day commitment period before you’re bound and a separate three-day federal right to cancel after closing.¹

Who Can Qualify

State law opens reverse mortgages to homeowners aged 60 and up, but almost every reverse mortgage written in Massachusetts is a HECM, and HECMs require you to be 62.¹ If you’re 60 or 61, you’d need to find a proprietary (non-HECM) product that the Division of Banks has approved, and those are uncommon.

The property has to be your primary residence and designed for no more than four families. For HECMs, that includes single-family homes, two-to-four-unit buildings where you occupy one unit, and HUD-approved condominiums.² The home has to meet minimum property standards; if it doesn’t, the lender will flag required repairs before closing.

You also need enough equity. Either own the home free and clear, or carry a mortgage balance small enough that it can be paid off at closing from your own funds or from the reverse mortgage proceeds themselves.² Federal rules don’t set a fixed equity percentage, but the math has to leave meaningful proceeds after the existing balance is cleared.

The Financial Assessment and Set-Asides

Before approving a HECM, the lender has to evaluate whether you can keep up with property taxes, homeowner’s insurance, and HOA fees. This assessment looks at your payment history on those obligations over the past 24 months, along with your income, assets, and credit.³ If property taxes exceed 10 percent of your gross income, FHA treats that as a higher-risk indicator.

When the assessment raises concerns about ongoing property charges, the lender has to carve out part of the loan proceeds into a Life Expectancy Set-Aside (LESA). That money is reserved for future tax and insurance payments and isn’t available for personal use.⁴ A LESA reduces the cash you can access, but it also reduces the risk of defaulting later and losing the home.

Mandatory In-Person Counseling

Massachusetts requires in-person counseling with a counselor employed by a third-party organization whose reverse mortgage program has been approved by the Executive Office of Elder Affairs.⁵ This is stricter than the federal rule, which generally allows phone counseling. The counselor has to provide the lender with a written certification that you completed an approved program before the loan can move forward.

Sessions cover the financial implications of a reverse mortgage, alternatives that may serve you better (property tax deferrals, home equity loans, public benefits), and your ongoing responsibilities. The counselor is independent of the lender. Fees generally run $125 to $250 and can be paid from loan proceeds.

How Much You Can Borrow and How You Receive It

Three things set the amount available to you: the age of the youngest borrower (or eligible non-borrowing spouse), the current interest rate, and the lesser of your home’s appraised value or the HECM lending limit. For 2026 that limit is $1,249,125, which caps how much of your home’s value the loan can tap.⁶ Older borrowers qualify for a larger percentage because the expected loan duration is shorter. With two borrowers, the younger age governs.⁷

HECMs offer several disbursement choices:

A line of credit you draw against as needed, with the unused portion growing over time at the same rate the loan balance would accrue interest.
Tenure payments: fixed monthly payments for as long as you live in the home.
Term payments: fixed monthly payments for a set number of years.
A lump sum at closing, available only with a fixed interest rate, and often yielding a lower total than other options.
A combination of a line of credit with either tenure or term payments.

The line of credit is the most popular because it’s flexible and the unused balance grows.

What It Costs

Reverse mortgages consume equity through upfront and ongoing charges, and state law requires lenders to disclose all of them before you commit.¹ For a HECM the main costs are:

Initial mortgage insurance premium (MIP) of 2 percent of your home’s appraised value (or the HECM limit, whichever is less), paid at closing.
Annual MIP of 0.5 percent of the outstanding loan balance, added to what you owe each year.
An origination fee of up to 2 percent on the first $200,000 of home value and 1 percent above that, capped at $6,000 total, with a floor of $2,500 for lower-value homes.
Standard closing costs such as appraisal, title insurance, and recording fees.
Servicing fees, often built into the interest rate rather than charged separately.

Most of these can be financed into the loan, but financed costs start accruing interest immediately. Financing $15,000 in closing costs at age 65 can cost $40,000 or more by the time the loan is repaid. You also have the right to prepay the loan at any time without penalty.

Your Core Protections in Massachusetts

Seven-Day Commitment Period

After you accept the lender’s written commitment in writing, you’re not bound by that acceptance for seven days.¹ During that week you can walk away with no penalty and no obligation. This is a state-level protection that most states don’t offer.

Three-Day Right to Cancel

Separately, federal Regulation Z gives you until midnight of the third business day after closing to rescind the loan. The clock starts on the latest of three events: when the transaction closes, when you receive all material disclosures, or when you receive the required rescission notice.⁸ If the lender fails to deliver proper disclosures or the rescission notice, that right extends to three years.

Non-Recourse Protection

HECMs are non-recourse loans. You and your heirs can never owe more than the home is worth at the time the loan is repaid. If the balance has grown to $400,000 and the home sells for $300,000, FHA’s mortgage insurance absorbs the difference. Massachusetts requires every reverse mortgage program submitted to the Division of Banks to state whether the loan is recourse or non-recourse, so confirm that in your loan documents.¹ All reverse mortgages recorded in Massachusetts must comply with the program requirements approved by the Division.⁹

Required Disclosures

Before closing, your lender has to obtain a signed statement confirming you received disclosure of every contractual event that could force a sale of your home.¹ The loan documents also have to spell out the interest rate and how it’s calculated, the disbursement method you chose, and whether the rate is fixed or variable.

Chapter 93A Accountability

Massachusetts Chapter 93A prohibits unfair or deceptive practices in trade or commerce.¹⁰ A lender that uses misleading promotional materials, buries fees in fine print, or pressures a borrower into a product they don’t need can face enforcement by the Attorney General. You can also file a private 93A lawsuit, and knowing or willful conduct can result in double or triple damages. Compliance with the Division of Banks’ approval process doesn’t shield a lender from a 93A claim.¹¹ Complaints go to the Attorney General’s office or the Division of Banks.

If a Spouse Isn’t on the Loan

For HECMs closed on or after August 4, 2014, a non-borrowing spouse can remain in the home and defer repayment after the borrower’s death if they were named in the loan documents at closing, were legally married to the borrower at closing and remained married until the borrower’s death, have lived in the home continuously as a primary residence, and stay current on property taxes and insurance. These protections are automatic.

For HECMs closed before August 4, 2014, protection isn’t automatic. The lender may voluntarily assign the mortgage to HUD under the Mortgagee Optional Election, and HUD will then defer repayment under similar conditions. If the lender declines, foreclosure can proceed.

A borrower can also be away in a healthcare facility for up to 12 consecutive months without the loan being called due.¹² After 12 months the loan can come due, but a qualifying non-borrowing spouse who stays in the home and meets the criteria above can keep living there without repaying.

When the Loan Comes Due

A reverse mortgage becomes due and payable when the last surviving borrower dies, sells the home, moves out permanently, or fails to meet loan obligations such as paying property taxes or keeping insurance in force.¹ A move to a healthcare facility for more than 12 consecutive months counts as ceasing to occupy the home, unless a qualifying non-borrowing spouse remains in residence.

Heirs get a due-and-payable notice and then have 30 days to decide whether to buy the home, sell it, or turn it over to the lender. Extensions of up to six months are available to allow time for a sale or financing.¹³

If the loan balance exceeds the home’s value, heirs don’t have to make up the difference. They can satisfy the debt by selling for at least 95 percent of the current appraised value, with FHA insurance covering the shortfall. Heirs who want to keep the home can also pay 95 percent of appraised value rather than the full loan balance, which can be a meaningful discount after years of compounding.¹³

Foreclosure Protection and the Right to Cure

Chapter 244, Section 35A gives any residential mortgage borrower, including a reverse mortgage holder, a 90-day right to cure a default. The lender can’t accelerate the loan or start foreclosure until at least 90 days after sending written notice specifying the nature of the default, the amount needed to cure it, and the deadline.¹⁴ For reverse mortgage borrowers, the usual trigger isn’t a missed mortgage payment: it’s unpaid property taxes or lapsed insurance.

Taxes and Government Benefits

Reverse mortgage proceeds are a loan advance, not income, so they aren’t subject to federal income tax, whether you take a lump sum, monthly payments, or line-of-credit draws.¹⁵ Interest accruing on a reverse mortgage isn’t deductible as it accrues because you haven’t paid it. It becomes potentially deductible only when the loan is paid off, and even then it’s treated as home equity debt, meaning the deduction applies only if the proceeds were used to buy, build, or substantially improve the home securing the loan.¹⁶ If you used the funds for living expenses or medical bills, the interest generally isn’t deductible at all.

Proceeds don’t count as income for Social Security, but they can affect Medicaid and SSI. Money sitting in your bank account at month-end counts as a resource, so a large lump sum you don’t spend can push you over the limit. Transferring those funds to a family member for less than fair market value can trigger a Medicaid penalty period.¹⁷ Borrowers who rely on Medicaid or SSI should generally take monthly payments or a line of credit rather than a lump sum.

Because you make no monthly payments, interest and the annual MIP are added to your balance every month, and the debt compounds.¹⁸ Over 15 or 20 years in a flat market, the balance can approach or exceed the home’s value. Non-recourse protection means that won’t become a personal debt, but it can leave little or nothing for heirs. That trade-off is the central thing counseling is designed to make sure you understand before you sign.

1
General Court of Massachusetts. Massachusetts General Laws Chapter 167E, Section 7 – Reverse Mortgage Loans
2
Consumer Financial Protection Bureau. Can Anyone Take Out a Reverse Mortgage Loan
3
U.S. Department of Housing and Urban Development (HUD). HECM Financial Assessment and Property Charge Guide
4
U.S. Department of Housing and Urban Development (HUD). HECM Financial Assessment and Property Charge Guide – LESA
5
Legal Information Institute. 209 CMR 55.04 – Requirement for Third Party Counseling
6
U.S. Department of Housing and Urban Development (HUD). HUD FHA Announces 2026 Loan Limits
7
U.S. Department of Housing and Urban Development (HUD). HUD FHA Reverse Mortgage for Seniors (HECM)
8
Consumer Financial Protection Bureau. 12 CFR Part 1026 (Regulation Z) – 1026.23 Right of Rescission
9
General Court of Massachusetts. Massachusetts General Laws Chapter 183, Section 67
10
General Court of Massachusetts. Massachusetts General Laws Chapter 93A, Section 2 – Unfair Practices
11
Mass.gov. 5.1-106 Reverse Mortgage Products – Guidance for Managing Compliance and Reputation Risks
12
Consumer Financial Protection Bureau. What Happens if I Have to Move Out of My Home Into a Nursing Home or Assisted Living and I Have a Reverse Mortgage
13
Consumer Financial Protection Bureau. With a Reverse Mortgage Loan, Can My Heirs Keep or Sell My Home After I Die
14
General Court of Massachusetts. Massachusetts General Laws Chapter 244, Section 35A – Right of Residential Real Property Mortgagor to Cure a Default
15
Internal Revenue Service. Publication 936 (2025) – Home Mortgage Interest Deduction
16
Internal Revenue Service. For Senior Taxpayers
17
U.S. Department of Health and Human Services. Letter Regarding Lump Sums and Estate Recovery
18
Federal Trade Commission. Reverse Mortgages