Can you sell a Downriver home that has a reverse mortgage?
Yes. A reverse mortgage doesn’t lock you into the house, but the sale has to pay it back. The CFPB’s reverse mortgage guide says that if you sell while you have the loan, you’ll have to pay back the money borrowed plus interest and fees. HUD’s rule for Home Equity Conversion Mortgages, the 24 CFR part 206 rules, makes the loan due and payable in full if the borrower conveys all title and no other borrower keeps title.
Most of what follows is about HECMs. The CFPB calls them the most common type of reverse mortgage, and its move-out guidance says it applies only to HECMs. If yours is a different kind, read your own loan papers and ask the servicer.
Here’s the practical part. Ask the servicer for a payoff figure good through your expected closing date, not a balance from last year’s statement, because the payoff your title company orders for closing is the one that counts. Our guide to the mortgage payoff statement explains how that request works.
What does the payoff look like if you sell while you still live there?
It depends on how the sale price compares with what you owe. The CFPB guide lays it out in a table, and the HUD rule says the same thing in regulation language.
| If you sell for | What happens to the loan |
|---|---|
| At least the loan balance | The loan is paid off, and you keep what’s left |
| Less than the balance, but at least the appraised value | The sale money goes to the loan, and the mortgage insurance covers what’s still owed |
The HUD rule puts it this way: when the HECM isn’t due and payable, the borrower can sell for at least the lesser of the loan balance or the appraised value.
That second row is the safety net people forget about. If prices in your part of Downriver haven’t kept up with the balance, you aren’t on the hook for the gap as long as the sale meets that floor. The CFPB’s heirs page says the rest of the loan is covered by the mortgage insurance the borrower paid over the life of the loan.
So before you set a list price, get two numbers in front of you: a current payoff estimate from the servicer, and a realistic value.
Put them side by side with the costs that come out of any sale, like the commission, title charges and transfer tax. If the price comfortably clears the payoff and those costs, you’re in the first row of the table, and the reverse mortgage is just one more line on the settlement statement. If it’s close, slow down and get the payoff in writing before you agree to a price, because what’s left after the payoff and those costs is what you walk away with. Our Riverview net proceeds guide shows how sellers work through the costs that come out of the sale.
What has to stay current while you get ready to sell?
Keep the loan in good standing until the sale closes. The CFPB’s guide lists three main requirements a reverse mortgage borrower must meet: the home must be your principal residence, you must pay property charges such as property taxes and homeowners insurance on time, and you must keep the home in good condition. HUD’s rule says the loan can come due, with HUD’s approval, if the borrower doesn’t pay property charges as required or doesn’t perform another obligation under the mortgage.
That matters during a listing. A listing can run longer than you expect, and a missed tax payment or a lapsed insurance policy in that window can turn a voluntary sale into a deadline. If you’re already behind on property taxes, our guide for Downriver sellers behind on property taxes covers how that gets settled at closing.
Moving out early is the other trap. The CFPB says that if you move somewhere else for most of the year and no co-borrower lives in the home, the loan will need to be paid back, and its guide says a home stops being your principal residence when you’re away for more than 12 consecutive months in a healthcare facility with no co-borrower living there. HUD’s rule lists both situations among the reasons the loan comes due. If you’re planning to move in with family or into assisted living before the house sells, talk to the servicer first so you know which clock you’re on.
What changes once the loan is due and payable?
The clock starts. A HECM can come due while you’re still alive. HUD’s rule lists the triggers, and the CFPB describes the same ones, including when the home stops being the principal residence of a borrower, and when a borrower is out of the home for more than 12 consecutive months because of illness and no other borrower lives there.
When the loan comes due, the lender sends a due and payable notice. The HUD rule gives the borrower, the estate or the heirs 30 days from that notice to act, and the CFPB’s heirs page gives the same 30 days. The options in the rule include:
- paying the loan balance in full
- selling the home
- giving the lender a deed in lieu of foreclosure
The CFPB says the timeline might be extended up to six months so heirs can sell or get their own loan to buy the home. Don’t count on it. Ask the servicer in writing what extension applies.
The 95 percent rule
This is the number that matters if the home is worth less than the loan. The CFPB’s heirs page says heirs who sell must repay the full balance, or at least 95 percent of the appraised value if the balance is more than the home is worth. Its reverse mortgage guide says the same for a borrower who has a due and payable notice: the home may sell for 95 percent of the appraised value or the amount owed, whichever is less. The HUD rule lets the sale close for an amount HUD sets by notice, which can’t be more than 95 percent of the appraised value.
That gives heirs room to price for a quicker sale without owing the difference, as long as the sale meets that floor. A bargain sale to a friend or relative below it is a different conversation with the servicer, so get the number in writing before you price the house.
What should you line up before you list?
Get the paperwork moving before the sign goes in the yard. Two questions come first: who has the authority to sign, and what else the sale has to pay.
Who signs, and what else comes out of the sale?
The person with the legal right to sell signs. While you’re alive, that’s you. After a death, the HUD rule refers to the borrower or other party with legal right to dispose of the property, which may mean going through probate first. Our guide to selling an inherited Downriver home through probate explains that process.
The reverse mortgage payoff is one line on the settlement statement. Ask the title company to walk you through the other closing costs and any transfer tax on the same statement. If the home is in Wayne County, our Wayne County transfer tax guide explains the county and state transfer taxes, and Monroe County sellers can start with the Monroe County transfer tax guide.
A checklist before the listing goes live
- Find out what kind of reverse mortgage it is. HECM rules don’t cover proprietary loans.
- Ask the servicer whether the loan is due and payable. If a notice has gone out, write down the date and the deadline.
- Get a payoff estimate in writing, and plan for the final payoff to be higher on closing day.
- Get a realistic value. If the balance is close to or above it, the appraisal decides the floor.
- Settle who has authority to sign. For an estate, that may mean probate before closing.
- Talk to a HUD-approved housing counselor or an attorney if the loan is due or the numbers are tight. The CFPB points people to both.
If you’re also deciding what to do with the house and its contents in what order, our guide on selling a family home in the right order helps you plan the steps.
Frequently asked questions
Do these rules apply to every reverse mortgage?
No. The CFPB says its guidance on moving out applies only to Home Equity Conversion Mortgages, and its heirs page describes HECMs as the most common type of reverse mortgage. A proprietary reverse mortgage follows its own loan documents, so ask the servicer which kind you have.
What if my spouse still lives in the home but isn't on the loan?
It depends on when the loan was made and whether your spouse qualifies as an Eligible Non-Borrowing Spouse under HUD's rules. The CFPB says that spouse may be able to stay without paying off the loan in some cases, and the HUD rule lists that spouse among the people the lender notifies when the loan comes due.
Can I just hand the house back instead of selling it?
Once the loan is due, a deed in lieu of foreclosure is one of the options. The HUD rule lists it among the choices the lender has to give, and the CFPB says heirs can turn the home over to the lender to satisfy the debt.
Who can help me sort out the options?
The CFPB points heirs and borrowers to a HUD-approved housing counseling agency or an attorney, both on its heirs page and in its reverse mortgage guide. Talk to one before you list if the loan is due or the balance is close to the home's value.
Sources
- 24 CFR 206.125, Acquisition and sale of the property (eCFR, current as of November 5, 2026)
- 24 CFR 206.27, Mortgage provisions (eCFR, current as of November 5, 2026)
- CFPB, With a reverse mortgage loan, can my heirs keep or sell my home after I die?
- CFPB, What happens if I have a reverse mortgage and I have to move out of my home?
- CFPB, You Have a Reverse Mortgage: Know Your Rights and Responsibilities
Ready to talk strategy? Call David Goad at 313-319-7688.
If you want to dig deeper into the local market, check out the Downriver MI Real Estate Guide. And if you want to get a better feel for who I am and how I work, here's the About David Goad — Downriver Realtor page. If you're comparing agents and trying to figure out who really knows this market, this page on the best Realtor in Downriver MI gives you more context too.
