This is the definition of house-rich, cash-poor. It's also exactly the problem a reverse mortgage was built to solve.
Texas adds a wrinkle most other states don't have. Because reverse mortgages touch the state's constitutional homestead protections, Texas layers extra rules on top of federal guidelines. Skipping this detail can cost homeowners time, money, or an outright denial.
This guide walks through eligibility, Texas-specific protections, real costs, and alternatives, so you know exactly where you stand before applying.
Key Takeaways
- Homeowners 62+ can convert home equity into cash with no required monthly mortgage payments
- Texas adds constitutional homestead protections and mandatory court-ordered foreclosure on top of federal HECM rules
- Non-recourse protection means you (or your heirs) never owe more than the home's appraised value
- Compare HELOCs, cash-out refinancing, and home equity loans before you commit to a reverse mortgage
What Is a Reverse Mortgage and How Does It Work in Texas?
A Home Equity Conversion Mortgage (HECM) is the FHA-insured reverse mortgage most Texans use. It lets homeowners 62 and older convert part of their home equity into cash. You repay only when you sell, move out permanently, or pass away.
Unlike a traditional mortgage, there's no monthly principal-and-interest bill. Instead, the loan balance grows over time as interest and mortgage insurance premiums accrue, while your available equity typically shrinks.
Payout options include:
- Lump sum (fixed-rate loans only)
- Line of credit that grows when unused
- Monthly payments (term or tenure)
- A combination of the above
Texas home prices give a sense of scale. The statewide median sales price hit $340,000 in March 2025, according to the Texas Real Estate Research Center. That's a healthy equity base for many long-time homeowners, though your actual loan amount depends on your specific home's appraised value, not the statewide median.
Three Reverse Mortgage Types
- HECM – The FHA-insured, federally regulated standard
- Proprietary (jumbo) reverse mortgages – Not federally insured, generally designed for higher-value homes
- HECM for Purchase – Lets you buy a new primary residence using reverse mortgage proceeds plus cash for the difference; you must occupy within 60 days of closing
Non-Recourse Protection Explained
This is the safety net that makes reverse mortgages viable for retirees. Under HUD's non-recourse rule, neither you nor your heirs will ever owe more than the home's appraised value at repayment, even if the loan balance has grown larger. No other assets are on the hook.
This protection doesn't erase the requirement to stay current on property taxes and homeowners insurance, though. Falling behind on those can still trigger foreclosure.
Texas-Specific Laws, Spousal Rules, and Borrower Protections
Texas Constitution Article XVI, §50 treats reverse mortgages as a distinct category of home lending, and it imposes protections that don't exist federally.
The Spousal Age Requirement
Federal HECM rules require only the youngest borrower to be 62 at closing. Texas’ constitutional language defines a reverse mortgage as credit extended to "a person who is or whose spouse is 62 years or older." In practice, Texas lenders typically need both spouses accounted for on the loan documentation before closing.
If your spouse is under 62, talk to a loan officer directly. Your options and structure may differ from a standard HECM setup elsewhere.
Court-Ordered Foreclosure
Texas requires a court order before a reverse mortgage lender can foreclose. This judicial process adds a meaningful layer of protection you won't find with a standard nonjudicial foreclosure state.
Eligible Non-Borrowing Spouse
If one spouse is under 62 and not named on the loan, federal HUD rules still allow that spouse to be designated as an Eligible Non-Borrowing Spouse (ENBS). This lets them continue living in the home under certain conditions if the borrowing spouse passes away first — provided they establish a legal right to remain within 90 days and keep up with taxes, insurance, and occupancy requirements.
What Happens If a Non-Borrowing Spouse Wasn't Protected?
If a spouse who wasn't on the loan and wasn't designated as an ENBS passes away, the loan can become due and payable. The surviving spouse may need to repay the balance or refinance to keep the home. This is exactly why proper spousal disclosure at closing matters so much in Texas.
Homestead Exemptions and Tax Deferral
Spousal and occupancy rules only help if you can also stay current on the home’s carrying costs. Texas homestead relief still applies with a reverse mortgage:
- $140,000 school-district homestead exemption
- Additional $60,000 if you are 65+ or disabled
Figures are per the Texas Comptroller. A reverse mortgage does not cancel these exemptions, but you must still keep property taxes current—even if you separately qualify for a deferral program.
HUD Counseling Is Mandatory
Before applying, every borrower must complete HUD-approved reverse mortgage counseling. Lenders cannot waive it. You need a counseling certificate before the loan can proceed to closing.
Eligibility Requirements and Common Disqualifiers
To qualify for a reverse mortgage in Texas, you need to clear a short list of baseline rules. Miss one, and the file usually stalls in underwriting.
Core requirements:
- Youngest borrower is 62 or older
- Property is your primary residence
- Sufficient home equity to support the loan
- Current on property taxes and homeowners insurance
- Completed HUD-approved counseling
These same screens also create the most common turndowns:
Common disqualifiers:
- Insufficient equity relative to the home's value
- Using the property as a vacation or investment home rather than primary residence
- Unpaid taxes or insurance that raise red flags during underwriting
- A spouse under 62 who isn't properly documented as an eligible non-borrowing spouse in Texas
Rural and Ranch Property Nuances
Texas has plenty of larger-acreage homesteads, and reverse mortgage underwriting still hinges on standard appraisal and marketability requirements. There's no published acreage cutoff.
Rural properties can face more appraisal scrutiny simply because comparable sales are harder to find. If you own a ranch-style property, expect the appraisal to weigh marketability, not just square footage.
Costs, Payment Details, and How Much You Can Get
There are no required monthly payments on a Home Equity Conversion Mortgage (HECM). That said, costs don't disappear. Interest, mortgage insurance premiums (MIP), and servicing fees all accrue against your loan balance over time.
You can receive funds as a lump sum, monthly payments, a line of credit, or a combination—whichever fits your needs.
What determines your loan amount:
- Your age (older borrowers typically qualify for more)
- Your home's appraised value
- Current interest rates
- Any existing mortgage balance that must be paid off at closing
Typical costs to expect:
| Cost Type | Amount |
|---|---|
| Initial MIP | 2% of maximum claim amount |
| Annual MIP | 0.50% of outstanding balance |
| Origination fee | Greater of $2,500 or 2% of first $200,000 (capped at $6,000) |
| Monthly servicing fee | Up to $30–$35 |
For high-value Texas homes, the 2026 FHA HECM lending limit is $1,249,125, per HUD's mortgagee letter, up from $1,209,750 in 2025. This limit applies nationwide, so it's the same ceiling for a home in Austin as it would be in any other state.
Weighing the Decision: Benefits and Alternatives
Key benefits:
- Tax-free access to home equity
- No required monthly mortgage payments
- You keep living in your home
- Flexible payout structures to match your needs
Alternatives worth comparing:
- HELOC – Revolving credit line, but typically requires monthly payments
- Cash-out refinance – Replaces your current mortgage with a larger one and gives you the difference in cash
- Home equity loan – Lump sum against your equity, repaid on a fixed schedule
- Downsizing – Sell and move to a smaller, lower-cost home
- Single-purpose reverse mortgage – Limited-use funds from local governments or nonprofits, often for repairs or tax payments
A reverse mortgage isn't the right fit for everyone. It depends on your age, how long you plan to stay in the home, and whether monthly payments are workable for your budget.
Those factors are easier to sort with a reverse-mortgage specialist. Chris Bonnema at Excel Mortgage Services works with Texas homeowners on retirement-income options and has an office in Georgetown.
He can run your numbers on spousal eligibility, appraisals on larger properties, or which payout structure fits your plans. Reach him at (805) 975-8584 or chris@myreloans.com.
Frequently Asked Questions
Can I get a reverse mortgage in Texas?
Yes. Texas allows reverse mortgages under Article XVI, §50 of the state constitution, which adds spousal age protections beyond federal HECM rules. Choose a lender who understands those Texas-specific requirements.
What are the main eligibility requirements for a reverse mortgage?
You'll need the youngest borrower to be 62+, the home must be your primary residence, you need sufficient equity, and you must complete HUD-approved counseling before applying.
How much money can I get from a reverse mortgage?
Your amount depends on your age, your home's appraised value, current interest rates, and any existing mortgage balance that needs paying off at closing.
Are there monthly payments on a reverse mortgage?
There are no required monthly mortgage payments. The loan is typically repaid when you sell the home, move out permanently, or pass away.
What would disqualify me from a reverse mortgage?
Common disqualifiers include insufficient home equity, using the property as a non-primary residence, unpaid taxes or insurance, or a spouse under 62 without proper documentation in Texas.
What happens if my spouse dies and they weren't on the loan?
If your spouse was not designated as an eligible non-borrowing spouse, the loan may become due and payable. You might need to repay or refinance to keep the home.
