HECM loans, more commonly known as reverse mortgages for homeowners 60+ use residual income (RI). Reverse mortgage guidelines also allow asset dissipation which is a calculation which converts your assets into an income calculation. Qualified seniors, especially those on a fixed or limited income, will have a far easier time qualifying for reverse mortgages over traditional mortgage loans.
Reverse mortgages offer the ability to borrow up to roughly 50 percent of the home’s value with flexible repayment terms. Borrowers have the option to make monthly payments or defer payback until the last remaining borrower leaves the home. Contrary to popular belief, borrowers do not relinquish ownership. Unlike any other type of mortgage loan, there is no mandatory monthly payment required. Payback, including loan interest, is deferred until the last remaining borrower permanently leaves the home.