For many older homeowners, especially those who have been in their home for decades, the idea of using the equity they’ve built up to fund retirement or ease financial stress can be pretty appealing. That’s exactly what a reverse mortgage is designed to do.

A reverse mortgage isn’t a loan you pay every month. In fact, it’s the opposite. Instead of making payments to a bank, the bank pays you—based on the value of your home. You keep living in your home, and there are no monthly payments required. The loan is only repaid later—usually when you move out or pass away—by selling the home or refinancing the loan. If the sale of the home brings in more than you owe, that leftover equity still goes to your heirs.

Now, this kind of loan isn’t for everyone. It’s only available to people who are at least 62 years old, and the home must be your primary residence—not a vacation home or rental. You’ll also need to have a good amount of equity built up. Most lenders want to see at least 50%, though it varies.

One of the biggest advantages is flexibility. You can take the money as a lump sum, in monthly payments, or as a line of credit to draw from when needed. Better yet, the money you get isn’t taxed. That’s because it’s not income—it’s just your equity being returned to you in a different form.

But it’s not all upside. Reverse mortgages come with fees—higher than most traditional loans. There’s mortgage insurance, origination charges, and closing costs. And you still have to keep up with your property taxes, homeowners insurance, and basic upkeep. If you don’t, you could risk defaulting on the loan and possibly even losing the home.

Another thing to think about is what happens when you’re no longer in the home. If you move into assisted living, for example, and you’re gone for more than a year, the lender may call the loan due. At that point, your heirs will need to sell the home or refinance the balance. The good news is, reverse mortgages are non-recourse. That means your heirs won’t owe more than the home is worth, even if the loan balance is higher.

So who is a reverse mortgage really for? It tends to work best for homeowners who want to stay in their homes long-term and need a source of income to supplement retirement. Maybe you’re house rich but cash poor, and selling your home isn’t something you want to do. Maybe you’ve got medical bills, or you want to delay tapping into your retirement accounts. Or maybe you just want to live a little more comfortably in your later years.

There are alternatives too. If you’re not quite sure a reverse mortgage is the right fit, you could consider a home equity line of credit, selling the home and downsizing, or renting out part of your home. All of those options have pros and cons, and the right choice depends on your goals, your health, and your finances.

A reverse mortgage can be a powerful tool when used wisely, but it’s not a one-size-fits-all solution. That’s why the process includes a required counseling session with a HUD-approved housing counselor. It’s their job to make sure you understand what you’re getting into and whether it really makes sense for your situation.

At the end of the day, it’s about giving older homeowners more choices. Retirement doesn’t look the same for everyone, and neither do the financial strategies that make it possible. A reverse mortgage might be just the thing you need—or it might not. But either way, understanding how it works is a good step toward making a smart, informed decision.

If you’re curious whether this is the right move for you or a loved one, I’d be happy to connect you with someone who specializes in these loans, so you can explore the options without pressure or obligation.