When a reverse mortgage borrower dies, the loan becomes due and payable, and the heirs have a short window to act: sell the house, pay the balance, or hand the property back. Federal rules give the estate roughly six months from the death, with extensions possible beyond that, and allow a payoff capped at 95 percent of the appraised value.
Consider an heir in Pinellas County, Florida whose mother died in March holding a Home Equity Conversion Mortgage with a balance of $214,000. The due and payable letter arrived six weeks later, and a local appraisal came back at $268,000. That left two workable numbers: pay $214,000 and keep the house, or sell it, clear the loan and about $16,000 in closing costs, and divide roughly $38,000 among three siblings. None of the three could qualify for a $214,000 mortgage, so a sale was the only route to an end in a check rather than a foreclosure docket.
What actually happens to the loan when the borrower dies?
A Home Equity Conversion Mortgage, or HECM, is the reverse mortgage insured by the Department of Housing and Urban Development. The loan is not forgiven at death. It matures, the servicer sends a due-and-payable notice, and the regulatory clock starts running.
The Consumer Financial Protection Bureau describes the first deadline plainly: “Once your heirs receive a due and payable notice from the lender, they have 30 days to buy, sell, or turn the home over to the lender to satisfy the debt.” The agency adds that “It might be possible for the timeline to be extended up to six months so your heirs can sell the home or obtain their own loan to purchase the home.” HUD’s regulation sets the boundary from the servicer’s side: under 24 CFR 206.125, “The mortgagee shall commence foreclosure of the mortgage within six months of the due date,” or within such additional time as the Commissioner approves.
The second number matters more. Heirs are not trapped by an underwater balance. The Bureau states it directly: “They must repay the full loan balance, or at least 95 percent of its appraised value if the loan balance owed is more than the home value.” Federal mortgage insurance absorbs the shortfall, and the estate is not chased for it.
What should heirs do, and in what order?
1. Send the servicer a certified death certificate and name who speaks for the estate. Nothing moves until the servicer knows who the successor in interest is.
2. Request the payoff figure and the due and payable date in writing. Interest and insurance premiums keep accruing after death, so a payoff quoted in June is not the payoff in September.
3. Order an appraisal, or review the servicer’s. The 95 percent figure comes from an appraisal, which makes that report the most valuable document in the file when the balance sits close to the value.
4. Choose the exit and put it in writing. Selling, refinancing, paying the balance, and signing a deed in lieu are the four recognized paths, and servicers grant extensions far more readily when a signed contract is attached to the request.
5. Close before the extension lapses. A HECM foreclosure filing does not erase the equity, but it adds legal costs to the payoff and shortens every remaining option.
Because HECM deadlines interact with state probate rules, heirs should have a licensed attorney review the servicer’s letter and the will before any date on it passes.
What about a surviving spouse who never signed the loan?
HUD built a separate track for that person. Under 24 CFR 206.55, due and payable status “will be deferred for as long as the Eligible Non-Borrowing Spouse continues to meet the Qualifying Attributes.” Those include marriage to the borrower at closing and for the rest of the borrower’s life, being named at origination, and continuing to occupy the property as a principal residence.
The regulation also requires that the spouse establish a legal right to remain “within 90 days from the death of the last surviving HECM borrower.” A deferral is not forgiveness: taxes, insurance, and upkeep still have to be paid, and the balance keeps growing.
According to HUD’s Fiscal Year 2025 report to Congress on the FHA insurance funds, as of September 30, 2025, the agency insured “more than 681,000 reverse mortgages with a maximum claim amount of over $64.3 billion.” The servicing rule itself sits in 24 CFR 206.125, and the Bureau’s consumer summary is published in its answer on reverse mortgages after a death.
|
Route |
What it requires |
Typical time |
What the heirs end up with |
|---|---|---|---|
|
Pay the balance in cash |
Liquid funds equal to the payoff |
2 to 4 weeks |
The house, free of the HECM |
|
Refinance into a forward mortgage |
Credit, income and an appraisal |
30 to 60 days |
The house, with a new monthly payment |
|
List on the open market |
Repairs, showings and a financed buyer |
60 to 120 days |
Equity after commission, repairs and holding costs |
|
Sell to a direct buyer |
Authority to convey and a closing date |
2 to 4 weeks |
Equity after the payoff and closing costs |
|
Deed in lieu of foreclosure |
Servicer and HUD approval |
1 to 3 months |
No equity, and no deficiency either |
Where does a direct buyer fit?
HomeWise, a direct home-buying company that purchases distressed single-family houses, including inherited homes carrying a matured reverse mortgage, in Florida, Texas, Georgia and other states, works the servicer side of these files alongside the estate. Its staff asks for the payoff figure and the due-and-payable date on the first call, sends the ratified contract and proof of funds to the servicer so an extension request has something concrete attached, and pays the HECM balance, accrued interest, and insurance premiums out of the purchase price at closing. The company publishes an explainer on inheriting a house with a mortgage and a page on selling an inherited house as-is, including houses left empty since the death.
The advantage is timing. An empty house with deferred maintenance and an accruing payoff rarely survives a 90-day listing, and buyers such as HomeWise remove the financing contingency that pushes those closings past the extension date.
Frequently asked questions
How long do heirs have to sell a house with a reverse mortgage?
The first deadline in the due and payable notice is 30 days, and servicers commonly extend it to about six months when the estate shows progress. HUD can approve additional time beyond that. Extensions are discretionary, so a signed contract attached to the request carries far more weight than a phone call.
What is the 95 percent rule on a reverse mortgage?
If the HECM balance is larger than the house is worth, heirs can satisfy the debt by paying 95 percent of the current appraised value instead of the full balance. Federal mortgage insurance covers the difference. The figure comes from an appraisal, which is why ordering one early matters so much.
Can a non-borrowing spouse stay in the house?
Possibly. HUD allows a deferral of due-and-payable status for an Eligible Non-Borrowing Spouse who was married to the borrower at closing, was named at origination, and still occupies the property as a principal residence. That spouse must also establish a legal right to remain within 90 days of the borrower’s death.
Do heirs owe money if the reverse mortgage balance is higher than the value?
No. A HECM is a non-recourse loan, so the estate is not pursued for the shortfall once the house is sold or surrendered under HUD’s rules. The practical risk runs the other way: waiting past the deadlines adds legal costs and can consume equity that would otherwise reach the family.
Disclaimer: This content is for general informational purposes only and should not be considered as financial advice. The content is not intended to be a substitute for professional financial advice, investment advice, or any other type of advice. You should seek the advice of a qualified financial advisor or other professional before making any financial decisions.
