The PLS is a reverse mortgage style loan offered by the federal government that allows borrowers of Age Pension age to receive a tax-free fortnightly income stream by taking out a loan against the equity in their home. Good to know: A reverse mortgage works a little like a home loan in reverse.

What reverse mortgage is not federally insured?

A proprietary reverse mortgage is a loan that allows senior homeowners to access the equity in their homes through a private lender. They are not as tightly-regulated as home equity conversion mortgages (HECM) and are not federally-insured.

Is the reverse mortgage backed by the government?

The short answer to that question is no, reverse mortgages are not government funded. HECM loans are typically funded by a private lender and insured by the federal government. The Federal Housing Administration (FHA) insures 1 all HECM loans to protect borrowers as well as lenders.

Is the FHA insured by a reverse mortgage?

The Federal Housing Administration (FHA) insures 1 all HECM loans to protect borrowers as well as lenders. While there are some privately issued reverse mortgages that do not require FHA insurance, HECM loans are more common and offer certain protections to borrowers.

What happens to a reverse mortgage for a senior?

A reverse mortgage for seniors allows the borrower to sell the home and repay the reverse mortgage at any time, just as they would a traditional mortgage loan. Once the loan balance is repaid, the borrower can keep the remaining equity and move on. What happens to the loan if I pass away? The heirs of the estate have two options:

What’s the loan limit for a reverse mortgage?

A key feature of the HECM is that it abides by the Federal Housing Administration’s loan limit, which was set at $822,375 for 2021. This means that homeowners with homes valued above this number cannot access more cash. HECMs were established in 1989 and are the most commonly used reverse mortgage.