Last updated: October 28, 2026
Short answer: When the last borrower on a reverse mortgage dies, the loan comes due. Heirs can pay it off, sell, or sign a deed in lieu of foreclosure. If the home is worth more, they keep the difference. If it's worth less, HUD lets them sell for at least 95% of appraised value. Get a free home value report.
Key takeaways
- After the lender sends a due and payable notice, the estate or heirs get 30 days to choose: pay off the loan, sell, or sign a deed in lieu (24 CFR 206.125).
- If the loan balance is more than the home is worth, the heirs can sell for at least 95% of the current appraised value, and the lender accepts the net proceeds. The CFPB says FHA mortgage insurance covers the rest.
- The lender generally has to start foreclosure within six months of the borrower's death, but HUD can approve up to two 90-day extensions when heirs show they're actively selling or paying off the loan (HUD Mortgagee Letter 2015-10).
- Property taxes and insurance stay the estate's responsibility until title transfers, according to HUD.
¡Qué tal! I'm Rosie Armenta. Losing a mom or dad is hard enough. Then a letter arrives from a loan servicer you've never heard of, with deadlines, and the house where you grew up suddenly has a clock on it. Take a breath. There's a process, and HUD's rules allow more time to sell than that first 30-day letter may make it seem. Mariela and I want to walk you through it step by step, gently and in plain language.
What happens to a reverse mortgage when the owner dies?
The CFPB says most reverse mortgage loans are Home Equity Conversion Mortgages (HECMs), which are insured by the Federal Housing Administration (FHA). A HECM has to be paid off when the last surviving borrower or Eligible Non-Borrowing Spouse dies, sells the home or no longer lives there as their main home.
If your parent's spouse is still living in the home and qualifies as an Eligible Non-Borrowing Spouse under HUD's rules, the timeline may be different, and that spouse may be able to stay. HUD's flyer for heirs says that spouse has to provide the lender a Non-Borrowing Spouse Certification within 30 days of the last borrower's death, among other requirements.
For everyone else, the loan becomes due and payable. Under HUD's current rule (Mortgagee Letter 2022-15), the servicer sends the estate or heirs a due and payable notice within 30 days after it notifies HUD of the death.
What are my options as an heir?
Under 24 CFR 206.125, the estate or heirs get 30 days from the date of the notice to choose one of these paths:
| Option | What it means | Good fit when |
|---|---|---|
| Pay off the loan and keep the home | Pay the full loan balance, including interest, mortgage insurance and servicer advances, for example with your own new loan | You want to keep the house and can qualify for financing |
| Sell the home | Sell and use the proceeds to pay off the loan. If the balance is higher than the value, sell for at least 95% of the appraised value | No one plans to live there, or the heirs want to divide the proceeds |
| Deed in lieu of foreclosure | Sign the home over to the lender instead of selling it | The home is worth less than the balance and the heirs don't want to manage a sale |
Sources: 24 CFR 206.125 (eCFR, current), HUD "Inheriting a Home Secured by an FHA-insured HECM" and the CFPB, all checked October 25, 2026.
Thirty days goes by fast, but you don't have to finish the sale in 30 days. What you do need is to call the servicer, tell them your plan in writing and keep them updated.
How long do heirs have to sell a reverse mortgage home?
HUD's Mortgagee Letter 2015-10 says the servicer generally has to take the first legal step toward foreclosure within six months of the death of the last surviving borrower. If the heirs show evidence that they're actively marketing the home or trying to pay off the loan, the servicer can ask HUD for up to two 90-day extensions.
That's why it helps to list the home early and keep records: the listing agreement, the listing date, offers and the purchase contract. That paperwork is what supports an extension request. The CFPB also suggests heirs can talk with a HUD-approved housing counseling agency or an attorney.
If the home also has to go through probate, or your parent left a beneficiary deed, my guide on how to sell an inherited house in Arizona explains who has the legal right to sign.
What is the 95% rule for selling a reverse mortgage home?
If the loan balance is more than the home is worth, HUD lets the estate or heirs sell the home for at least 95% of its current appraised value, and the lender accepts the net proceeds as satisfaction of the loan. The CFPB explains that the rest of the loan is covered by the FHA mortgage insurance the borrower paid during the life of the loan. Under 24 CFR 206.125, closing costs on that kind of sale can't be more than the greater of 11% of the sales price or a dollar amount HUD sets.
Here's how the math works in two examples for a home in Avondale:
| Home worth more than the loan | Home worth less than the loan | |
|---|---|---|
| Appraised value | $400,000 | $400,000 |
| Reverse mortgage balance (made-up example) | $250,000 | $450,000 |
| Lowest sale price HUD allows | Enough to pay off the loan | $380,000 (95% of $400,000) |
| Sale price in this example | $400,000 | $380,000 |
| Loan payoff | −$250,000 | Lender accepts the net proceeds |
| Before closing costs, the heirs receive | $150,000 | $0; FHA mortgage insurance covers the rest of the loan |
| Then subtract | Agent compensation, title and escrow, the estate's share of taxes and HOA dues | Closing costs, within HUD's limit |
Value: a made-up appraised value for illustration. Loan balances are made up. Agent compensation is negotiable, not set by law or any association.
What does it cost to hold the house while we sell?
HUD says property taxes and insurance remain the estate's responsibility until title is transferred. While the house sits, budget for:
| Holding cost | Example for an Avondale home | Where the number comes from |
|---|---|---|
| Property taxes | About $1,531 a year, or about $128 a month | 2026 Maricopa County rates for tax area 440100 (9.3588 per $100) on Avondale's 2026 median limited property value of $163,567, before any homeowner credit |
| Homeowners insurance | About $1,194 a year, or about $100 a month | NAIC average Arizona HO-3 premium (2023 data, published 2026) |
| HOA dues | Your HOA's amount | The HOA's statement |
| Utilities | Electric, water, trash and gas at the home | Each utility's bill |
| Upkeep | Yard, pool, pest control, A/C service | Your own quotes |
Tax figures: Maricopa County 2026 tax rate sheet and Maricopa County Assessor 2026–2027 comparison, checked October 28, 2026. A vacant home may need a different insurance policy, so call the insurance agent right away.
If you're deciding what the house might sell for after you account for all these costs, my guide on how to read a seller's net sheet shows each line.
How do I sell my parent's house with a reverse mortgage?
- Call the servicer. Report the death, ask for the loan balance and the due and payable notice, and tell them you plan to sell.
- Confirm who can sign. Find out whether the home goes through probate, a trust or a beneficiary deed, and talk with an attorney.
- Keep the home insured and taxes paid. HUD says the estate stays responsible for both until title transfers.
- Get a value and an appraisal. Ask for a home value estimate now, and request the appraisal the servicer uses for the 95% rule.
- List the home and keep records. Save the listing agreement, showings and offers to support any extension request.
- Send the servicer your contract. Once you accept an offer, send the purchase contract and ask for a written payoff or short-sale approval.
- Close and settle. Escrow pays off the loan, and any remaining proceeds go to the estate or heirs.
Ready to talk about your parent's home?
Start with a free home value report so you know where the home stands against the loan balance. You can also look at recent prices on the Avondale home values page. Then call or text me at 623-295-5770. Mariela and I will take it one step at a time with you and the other heirs, coordinate with the servicer and escrow, and keep you informed in English or Spanish.
Frequently Asked Questions
Do heirs have to pay back a reverse mortgage?
The loan has to be repaid when the last borrower dies, by paying it off, selling the home or signing a deed in lieu. If the balance is higher than the home's value, the heirs can sell for at least 95% of the appraised value, and the CFPB says FHA mortgage insurance covers the rest of the loan.
How long do heirs have to sell a house with a reverse mortgage?
The heirs have 30 days from the due and payable notice to tell the servicer their plan. The servicer generally has to start foreclosure within six months of the death, and HUD can approve up to two 90-day extensions if the heirs are actively selling or paying off the loan.
What is the 95% rule on a reverse mortgage?
If the HECM balance is more than the home is worth, the estate or heirs can sell the home for at least 95% of its current appraised value, and the lender accepts the net proceeds as payment in full.
Can I keep my parent's house if it has a reverse mortgage?
Yes, if you pay off the loan. HUD's flyer for heirs says that to keep the home, the HECM balance must be paid off in full. The CFPB notes heirs may be able to get their own loan to buy the home. Ask the servicer for a written payoff amount and talk with a licensed lender of your choice.
Who pays the property taxes after my parent dies?
HUD says property taxes and insurance remain the estate's responsibility until title is transferred. Keep both current while you sell, so the servicer doesn't have to advance them and add them to the balance.
What if my parent's spouse still lives in the house?
If the spouse qualifies as an Eligible Non-Borrowing Spouse under HUD's rules, they may be able to stay in the home. HUD's flyer says they need to send the lender a Non-Borrowing Spouse Certification within 30 days of the last borrower's death, among other requirements.
Can I sell a reverse mortgage home if it's still in probate?
Someone with the legal right to sign has to sign. That may be a personal representative appointed by the court, a trustee or a beneficiary named in a beneficiary deed. Ask an attorney, and keep the servicer updated so delays are documented.
What happens if heirs do nothing?
If no one pays off the loan, sells or signs a deed in lieu, the servicer can start foreclosure, generally within six months of the death unless HUD approves an extension. Calling the servicer early gives you and the other heirs the most options.
This article is general information, not legal, tax, or financial advice. Please talk with a licensed attorney, CPA, or lender about your situation.
About the authors
Rosie Armenta is a REALTOR® with West USA Realty. She and her daughter, Mariela Armenta, work together as a mother-daughter team. Avondale (85392) is their home base, and they help buyers and sellers across the West Valley in English and Spanish. Call or text 623-295-5770, or get a free home value report.
Rosie Armenta, REALTOR® | West USA Realty | Equal Housing Opportunity
Figures were checked on October 25, 2026 (HUD Mortgagee Letter 2022-15, the Maricopa County tax rate sheet and the Assessor comparison re-checked October 28, 2026), from 24 CFR 206.125 (eCFR), HUD Mortgagee Letters 2015-10 and 2022-15, HUD's flyer "Inheriting a Home Secured by an FHA-insured Home Equity Conversion Mortgage," the Consumer Financial Protection Bureau, the 2026 Maricopa County tax rate sheet, the Maricopa County Assessor's 2026–2027 single-family comparison and the NAIC homeowners insurance report (data for 2023). The loan balances in the example are made up. Your servicer confirms the deadlines for your loan.