Loan guide
Reverse mortgages in Michigan
For Michigan homeowners 62 and older, a reverse mortgage converts home equity into income with no monthly payment — but the single biggest risk here is local, and it's property taxes.
- Age
- 62+
- Monthly payment
- None (balance grows instead)
- Main MI risk
- Property-tax / insurance default
- Required
- HUD-approved counseling
How reverse mortgages work
The most common reverse mortgage is a HECM (Home Equity Conversion Mortgage), insured by the FHA for borrowers 62 and up. Instead of you paying the lender, the lender pays you — as a lump sum, monthly income, or line of credit — and the balance grows over time. Nothing is due until you sell, move out, or pass away, at which point the home is typically sold to repay the loan.
You keep the title and can never owe more than the home is worth. The trade-offs are real: fees are higher than a traditional loan, the growing balance reduces the equity your heirs inherit, and — crucially — you remain responsible for property taxes, insurance, and upkeep.
What's different in Michigan
That last point is where Michigan reverse-mortgage borrowers get into trouble: falling behind on property taxes or insurance is the main trigger for reverse-mortgage default here. With effective tax rates above 2% in parts of Wayne County, the annual bill is substantial, and a HECM does not escrow it for you unless a set-aside is arranged.
Federal rules require independent HUD-approved counseling before you can take a HECM, which every Michigan borrower must complete. Treat it as protection, not a formality — it's the step that surfaces whether a reverse mortgage genuinely fits your situation.
Requirements at a glance
- Youngest borrower age 62 or older
- Home is your primary residence with significant equity
- Completed HUD-approved reverse-mortgage counseling
- Ability to keep paying taxes, insurance, and upkeep
Frequently asked questions
What is a reverse mortgage?
A loan for homeowners 62+ that converts home equity into cash — as a lump sum, monthly income, or line of credit — with no monthly payment required. The balance grows over time and is repaid when you sell, move, or pass away. The most common type is the FHA-insured HECM.
How does a reverse mortgage work in Michigan?
The same as elsewhere federally, but Michigan's higher property taxes make one rule critical: you must keep paying taxes, insurance, and upkeep, and falling behind is the leading cause of reverse-mortgage default in the state. HUD-approved counseling is required before you can take one.
What are the pros and cons of a reverse mortgage?
Pros: no monthly payment, you keep the title, and you can't owe more than the home's value. Cons: higher fees than a normal loan, a growing balance that shrinks your heirs' inheritance, and continued responsibility for taxes and insurance — the obligation that trips up many Michigan borrowers.
This guide is general information, not a lending decision. Loan limits and program rules change — verify current figures with a licensed Michigan lender and confirm licensing at NMLS Consumer Access. See all Michigan loan types or compare lenders.