Fed Just Cut Rates: Great Time to Get a Reverse Mortgage?

Big news:

On September 17, the Federal Reserve just lowered interest rates for the first time since 2024.

If you’re a homeowner age 62 or older, this could be a big opportunity.

Lower rates can increase how much of your home’s equity you can access and reduce how quickly interest accrues on what you borrow.

How?

With a reverse mortgage.

What Is a Reverse Mortgage?

A reverse mortgage (formally called a Home Equity Conversion Mortgage, or HECM) is a special type of loan designed for homeowners 62 and older.

Instead of making monthly mortgage payments, the lender pays you — either as a lump sum, monthly payments, a growing line of credit, or a mix of those options.

You keep the title to your home and can live there as long as you:

• Maintain it as your primary residence
• Keep property taxes and homeowners’ insurance current
• Take care of basic upkeep

The loan is repaid later — usually when you sell the home, move out, or pass away. Your heirs can choose to keep the house by paying off the loan or sell it and keep any remaining equity.

What the Fed Actually Did

The Fed lowered its main interest rate by a quarter of a percent.

This decision is meant to keep the economy steady — prices have been high, job growth is slowing down, and the Fed wants to give people a little relief.

When the Fed does this, it often leads to lower borrowing costs across the economy. Mortgage rates don’t always drop overnight, but they often move lower after a cut like this.

Why Lower Rates Matter for Reverse Mortgages

Reverse mortgages work differently from regular mortgages, but interest rates still matter.

• When rates go down, you may be able to get more money from your home. The amount you qualify for is partly based on interest rates — lower rates mean you can access a bigger percentage of your home’s value.
• Lower rates also mean interest builds up more slowly. This can help preserve more of your home’s equity over time.

Example: Let’s say your home is worth $400,000 and you’re 70 years old. Before the Fed cut, you might have qualified for around $180,000 in proceeds. After a 0.25% rate cut, you could see that number jump to $190,000 or more — an extra $10,000 just because of the lower rate.

Put simply: lower rates = more options and potentially better terms.

If You’re Thinking About Getting a Reverse Mortgage

This rate cut might make now a good time to look again at your numbers.

Even a small drop in rates can mean thousands of dollars more in available funds. If you were on the fence before — maybe the numbers didn’t quite work — this could push you over the line.

You can use a reverse mortgage in a few ways:

• Get a lump sum of cash
• Set up monthly payments to supplement your income
• Create a line of credit you can tap into when you need it

Lower rates can make all of these options a little more attractive.

If You Already Have a Reverse Mortgage

You may want to check if refinancing your existing reverse mortgage would let you access more money — especially if your home’s value has gone up.

Or, if you have a reverse mortgage line of credit, know that lower rates can affect how quickly that credit line grows. This isn’t necessarily bad, but it’s something to be aware of if you were counting on that growth as part of your plan.

Pros and Cons of Acting Now

So, rates have been cut. But should you make your move now? Or should you keep waiting?

Why acting now could be smart:

• You may be able to unlock more equity from your home.
• You’ll benefit from lower interest charges over time.
• You can lock in today’s terms before rates change again.

Why you might wait:

• The Fed could cut rates again later this year — meaning you could qualify for even more.
• But waiting also means rates could go back up, and you’d lose this window of opportunity.

This is a personal decision, and there’s no one-size-fits-all solution.

But if you’re trying to unlock more equity and you want to lock in today’s rates without waiting and hoping for another rate cut, now might be a good time to find out more about a reverse mortgage.

What if Rates Drop Again?

Some retirees wonder if they should wait in case the Fed cuts rates again. That’s always a possibility — but rates can also rise if inflation picks up or economic data changes.

Acting now locks in today’s terms and protects you from future increases, while waiting is essentially a bet that rates will keep falling.

Simple Next Steps

Decided NOW is the right time? Here’s what you can do next:

1. Get an updated quote. See exactly how much you could qualify for with today’s lower rates.
2. Compare scenarios. Ask your loan officer to show you the numbers if you wait vs. act now.
3. Schedule required counseling. HUD requires you to speak with an independent counselor before getting a reverse mortgage.
4. Review your plans. Think about how long you want to stay in your home and what you want to use the funds for.
5. Talk it through. A quick conversation with a reverse mortgage professional can help you decide if this is the right move.

Bottom Line

The Fed’s decision to cut rates is good news for many seniors. It could mean more cash, lower costs, and better terms if you take out a reverse mortgage now.

If you’d like to see what this means for your specific situation, get an instant reverse mortgage quote right here—it only takes 60 seconds, and you might be blown away by how much equity you can unlock!

How fast will these lower rates affect reverse mortgages?

Usually pretty quickly — sometimes within days — but it depends on how lenders update their pricing. If you check your numbers this week, you’ll probably already see the impact of the Fed’s cut.

Will I definitely get more money if I apply now?

Most likely, yes — when interest rates drop, the formula used to calculate how much money you can borrow usually allows you to access a bigger portion of your home’s value. The exact amount still depends on your age, your home’s value, and FHA’s lending limits.

Should I wait in case rates drop even more?

That’s a good question. The Fed could cut rates again later this year, which might give you access to even more funds. But rates can also go back up. If you need the money soon, it might make sense to act now while you know today’s numbers.

I already have a reverse mortgage. Can I refinance to take advantage of lower rates?

Yes. If your home’s value has gone up or if lower rates let you qualify for more, you might be able to refinance your existing reverse mortgage to access additional funds. Your lender can run the numbers to see if it’s worth it.

What if I have a reverse mortgage line of credit?

Lower rates can slow down how quickly your unused line of credit grows. That’s not necessarily bad, but it’s something to consider — and it could be a reason to ask about refinancing to lock in a higher available amount.

Will my heirs still get the house if I take out more money now?

Yes — your heirs still have the right to keep the home by paying off the loan balance (usually by selling or refinancing). Taking out more money just means there will be less equity left when the loan is repaid.

How long does it take to get a reverse mortgage?

Typically, 4–6 weeks from start to finish. A big part of that timeline is the required counseling session and appraisal. If you think you might want to move forward, it’s smart to start the process soon so you can lock in today’s rate.

What if I change my mind?

You have a built-in “cooling-off period.” By law, you can cancel a reverse mortgage within three business days after closing and owe nothing.

Are there upfront costs?

Yes, there are closing costs and FHA insurance premiums, just like a regular mortgage. Many of these can be rolled into the loan so you don’t have to pay them out of pocket.

What happens if rates go back up after I close?

Your loan terms are locked in when you close. If rates rise later, your reverse mortgage is not affected.

How do I get started?

Easy! Get an instant quote and find out how much equity you could unlock by filling out this quick form (takes less than a minute).