What Really Happens to a Reverse Mortgage When the Borrower Passes Away

“Will the bank take my house after I die?”

“Will my kids have to pay off the loan right away?”

“How much time will my family actually have to sell or refinance the home?”

These are some of the most common — and most important — questions people ask when considering a reverse mortgage. And it’s no wonder. For many homeowners, the idea of leaving their home to loved ones is just as important as enjoying financial flexibility during retirement.

The good news? Reverse mortgages have clear, well-defined rules and protections that give families time and options after the borrower passes away.

But many of these protections are misunderstood — and that confusion can lead to unnecessary stress during an already difficult time.

Here’s exactly what happens to a reverse mortgage after the borrower’s death, what heirs are (and aren’t) responsible for, and how families can avoid common pitfalls.

Step 1: Notifying the Lender

When a reverse mortgage borrower passes away, the first step is simple:

The lender (or loan servicer) must be notified.

Typically, heirs or the estate have 30 days to inform the servicer of the borrower’s death. This is usually done by submitting:

• A copy of the death certificate
• A statement of intent (e.g., to sell, refinance, or deed the home back)
• Contact information for the executor or responsible party

This step starts the official clock on the repayment timeline.

Step 2: Heirs Have Six Months to Satisfy the Loan

For FHA-insured Home Equity Conversion Mortgages (HECMs) — which make up the vast majority of reverse mortgages in the U.S. — heirs have six months to pay off the loan.

They can do this by:

• Selling the home and using the proceeds to pay off the loan balance.
• Refinancing the loan into a traditional mortgage if they want to keep the home.
• Deeding the home back to the lender if there’s no equity left and they prefer to walk away.

During this time, no monthly mortgage payments are required, and the home can usually remain vacant while it’s being prepared for sale.

Step 3: Extensions Are Available (Up to 12 Months Total)

If more time is needed — for example, due to a slow probate process or a longer home sale timeline — heirs can request up to two 90-day extensions, for a maximum of 12 months total.

As long as the estate is actively working toward satisfying the loan (e.g., keeping the home maintained, listed, and insured), lenders typically grant these extensions.

Step 4: No Personal Liability — Ever

One of the most important features of a HECM reverse mortgage is that it’s a non-recourse loan.

That means:

• Heirs are not personally responsible for the debt.
• If the loan balance is greater than the home’s value, the estate can simply hand the keys back to the lender.
• FHA insurance covers the difference — the lender cannot go after the heirs or other estate assets.

This protection is what makes reverse mortgages a powerful retirement planning tool: seniors can access their home equity without putting their children on the hook later.

How to Protect Your Family

If you or your parents are considering a reverse mortgage, there are a few smart steps to ensure things go smoothly down the road:

• Have clear estate plans in place. Setting up a trust or Lady Bird deed can help avoid lengthy probate and allow heirs to act quickly.
• Keep heirs informed. Make sure your children or executors understand the loan terms and timeline before anything happens.
• Work with a knowledgeable lender. The right reverse mortgage company will help guide families through this process and communicate with servicers if issues arise.
• Document everything. From the death certificate to the listing agreement to extension requests, keep records of every interaction.

The Bottom Line

Reverse mortgages are designed with built-in protections for heirs.

With the right guidance, families typically have six to twelve months to handle the loan after a borrower passes away, and no one is ever personally on the hook if the home’s value doesn’t cover the balance.

Ready to Learn More?

If you have questions about how a reverse mortgage works during life and after, our team is here to help.

👉 Get Your Personalized Reverse Mortgage Quote

We’ll walk you through every step — so you and your family can make confident, informed decisions about your home and your future.

Frequently Asked Questions

Will the bank take my house when I die?

No. The lender does not automatically take ownership of the home when the borrower dies. Title remains in the borrower’s or estate’s name. The loan becomes due and payable, and the heirs decide whether to sell, refinance, or deed the home back.

How long do my heirs have to pay off the reverse mortgage?

In most cases, heirs have six months to satisfy the loan. They can request up to two 90-day extensions, giving them up to 12 months total.

This timeline provides plenty of breathing room to handle probate, list the home, and close a sale or refinance. During this period, no monthly mortgage payments are required.

What if the loan balance is higher than the home’s value?

Reverse mortgages are non-recourse loans, which means heirs are never personally liable for any shortfall. If the balance is higher than the value, the heirs can simply sign the property back to the lender (deed-in-lieu) and walk away. FHA mortgage insurance covers the difference. Neither the estate nor the heirs are responsible for the gap.

Can my children keep the house?

Yes. If your heirs want to keep the home, they can refinance the reverse mortgage into a traditional loan.

FHA rules allow them to pay either the full loan balance or 95% of the home’s current appraised value, whichever is less. This gives families flexibility to retain the property without overpaying.

What happens if we need more time because of probate or delays?

If the home is tied up in probate or other legal proceedings, heirs can request extensions in writing. As long as the estate is actively working toward resolving the loan (e.g., keeping the home maintained and listed for sale), lenders typically grant these extensions. The key is clear communication and documented intent.

Can a reverse mortgage ever lead to foreclosure after death?

Foreclosure can occur only if heirs don’t respond, don’t communicate intentions, or miss key deadlines. It’s rare when the family follows the proper steps. The easiest way to avoid issues is to notify the lender promptly, keep records of all communication, and request extensions early if needed.

What can we do now to make things easier for our family later?

The best steps are to:

• Create a clear estate plan (trust or Lady Bird deed) to bypass probate delays.
• Inform heirs of the loan terms and post-death timeline in advance.
• Work with an experienced reverse mortgage lender who can guide the family through the process.
• Keep documentation organized, including loan papers, insurance records, and the lender’s contact info.