How Much Does a Reverse Mortgage Cost?
A reverse mortgage has upfront costs (an origination fee, an initial mortgage insurance premium and third-party closing costs) and ongoing costs (interest, an annual mortgage insurance premium and any servicing fee) that are added to the balance each month. The CFPB says a reverse mortgage is typically more expensive than other home loans, and what you'll pay depends on the lender, the home and how much you borrow, so ask each lender for every cost in writing.
Last updated October 22, 2026Upfront costs
On a Home Equity Conversion Mortgage (HECM), the most common kind, the one-time costs at the start are:
- Origination fee, paid to the lender. Federal rules cap it, and a lender can charge less than the cap.
- Initial mortgage insurance premium.
- Third-party closing costs, such as the appraisal, title search and title insurance, surveys, inspections, recording fees, mortgage taxes, flood certification and the credit check, charged at what they actually cost.
- Counseling. HUD-approved counselors may charge a reasonable fee, but can't charge you if you can't afford it, and must tell you the cost before the session.
You can pay these in cash or out of the loan. Paying out of the loan means you bring no money to closing, but it leaves less of the loan for you to use, and those costs then carry interest as part of the balance.
Ongoing costs
These are added to the balance each month, so each month's interest and fees are charged on the interest and fees already added:
- Interest on what you've borrowed.
- Annual mortgage insurance premium, figured on the outstanding balance.
- Servicing fees some lenders charge for statements, sending your payments and checking that the loan's terms are met.
On top of these, you keep paying the home's own bills: property taxes, homeowners insurance, any flood insurance and HOA dues, and upkeep. The CFPB points out that the larger the balance and the longer you keep the loan, the more you pay in ongoing costs.
What the mortgage insurance does
If the balance grows past the home's value when the loan is repaid, mortgage insurance covers the difference, so you or your heirs won't owe more than the home is worth. The premiums for it are part of what makes the balance grow.
What drives your total cost
- How much you borrow and when. Interest and the annual premium are charged on what you've drawn, so a larger balance costs more over time.
- How long the loan runs. The longer it's open, the more interest and premium build up.
- The lender's fees and rate. These differ from lender to lender.
Comparing offers
The CFPB suggests comparing loan options, fees and interest rates from several lenders. Ask each one to put its origination fee, interest rate, servicing fee and estimated closing costs in writing so you can line them up. Proprietary reverse mortgages, which some lenders offer for higher-value homes, follow their own terms rather than the HECM rules, so ask about each cost the same way.
| Origination fee | Upfront, in cash or from the loan; capped under federal rules |
|---|---|
| Initial mortgage insurance premium | Upfront, in cash or from the loan |
| Third-party closing costs | Upfront, at actual cost |
| Interest | Added to the balance monthly |
| Annual mortgage insurance premium | Added to the balance monthly |
| Servicing fee | Added to the balance, if the lender charges one |
| Taxes, insurance, HOA dues, upkeep | Paid by you, for as long as you have the loan |
Related questions
Sources
- https://www.consumerfinance.gov/ask-cfpb/how-much-does-a-reverse-mortgage-loan-cost-en-237/
- https://www.ecfr.gov/current/title-24/subtitle-B/chapter-II/subchapter-B/part-206
- https://www.hud.gov/hud-partners/single-family-hecmhome
- https://www.consumerfinance.gov/ask-cfpb/are-there-different-types-of-reverse-mortgages-en-226/
- https://www.consumerfinance.gov/ask-cfpb/what-happens-if-my-reverse-mortgage-loan-balance-grows-larger-than-the-value-of-my-home-en-1217/
Sourced from licensed loan officers and brokers in the FreeRateUpdate network.
Educational information only, not individualized financial or legal advice. Program details and rates change; verify current terms with a licensed loan officer before making a decision.