What to look for when comparing reverse mortgage lenders

Reverse mortgage lenders differ in the loans they offer, the fees they charge, and how they handle customer service. You will not find one "best" lender for everyone — the right choice depends on your home value, how much you need to borrow, and whether you want a fixed or adjustable rate. Before you contact any lender, know that the Federal Housing Administration (FHA) requires you to complete a counseling session with an independent third party, which costs between $0 and $300 and is not part of the lender's fee.

The most common type is the Home Equity Conversion Mortgage (HECM), which is FHA-insured and available from many lenders. Some lenders also offer proprietary reverse mortgages, which are not FHA-insured and typically require a higher home value. Comparing lenders means looking at origination fees (usually 1 to 2 percent of the loan amount), closing costs, interest rates, and the types of payment plans each one offers.

Key Takeaways

  • HECM loans are FHA-insured and available from dozens of lenders; proprietary loans require a higher home value but may have lower fees on expensive homes.
  • Origination fees, closing costs, and interest rates vary between lenders, so requesting quotes from at least three is standard practice.
  • You must complete FHA-required counseling before you can close, and the counselor must be independent of the lender.
  • Fixed-rate HECMs let you take all the money at closing; adjustable-rate HECMs let you draw over time and usually have lower rates.
  • Lenders differ in customer service quality and speed, which you can check through state licensing boards and consumer complaint databases.

Major lenders offering HECM loans

New York Life, may provide Rate, and Amerivest are among the largest HECM lenders by volume. New York Life is known for lower origination fees on HECM loans and has a long history in the reverse mortgage market. may provide Rate (formerly may provide Rate Mortgage) is a large mortgage lender overall and offers both HECM and proprietary products. Amerivest specializes in reverse mortgages and focuses on customer education before closing.

Other established HECM lenders include Finance of America Reverse, Reverse Mortgage Funding, and LendingTree's reverse mortgage partners. Finance of America Reverse is one of the largest servicers of reverse mortgages and handles both origination and servicing. Reverse Mortgage Funding is a smaller, specialized lender. LendingTree does not originate loans itself but connects you with multiple lenders so you can compare offers in one place.

Lender size and market share do not may provide the best experience for you. A smaller lender may offer faster processing or more personalized service, while a large lender may have more payment plan options. Request quotes from at least two or three lenders before deciding.

Proprietary reverse mortgages and jumbo lenders

If your home is worth $800,000 or more, you may want to compare proprietary reverse mortgages alongside HECM loans. Proprietary loans are not FHA-insured, so there is no insurance premium, but they are only offered by a handful of lenders and require a higher home value to make financial sense. Fidelity Home Loan and Reverse Mortgage Funding both offer proprietary products.

Proprietary loans can sometimes provide a larger lump sum on a high-value home because there is no FHA loan limit. However, they come with less regulatory oversight than HECM loans, so read the terms carefully. Ask the lender to explain the total cost of the loan over time, not just the upfront fees.

How to request and compare loan quotes

Contact at least two or three lenders and ask for a Loan Estimate, which is required by federal law and shows origination fees, closing costs, interest rate, and monthly payment or draw options. The Loan Estimate must be provided within three business days of your process. Compare the total cost, not just the interest rate, because a lower rate with higher fees may cost you more overall.

Ask each lender about the payment plans they offer. A line of credit (which you draw as needed) usually has a lower interest rate than a lump sum at closing. Ask whether the interest rate is fixed or adjustable, and if adjustable, what the margin and index are. Request a sample amortization schedule so you can see how the loan balance grows over time.

Do not rush. You have the right to cancel within three business days of closing without penalty. Take time to understand the terms, and do not let a lender pressure you into a decision.

Checking a lender's licensing and complaint history

Verify that a lender is licensed in your state by checking your state's Department of Financial Services or equivalent agency. Search the Nationwide Mortgage Licensing System (NMLS) at www.nmlsconsumeraccess.org to confirm the lender's license status and look up any disciplinary history.

Check the Consumer Financial Protection Bureau (CFPB) complaint database at www.consumerfinance.gov/complaint to see complaints filed against the lender. Read the complaints and the lender's responses to understand what issues have come up. A few complaints is normal for a large lender; a pattern of unresolved complaints is a red flag.

You can also contact your state's Attorney General office or local Better Business Bureau to ask about complaints. These sources do not tell you everything, but they give you a starting point for evaluating whether a lender has a track record of fair dealing.

Red flags and common mistakes to avoid

Do not work with a lender who pressures you to close quickly, promises a specific interest rate without a written Loan Estimate, or tells you that you must use a particular financial advisor or insurance product. These are common tactics used to rush borrowers into unfavorable terms.

Avoid lenders who do not clearly explain the total cost of the loan or who bundle the FHA counseling fee into the loan itself (you should pay for counseling separately and choose your own counselor). Be wary of any lender who suggests you use the reverse mortgage proceeds to buy an investment product or to pay off a debt quickly.

Do not assume that the lender with the lowest origination fee is the cheapest overall. A lender with a 1 percent origination fee but $5,000 in other closing costs may cost more than a lender with a 2 percent fee and $2,000 in closing costs. Always compare the total cost.

Questions to ask before you commit

Ask each lender: What is the total cost of this loan, including all fees, over the first five years and over the life of the loan? How long does processing usually take? What happens if I want to pay off the loan early — is there a prepayment penalty? Can I change my payment plan later, and if so, what does that cost?

Ask about servicing: Will the lender service the loan, or will it be sold to another company? If sold, how will I make payments and get statements? What is the customer service phone number, and what are the hours? Request the name and contact information of a recent customer you can speak with (some lenders provide references).

Ask about the counseling requirement: Does the lender have a list of approved counselors, or do I find my own? Can I do the counseling online or by phone, or must it be in person? How much does it cost?

Frequently Asked Questions

Do all reverse mortgage lenders offer the same types of loans?

No. All major lenders offer HECM loans, but not all offer proprietary loans. Some lenders specialize in one type of payment plan (lump sum or line of credit), while others offer all options. Ask each lender what products and payment plans they have before requesting a quote.

Can I switch lenders after I start the process?

Yes. You can cancel within three business days of closing without penalty. You can also shop with multiple lenders at the same time — each Loan Estimate is free, and comparing offers is normal. If you change lenders after closing, you will have to pay closing costs again.

What is the difference between a fixed-rate and adjustable-rate reverse mortgage?

A fixed-rate HECM requires you to take all the money at closing. An adjustable-rate HECM lets you draw money over time and usually has a lower interest rate. Adjustable rates change based on a market index, so your rate and the amount you can borrow may change. Fixed rates are simpler if you need a large lump sum; adjustable rates are better if you want to draw gradually.

What if I have a second mortgage or home equity line of credit?

You must pay off any existing liens on the home before you close on a reverse mortgage. Some lenders will use part of the reverse mortgage proceeds to pay off the second mortgage or HELOC. Ask the lender whether they can do this and what it costs.

How do I know if a lender is legitimate?

Check the NMLS database and your state's Department of Financial Services to confirm the lender is licensed. Search the CFPB complaint database and the Better Business Bureau. Legitimate lenders will have a physical address, a phone number you can call, and a clear explanation of all fees in writing.