Can You Rent Out a Home With a Reverse Mortgage?
For many retirees, finding ways to increase monthly income and improve cash flow is an important part of retirement planning. A reverse mortgage is one option that may help—but it comes with specific occupancy rules. One common question is whether you can rent out a home that has a reverse mortgage.
The short answer: you cannot rent out the entire property and live elsewhere. However, there are limited situations where rental income is allowed, as long as you continue to live in the home.
Reverse Mortgage Occupancy Rules
A key requirement of any reverse mortgage is that the home must be the borrower’s primary residence. This means the property must be the place where you live most of the year.
Because of this requirement, a home that is fully rented out and no longer occupied by the homeowner does not qualify for a reverse mortgage.
In addition to occupying the property as your main residence, borrowers must also meet the following general guidelines:
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Be at least 62 years old (in most cases)
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Have substantial equity in the home
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Keep the property in good condition
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Stay current on property taxes, homeowners insurance, and any HOA dues
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Complete mandatory counseling with a HUD-approved reverse mortgage counselor
What Is Considered a Primary Residence?
Your primary residence is the home where you live for the majority of the year. Whether it’s a single-family home, townhouse, or condominium, homeowners who live in their property may qualify for certain tax advantages, such as mortgage interest deductions or capital gains exclusions when selling (subject to IRS limits).
With a reverse mortgage, maintaining the home as your principal residence is essential. Generally, you must live in the property for more than six months each year. If all borrowers are absent from the home for more than twelve consecutive months, the property is no longer considered a primary residence, and the loan may become due.
Can You Rent a Room or Add a Roommate?
Yes—while you cannot lease out the entire home, you are allowed to rent individual rooms or have roommates while living in the property yourself. Many retirees choose this option to help offset living expenses while also enjoying the social benefits of shared housing.
If you own a multi-unit property with two to four units, you may still qualify for a reverse mortgage as long as one of the units is your primary residence.
Learn More About Your Options
Every retirement plan is unique, and reverse mortgage guidelines can vary based on your goals and property type. To explore whether this strategy fits your situation, please reach out:
👉 www.reversewithintegrity.com
Important Disclosure
This article is intended for general informational and educational purposes only and should not be considered financial or tax advice. For guidance regarding your specific tax situation, please consult a qualified tax professional. To determine whether a reverse mortgage aligns with your overall retirement strategy, speak with your financial advisor.
Resource Finance of America Reverse LLC