Reverse Mortgage in Colorado: A Plain-English Guide for Homeowners 55+

If you’re 55 or older and have built up equity in your home, you’ve probably heard about reverse mortgages, along with plenty of myths. A reverse mortgage in Colorado can let you turn part of that equity into cash without selling your home or taking on a monthly mortgage payment. Here’s how it works, who it fits, and the questions I’d want answered before you decide.

What is a reverse mortgage?

A reverse mortgage is a loan that lets older homeowners borrow against their home equity. Instead of you paying the lender every month, the loan balance grows over time and is repaid later, usually when the home is sold.

Most reverse mortgages are Home Equity Conversion Mortgages (HECMs), which are insured by the FHA. That federal backing comes with consumer protections I’ll cover below.

There are also proprietary reverse mortgages, which are private programs that aren’t insured by the FHA. Some of the proprietary programs I offer start at age 55, which opens the door for homeowners who aren’t 62 yet. Eligibility, costs, and protections vary by program, so I’ll show you exactly how any option compares with a HECM.

One important point: you still own your home. Your name stays on the title, and you’re still responsible for property taxes, homeowners insurance, HOA dues, and basic upkeep.

Who qualifies for a reverse mortgage in Colorado?

According to HUD, the main HECM requirements are:

• Age: you must be at least 55.
• Primary residence: the home has to be where you live, not a second home or rental.
• Equity: you need to own the home outright or have paid down a large share of the mortgage. Any existing mortgage gets paid off with the reverse mortgage proceeds.
• Counseling: you must complete a session with a HUD-approved HECM counselor before moving forward.
• Ability to keep up with the home: you need the resources to stay current on property taxes, insurance, and HOA fees, and you can’t be delinquent on federal debt.
• Eligible property: single-family homes, 2–4 unit homes where you live in one unit, FHA-approved condos, and manufactured homes that meet FHA standards.

If you’re between 55 and 61, a proprietary reverse mortgage may still be an option. These programs set their own age, property, and financial requirements, so we’ll look at which ones fit your situation.

How can you receive the money?

This is where reverse mortgages are more flexible than most people expect. With an adjustable-rate HECM, you can choose from these options (proprietary programs have their own payout choices):

• A line of credit you draw from only when you need it.
• Monthly payments for as long as you live in the home (called tenure).
• Monthly payments for a set number of months (called term).
• A combination of a line of credit and monthly payments.

A fixed-rate HECM pays out as a single lump sum at closing. The right setup depends on what you’re trying to accomplish, whether that’s covering monthly expenses, keeping a cash cushion for emergencies, or paying off an existing mortgage.

How much can you borrow?

The amount depends on the age of the youngest borrower (or eligible non-borrowing spouse), your home’s appraised value, current interest rates, and any existing mortgage that needs to be paid off. Generally, the older you are and the more equity you have, the more you can access.

FHA also caps the home value used in the calculation. For 2026, HUD set that HECM limit at $1,249,125 nationwide. If your home is worth more than that, the calculation is based on the limit, not the full value.

What does a reverse mortgage cost?

Reverse mortgages do have costs, and I always want my clients to see them clearly. With a HECM you’ll typically see:

• Upfront FHA mortgage insurance: 2% of the loan, charged at closing.
• Annual FHA mortgage insurance: 0.5% of the outstanding balance each year.
• Interest, which is added to your loan balance over time.
• Standard closing costs like the appraisal, title, and lender fees.

Many of these costs can be financed into the loan, so you may not need much cash upfront. That mortgage insurance is also what pays for the FHA’s protections, including the guarantee that you’ll never owe more than the home is worth. Proprietary reverse mortgages don’t carry FHA mortgage insurance but have their own pricing and terms, so it’s worth comparing both side by side.

When does a reverse mortgage have to be repaid?

The loan generally becomes due when the last borrower passes away, sells the home, or moves out permanently. It can also come due if property taxes, insurance, or upkeep aren’t kept current, which is why that counseling session and a realistic budget matter.

HECMs are non-recourse loans (ask about the terms on any proprietary program, too). That means neither you nor your heirs will owe more than the home is worth when it’s sold, even if the loan balance has grown larger. If your family wants to keep the house, they can pay off the loan, often through a sale or their own financing.

What questions should you ask before you apply?

Before you commit, make sure you (and anyone who lives with you) can answer these:

• How long do I plan to stay in this home?
• What happens to my spouse or partner if I pass away or move into care first?
• Can I comfortably keep paying property taxes, insurance, and HOA dues for years to come?
• Which payout option fits my goals best: line of credit, monthly payments, or a mix?
• What are my total upfront and ongoing costs?

Your HUD-approved counselor will cover many of these, and I’ll go over them with you too. Bringing family into the conversation early can save a lot of confusion later.

Is a reverse mortgage right for you?

A reverse mortgage can be a great fit if you plan to stay in your home long term and want more breathing room in retirement. It may not be the best choice if you expect to move in a few years, want to leave the home free and clear to your heirs, or would have trouble keeping up with taxes and insurance.

It’s also worth comparing other ways to tap equity. For some homeowners, a HELOC or a cash-out refinance makes more sense; my post on rate-and-term vs. cash-out refinancing walks through that option. Because a reverse mortgage can affect taxes and needs-based benefits, I also recommend checking with your tax or financial advisor.

I’m happy to sit down with you, and your family if you’d like, to walk through the numbers patiently and answer every question. You can see all the loan programs I offer or reach out anytime.

Ready to get started? Apply online, call me at 614-348-0916, or send me a message. I’m happy to answer questions, no obligation.

Jack Pardi is a mortgage loan officer with DNVR Lending in Denver, Colorado. NMLS #2408286. DNVR Lending, LLC NMLS #2403751. This article is for general information only and is not a commitment to lend. Not all borrowers will qualify; programs and guidelines are subject to change.