Costs

Item	How much	Paid how	Notes
Upfront FHA mortgage insurance (IMIP)	2% of the maximum claim amount (home value, capped at $1,249,125 for 2026)	Financed into the loan	Buys the non-recourse guarantee and the guarantee that your line of credit and payments continue even if the lender fails.
Annual FHA mortgage insurance	0.5% of the outstanding balance per year	Accrues to the balance	Also the reason the unused line of credit grows at the note rate plus 0.5%.
Lender origination fee	Capped by HUD at the greater of $2,500 or 2% of the first $200,000 of value plus 1% above that, never more than $6,000	Financed	That formula is the maximum; the actual fee can be lower and is sometimes reduced in exchange for a different rate.
Third-party closing costs	Varies by state and value; commonly $2,000 to $5,000	Financed	Title insurance, escrow, recording, flood certification, credit report, document preparation.
Appraisal	$600 to $800 (more for large or rural properties)	Out of pocket upfront; sometimes credited back at closing	Required. A second appraisal is sometimes required by FHA's collateral risk review.
HUD counseling	Typically $150 to $300, set by the agency	Out of pocket	Independent, required by law. Some agencies waive the fee for hardship.
Interest	Adjustable (index plus margin, with caps) or fixed	Accrues to the balance	No monthly payment is required; the balance grows. You may make voluntary payments at any time.
Servicing fee	$0 to $35 per month	Accrues	Many lenders charge none. I'll tell you if one does.

Because almost everything is financed, the typical out-of-pocket is the appraisal and the counseling. The cost is real either way; it reduces the equity available to you.

Protections

Non-recourse. You and your heirs never owe more than the home's value at sale. If the balance exceeds the value, FHA pays the difference.
Heirs' 95 percent rule. Heirs may keep the home by paying the lesser of the balance or 95 percent of appraised value.
Mandatory independent counseling before application.
Eligible non-borrowing spouse protections, so a younger spouse can remain in the home for life.
Line of credit guarantee. The line cannot be frozen, reduced, or cancelled because home values fall or your credit changes, as long as you meet the loan terms.
Three-business-day right of rescission on HECMs that are not purchases.
No prepayment penalty.
Rate caps on adjustable HECMs, which vary by product: annual-adjusting loans commonly cap increases at 2 percent per year and 5 percent over the life; monthly-adjusting loans commonly cap at 10 percent over the life. Your loan's caps are in its disclosures.
Financial assessment and LESA, which exist to keep borrowers from defaulting on taxes and insurance.

Obligations, spelled out

The loan can be called due if you stop living in the home as your primary residence (extended absences, including for a care facility, can trigger this under HUD's rules), or if you fail to pay property taxes, homeowners insurance, HOA or special assessments, or to keep the home in reasonable repair. The lender will send an annual occupancy certification. Sign it and send it back. Meet those obligations and the loan terms allow you to stay for as long as you live there.

Jumbo and proprietary reverse mortgages

For homes worth more than the FHA limit, or in a few cases for borrowers under 62 (some proprietary programs start at 55), private lenders offer non-FHA reverse mortgages. They have no FHA insurance premium, which lowers upfront cost, but they also lack FHA's guarantees and usually make a smaller percentage of value available. As a broker I can show you both side by side when it's relevant.

What a reverse mortgage costs, and what you get for it

Costs

Protections

Obligations, spelled out

Jumbo and proprietary reverse mortgages

Want these costs on your actual numbers?