Reverse Mortgage Requirements in Colorado (Age, Home, Equity)

You're not sold on this. Maybe you've heard a reverse mortgage is how people lose the house. You just want to know whether you'd qualify first. That's the right order.

The short answer on the trap part: you keep the title. There's no monthly mortgage payment while you live there, and you still pay taxes, insurance, and upkeep. When these go wrong, it's usually because those stopped getting paid.

I've been on the lending side for twenty years. The requirements are simpler than the reputation.

The requirements are simpler than the reputation.

So one question before the list. Which part are you least sure about: your age, your house, or what's still owed on it?

Six things have to be true.

Miss one and the rest don't matter. Clear all six and you qualify. Whether it fits your life is a separate question we answer together, on paper.

Notice what's not on the list. A high credit score. A big income. Your kids' approval.

The paperwork, and the people. A few things on the kitchen table turn a guess into a real answer.

That last one matters. This is a big decision, and it goes better when the people you'd talk it over with hear it firsthand.

Which of those would take you the longest to find?

Sixty-two, and yes.

The standard reverse mortgage is the HECM, the federally insured version. Its floor is sixty-two, and it's a hard floor. If you're married, the younger spouse's age sets how much you can get, and a younger spouse can be protected as a non-borrowing spouse. We cover that before the application, not after.

Some private programs, called jumbo or proprietary reverse mortgages, start at fifty-five in Colorado. If you're close, ask.

The home has to be where you live, and you certify that every year. A hospital stay doesn't undo it. Moving out for good does, and the loan comes due.

The house also has to be an eligible type and in decent shape. The appraiser flags health-and-safety items. On a mountain house that's usually a roof, a deck railing, or a wood stove.

Enough for the new loan to pay off the old one.

There's no fixed floor. What you can get depends on your age, the home's value, and rates at the time. If you owe more than that, the loan doesn't work unless you bring the difference to signing day.

A paid-off home qualifies for the most. A small balance usually works. A house still carrying most of its original loan often doesn't. The only way to know is to run it.

Mountain home values push a lot of houses past the federal loan limit. That's where the private programs come in. See the Colorado reverse mortgage page.

Less than you'd think, but not nothing.

A HECM has no minimum credit score. The lender runs a financial assessment instead. It asks one question: can you keep paying property taxes, homeowners insurance, and upkeep for as long as you live there?

They look at your income, your credit, and most of all, whether you've paid those bills on time. A rough patch with a reason behind it gets a letter of explanation.

If the answer is shaky, the loan can still work with a set-aside. Part of the money is held back to cover taxes and insurance. That's not a penalty. It protects you from the thing that most often goes wrong.

Yes, and it comes before the application.

You sit with an independent counselor approved by HUD. I give you the list. I can't pick the agency, book it, or sit in, and that's the point. It's usually a phone call of about an hour, and family can join. You get a certificate, and nothing moves until it's in the file.

For a skeptic, this step helps most. The person walking you through the trade-offs isn't paid by anyone on the loan.

What would you want to ask someone with nothing to gain from your answer?

One of those six not being true.

Under the age floor. Not living in the home. Owing more than the new loan can pay off. A house that can't be brought up to standard. Unpaid taxes or insurance a set-aside can't cover. Unpaid federal debt, which has to be cleared first.

A low credit score alone isn't on that list. Neither is a modest income, being widowed, or adult children who don't like the idea.

A retired couple in Eagle had been told they were too young for a reverse mortgage. For a HECM, they were. For a private program, they weren't. The house was worth more than the federal limit, the balance was small, and their taxes had never been late. Counseling was done within the week, the appraisal came back with one deck-railing repair, and the loan funded. No monthly mortgage payment while they live there. Taxes, insurance, and upkeep stayed theirs, and they knew that going in.

I'm a mortgage broker and a licensed Colorado real estate broker. If selling or downsizing fits better, we look at that too, on the same numbers.

If one of those six came back wrong for you today, which one would it be?