Protecting Your Non-Borrowing Spouse
If you're married and only one spouse is listed as a borrower on a HECM reverse mortgage, understanding non-borrowing spouse (NBS) protections is crucial. These provisions can allow the non-borrowing spouse to remain in the home under certain circumstances.
What Is a Non-Borrowing Spouse?
A non-borrowing spouse is a husband or wife who is not listed as a borrower on the HECM loan. This situation commonly arises when one spouse is under 62 (the minimum age for HECM eligibility) or when excluding a spouse might result in better loan terms.
Eligible Non-Borrowing Spouse Protections
Under HUD guidelines, an eligible non-borrowing spouse may be able to remain in the home after the last surviving borrower dies, moves to a long-term care facility, or otherwise vacates the property. To qualify, the NBS must have been married to the borrower at the time of loan closing and remain married until the borrower's death or permanent departure.
Impact on Loan Calculations
When a non-borrowing spouse is identified at the time of loan application, the younger spouse's age is used to calculate the principal limit factor — even though they're not a borrower. This typically results in a lower principal limit because the loan must account for a longer potential occupancy period.
Requirements for Continued Occupancy
For a non-borrowing spouse to remain in the home, they must continue to meet all property obligations including property taxes, insurance, and maintenance. They must also continue to occupy the home as their primary residence. No additional loan proceeds will be available to the NBS.
Planning Considerations
If your spouse is close to age 62, it may be worth waiting until both spouses can be listed as co-borrowers. This provides stronger protections and may result in better loan terms. Discuss your specific situation with your reverse mortgage advisor to determine the best approach.
