What happens to a HECM mortgage when the owner dies?

By Jason Scott Gray, Branch Manager, NEXA Lending · NMLS 118354 · Lending since 1993
Published October 19, 2026 · Last updated October 19, 2026

Step by step: what usually happens

1. The servicer is notified. A family member or the executor lets the loan servicer know the borrower has passed away. No more funds can be drawn from the loan.
2. The loan becomes due and payable. The servicer sends a due and payable notice and typically orders an appraisal to confirm the home's current value.
3. Heirs respond within about 30 days. The CFPB explains that once heirs receive the notice, they generally have 30 days to buy the home, sell it, or turn it over to the lender. Contact the servicer early, even if you're not sure yet what you'll do.
4. More time may be available. The CFPB notes the timeline may be extended up to six months so heirs can sell or arrange their own financing, and HUD says the lender may approve 90-day extensions when heirs document that they're actively selling or repaying.
5. Keep the house protected meanwhile. HUD notes that property taxes and insurance remain the responsibility of the estate until title is transferred. Keep the home insured, maintained and secure.

The three options for heirs

1. Keep the home

To keep the home, the HECM mortgage has to be repaid. Many families do this with a new home loan in their own name. If you're in that spot, I can help you look at a regular mortgage to keep the house (see Jason's Washington home loans). If the balance is more than the home is worth, ask the servicer in writing exactly what payoff amount applies to a family member who wants to keep the home.

2. Sell the home

The home is sold, the HECM mortgage is paid from the proceeds, and any money left over goes to the estate or heirs. If the home is worth more than the balance, that equity is theirs.

3. Turn the home over to the lender

If no one wants the home and the balance is more than its value, heirs can transfer title to the lender with a deed in lieu of foreclosure. HUD lists this as an option to avoid foreclosure.

What if the home is worth less than the loan balance?

A HECM is a non-recourse loan. If the balance has grown past the home's value, the estate or heirs can sell the home for at least 95% of its current appraised value, and the lender accepts the net proceeds to satisfy the loan. The remaining balance is covered by the FHA mortgage insurance that was part of the loan. Heirs are not asked to make up the difference from their own savings.

Illustration only: if the balance is $520,000 and the home appraises at $500,000, a sale for at least $475,000 (95% of $500,000) can settle the loan.

What about a spouse?

• Spouse on the loan (co-borrower): nothing becomes due. The surviving spouse keeps living in the home under the same terms, as long as they meet the loan obligations.
• Eligible non-borrowing spouse: repayment may be deferred so they can stay in the home for life, if the requirements are met. HUD says they must provide the lender with a Non-Borrowing Spouse Certification within 30 days of the last borrower's death, among other requirements, and keep paying taxes, insurance and upkeep.
• Spouse who isn't eligible: the loan is handled like any heir's situation above.

This is one of the most important things we go over before anyone applies. If you're married and only one of you is 62 or older, let's talk it through carefully.

A Washington example

Illustration only, not an actual client. A widowed homeowner in Everett had a HECM. After she passes away, her son in Spokane calls the servicer, sends a copy of the death certificate, and learns the home appraised for more than the loan balance. He works with a local listing agent, keeps the property insured and the yard maintained, and stays in touch with the servicer as the sale moves along. At closing, the loan is paid off and the remaining equity goes to the estate. A Washington estate attorney helps with probate and transferring title.

How to prepare your family now

• Tell your heirs or executor that you have a HECM and who the servicer is.
• Keep the servicer's contact information with your will or estate papers.
• Talk with a Washington estate planning attorney about your will, title, and whether probate may be needed.
• If you're married, make sure you understand your spouse's status on the loan before closing.
• Invite your adult children to our conversations. I'll send clear written summaries so everyone sees the same information.

Want to talk it through? Request a free call or call me directly. You can also read how a HECM works, the myths and facts, or the full FAQ.

Common questions

Sources

• HUD: Inheriting a Home Secured by an FHA-insured HECM (PDF)
• CFPB: With a reverse mortgage loan, can my heirs keep or sell my home after I die?
• CFPB: You have a reverse mortgage: Know your rights and responsibilities (PDF)

General information only, not legal or tax advice. HUD-approved counseling is required before applying for a HECM; a list of counselors is available from HUD. See licensing and disclosures.