If you have ever wondered “what is a reverse mortgage?” you are not alone. For Texas homeowners aged 62 and older, a reverse mortgage offers a unique way to access home equity in Texas without selling your home or making monthly mortgage payments. At Texaslending, we help seniors understand this retirement planning tool and determine whether it fits their financial goals.
This guide explains everything you need to know about reverse mortgages in Texas, including updated 2026 lending limits, Texas-specific constitutional requirements, and how to decide if this option makes sense for your situation.
How Does a Reverse Mortgage Work?
A reverse mortgage is a type of home equity loan that works differently from a traditional mortgage. Instead of making monthly payments to a lender, the lender makes payments to you based on the equity you have already built in your home.
The most common type is the Home Equity Conversion Mortgage (HECM), which is insured by the Federal Housing Administration (FHA). Congress created the HECM program in 1987 to help seniors convert their home equity into usable funds while remaining in their homes.
The key difference is straightforward. With a traditional mortgage, your loan balance decreases and your equity increases over time. With a reverse mortgage, you receive funds from your equity, so the loan balance increases while your equity decreases. The loan does not require repayment until you sell the home, move out permanently, or pass away.
2026 HECM Lending Limits
For Texas homeowners considering a reverse mortgage in 2026, HUD has increased the national HECM lending limit to $1,249,125, up from $1,209,750 in 2025. This change, outlined in HUD Mortgagee Letter 2025-22, means homeowners with higher-value properties can access more equity than in previous years.
The amount you can borrow depends on several factors, including your age (older borrowers typically qualify for more), current interest rates, your home’s appraised value up to the HECM limit, and the specific HECM product you select. Use a mortgage calculator Texas tool to estimate your potential proceeds based on your specific situation.
Texas-Specific Reverse Mortgage Requirements
Texas is the only state that regulates reverse mortgages at the constitutional level, providing additional protections for homeowners. Under Article XVI, Section 50(a)(7) of the Texas Constitution, with detailed requirements in Sections 50(k) through 50(v), reverse mortgages must meet specific requirements that go beyond federal guidelines.
Age Requirements
Critical Texas Difference: While the federal HECM program requires at least one borrower to be 62, Texas practice requires all borrowers and their spouses to be at least 62 years old, even if the spouse is not on the title.
This stricter interpretation comes from the combination of Section 50(k)(1), which requires consent of “each owner and each owner’s spouse,” and Section 50(k)(2), which specifies the loan must be “made to a person who is or whose spouse is 62 years or older.” Texas lenders interpret these provisions together to require both spouses meet the age threshold.
This means if you are 65 and your spouse is 58, you cannot obtain a reverse mortgage in Texas until your spouse turns 62, regardless of whose name is on the deed.
Texas Constitutional Protections
The Texas Constitution provides unique protections not found in other states:
- Consent Required: Every owner and their spouse must consent to the loan in writing under Section 50(k)(1)
- Non-Recourse Protection: Under Section 50(k)(3), the loan is made without recourse for personal liability. You and your heirs can never owe more than the home’s value
- 12-Day Notice Period: Borrowers must receive a detailed disclosure notice at least 12 days before closing, signed by both lender and borrower
- Mandatory Counseling: You must complete HUD-approved counseling between 5 and 180 days before closing, and both spouses must attest in writing that counseling was received
- Primary Residence Only: The property must be your principal residence
- Lender Forfeiture Penalty: Under Section 50(k)(7), if a lender fails to make loan advances and does not cure the default after notice, the lender forfeits all principal and interest
- 30-Day Cure Period: Under Section 50(k)(10), a lender must give 30 days to remedy any default before foreclosure (20 days for lien priority issues)
- Court Order Required: Under Section 50(k)(11), foreclosure requires a court order except in cases of death or permanent move
- No Credit or Debit Cards: Under Section 50(v)(1), you cannot use cards or preprinted checks to obtain advances
- No Unilateral Amendments: Under Section 50(v)(3), the lender cannot change loan terms without your agreement
Types of Reverse Mortgages Available in Texas
HECM (Home Equity Conversion Mortgage)
The HECM is the most popular reverse mortgage option, insured by FHA and available through trusted home lenders Texas residents rely on. Benefits include federally insured protection, multiple payout options, non-recourse guarantee, no restrictions on how you use the funds, and the 2026 lending limit of $1,249,125.
HECM for Purchase
This option lets you buy a new home using a reverse mortgage in a single transaction. It is ideal for Texas seniors who want to downsize to a more manageable property, move closer to family, or relocate without taking on monthly mortgage payments. The reverse mortgage covers a portion of the purchase price, and you live in the home without monthly principal and interest payments.
Proprietary (Jumbo) Reverse Mortgages
For homes valued above the HECM limit, proprietary reverse mortgages offer an alternative with higher loan amounts. These are not FHA-insured, so they do not include federal mortgage insurance premiums. However, proprietary reverse mortgages are not available in Texas for borrowers under 62, unlike some other states that allow age 55 and older.
How You Can Receive Your Funds
Reverse mortgages offer flexible payout options to match your financial needs. You can choose a lump sum to receive all available funds at closing, monthly payments as either tenure (for as long as you live in the home) or term (for a set period), a line of credit to draw funds as needed with unused credit growing over time, or a combination of monthly payments with a line of credit.
Many Texas homeowners use reverse mortgage proceeds to pay off existing mortgages and eliminate monthly payments, cover healthcare expenses and long-term care costs, fund home renovations, supplement retirement income, or create an emergency fund through a growing line of credit.
Is a Reverse Mortgage Right for You?
A reverse mortgage can be a valuable tool for the right homeowner, but it is not for everyone. Consider speaking with a qualified Texas home equity lending specialist if you are 62 or older with significant home equity, you want to eliminate monthly mortgage payments, you plan to stay in your home long-term, or you need supplemental retirement income.
At Texaslending, our team can help you evaluate whether a reverse mortgage aligns with your retirement plan. We understand the unique home equity loans in Texas landscape and can guide you through every step of the process. Explore your options by visiting our home equity page or use our refinance calculator to get started.
Frequently Asked Questions
What is the difference between a reverse mortgage and a home equity loan?
A traditional home equity loan Dallas Texas borrowers use requires monthly repayment on a fixed schedule. A reverse mortgage does not require monthly principal and interest payments. Instead, the loan balance grows over time and becomes due when you sell, move, or pass away.
Can I lose my home with a reverse mortgage?
You retain ownership of your home as long as you meet loan obligations, which include paying property taxes, maintaining homeowners insurance, and keeping the home in good condition. Texas constitutional protections, including the court order requirement for foreclosure under Section 50(k)(11), provide additional safeguards.
How much equity can I access with a reverse mortgage?
The amount depends on your age, current interest rates, and your home’s appraised value. Generally, older borrowers with higher-valued homes can access a larger percentage of equity. Contact Texaslending to discuss your specific situation and explore current Texaslending rates for reverse mortgage options.
Are reverse mortgage proceeds taxable?
Reverse mortgage proceeds are generally not considered taxable income because they are loan advances, not earnings. However, consult with a tax professional regarding your specific circumstances.
What happens to the reverse mortgage when I pass away?
Your heirs have options. They can repay the loan and keep the home, sell the home and keep any remaining equity above the loan balance, or walk away with no personal liability thanks to the non-recourse protection under Texas law. Heirs typically have up to 12 months to resolve the loan.
