Reverse mortgage clients face growing budget deficits

Seniors are turning to reverse mortgages as they struggle to keep up with the costs of living, a new industry report found.

More than 21% of reverse mortgage clients entered counseling with a deficit in their monthly budget last year, almost double the 12.2% of clients in 2024, according to GreenPath Financial Wellness, a nonprofit. The average deficit also increased nearly $300 from $1,498 to $1,793 per month.

"These are not small gaps," said Jennifer Fraser, director of stakeholder engagement and grants at GreenPath, in a press release Tuesday. "Budget shortfalls of this size often mean struggling to afford essential living costs like housing, healthcare, utilities and food. Since funds from a reverse mortgage can be used for almost anything, it becomes a lifeline in times of financial hardship."

Income trends epitomized the financial struggles seniors deal with. Half of all GreenPath reverse mortgage clients made less than 50% of their area median income in 2025, and about 23% of clients were in the very low-income bracket, which consists of households below 30% of the area median income, over the past two years, according to the report.

There was also a clear age-based correlation, the report found, as deficit rates increased along with age. The 80-or-older age group saw the largest increase in deficit rates, more than doubling from 12.6% in 2024 to 25.8% in 2025, followed by the 70-79 age group rising from 11.7% to 20.4% and the under-70 age group jumping from 12.4% to 18%.

The fixed income seniors receive often fails to keep pace with the rising cost of living and healthcare expenses. Almost 60% of the 80-or-older age group lived on less than 50% of the area median income, the report showed.

As a result, many seniors have fallen back on reverse mortgages to make ends meet.

Reverse mortgage volume got off to a slow start this year, as endorsements of Federal Housing Administration-backed Home Equity Conversion Mortgages dropped 20.7% between January and February to 1,821 transactions, according to Reverse Market Insight. But March saw a significant boost in volume, with endorsements rising 16.3% to 2,117 loans, although they were still down 0.5% year over year.

Reverse mortgage lender Finance of America rolled out a new product earlier this month that allows older homeowners to access equity without adding another monthly payment, potentially serving as a viable option for low-income homeowners.

"The cost of living is rising amid continued market volatility, and homeowners are looking for solutions," said Kristen Sieffert, president of Finance of America, in a press release. "This product gives borrowers the ability to access their home equity on their terms, when they need it, without adding a new monthly mortgage payment."

GreenPath also received a supplementary award to the Comprehensive Housing Counseling grant from the Department of Housing and Urban Development. Proceeds from the $455,000 grant will support funding HECM reverse mortgage counseling sessions, according to the release.

"Many seniors have spent their lives working hard to own a home, so drawing on its equity can seem like an obvious choice," Fraser said. "But there are a lot of pros and cons to consider first. This grant helps ensure that older adults living on strained incomes don't have to navigate complex financial decisions alone."