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What loan originators and consumers should know about reverse mortgage borrowers with younger spouses
When one spouse doesn’t meet the age or eligibility requirements for a Home Equity Conversion Mortgage (HECM), that person is referred to as a non-borrowing spouse (NBS). This situation is more common than many realize and can create confusion—even among mortgage professionals. Understanding how HUD and FHA protect these spouses is essential to ensuring both partners’ long-term housing security.
WHY NON-BORROWING SPOUSES EXIST
The most common reason a spouse is left off the loan is age—HECM borrowers must be at least 62. But there are other reasons. Some couples have prenuptial agreements or inheritance plans favoring other parties. Others may be considering a divorce or simply choose not to include both names on title for legal or financial reasons. Whatever the reason, an excluded spouse becomes a non-borrowing spouse and until 2014 had no protection under the loan terms.
Before August 4, 2014, if the borrowing spouse died first, the loan became due and payable, even if the surviving spouse still lived in the home. This created heartbreaking situations in which widowed homeowners were forced to sell or refinance to avoid foreclosure.
HUD’S FIX
Recognizing this gap, the FHA established protections for Non-Borrowing Spouses. If a couple was married at the time of application and remained married through the life of the loan—and if the NBS continued to occupy the home—HUD allowed the loan’s due-and-payable status to be deferred after the borrower’s death.
This was a critical milestone: it ensured that surviving spouses could remain in their homes without fear of displacement. However, it also affected loan calculations. Because HECM proceeds are based on the age of the youngest spouse, available funds are reduced.
In 2015, FHA refined these rules by defining two NBS types—Eligible and Ineligible:
- Eligible Non-Borrowing Spouse: Occupies the home, receives deferral protection, and has their age included in calculating loan proceeds.
- Ineligible Non-Borrowing Spouse: Does not occupy the home, has no deferral protection, and is not factored into loan calculations.
WHY THESE RULES MATTER
Reverse mortgages are designed to provide financial stability for aging homeowners—not uncertainty. Today’s NBS protections reflect HUD’s commitment to consumer safeguards and to keeping couples in their homes whenever possible. Still, having a non-borrowing spouse introduces complexities that require careful planning.
Reverse mortgage guidelines continue to evolve to better protect homeowners and their families. The changes of 2014 and 2015 were important steps in ensuring fairness for surviving spouses—an area once overlooked. As the reverse mortgage program matures, education remains our best safeguard.
For more in-depth explanations and real-world examples, see Understanding Reverse and Navigating Reverse by Dan Hultquist—two of the industry’s most trusted guides for navigating every stage of the reverse mortgage journey.