Subprime Alert: More Seniors Turning to Reverse Mortgages as Budget Gaps Spiral
Writer: Lucy Lazarony
Editor: Lillian Guevara-Castro
Reviewer: Adam West
Key Takeaways
- Senior homeowners, who face budget shortfalls, are reaching for reverse mortgages for financial help.
- Reverse mortgages have become resources for senior homeowners with low incomes.
- The amount of home equity among homeowners aged 62 and older dipped slightly to $14.62 trillion in the fourth quarter of 2025.
More homeowners are turning to reverse mortgages as a means of easing financial strain.
In 2025, more than one-fifth (21.1%) of reverse mortgage clients had monthly budget deficits, up from 12.2% in 2024, according to GreenPath Financial Wellness data. The amount of the monthly deficit also increased almost $300 from $1,498 in 2024 to $1,793 in 2025.
“These are not small gaps,” said Jennifer Fraser, Director and Stakeholder Engagement & Grants at GreenPath. “Budget shortfalls of this size often mean struggling to afford essential living costs. … Since funds from a reverse mortgage can be used for almost anything, it becomes a lifeline in times of financial hardship.”
National Mortgage Professional wrote that GreenPath data suggests some borrowers are entering the reverse mortgage process later, with less financial flexibility.
A Resource for Low-Income and Elderly Clients
Not surprisingly reverse mortgages have become financial resources for seniors with low incomes. In 2025, half of all reverse mortgage clients at GreenPath lived on less than 50% of their Area Median Income (AMI). And when combining 2024 and 2025 data, about 23% of clients had income below 30% of AMI.
Older seniors are seeing the greatest increases in monthly financial deficits. The 80 and older age group more than doubled their monthly deficit rates from 12.6% in 2024 to 25.8% in 2025, according to GreenPath data. Of seniors in the 80 and older group, 58.8% get by on less than 50% of AMI.
Home Equity Available to Seniors
The amount of home equity among homeowners aged 62 and older declined less than 1% to $14.62 trillion in the fourth quarter of 2025, according to the National Reverse Mortgage Lenders Association (NRMLA).
“While we saw a modest dip in housing wealth at the end of 2025, the overall level of home equity among older Americans remains historically strong,” said Steve Irwin, President of NRMLA.
“For many retirees, housing wealth continues to be a critical component of financial security and retirement planning,” he said. “Even in a moderating market, reverse mortgages remain a valuable tool to help seniors access that equity and meet their evolving financial needs.”
About Reverse Mortgages
Most reverse mortgages are insured by the Federal Housing Administration and are called Home Equity Conversion Mortgages (HECMs). These reverse mortgages allow homeowners age 62 and older to convert home equity into cash without making monthly mortgage payments and all while living in their homes.
Some reverse mortgage products may be available to homeowners as young as 55, depending on the lender and state.
With reverse mortgages, homeowners are still required to pay property taxes for the home and homeowners insurance. But they don’t have to pay back the reverse mortgage until they sell the house, move, or pass away.
The Bottom Line
GreenPath’s data suggests more of its reverse mortgage counseling clients are entering the process with budget shortfalls. In 2025, more than 21% of reverse mortgage clients had deficits in their monthly budgets. Half of all reverse mortgage clients live on low incomes.
Elderly reverse mortgage clients face the highest deficits in their monthly budgets. The amount of home equity available to homeowners aged 62 and older was $14.62 trillion in the fourth quarter of 2025.
