While Reverse Mortgages are a great idea for some people, they aren’t for everyone. First of all you have to be 62 years old or older and own your own home to qualify. The home must also be your permanent residence and it must be a single-family home, two to four unit building, or a condominium. It also has to meet HUD’s minimal property standards.

The purpose of a Reverse Mortgage allows you to use part of your home equity for cash. The cash is normally meant for home improvement projects. The loans do not require repayment as long as you live in the house, which means that your income level has no bearing on your loan eligibility.

To apply for a Reverse Mortgage you basically have three avenues – single-purpose reverse mortgages, federally insured reverse mortgages and proprietary reverse mortgages. Single purpose reverse mortgages are available from state and local government agencies and certain nonprofits. These loans have to be used for one specific purpose, such as home repairs or property taxes, as determined by the lender.

The federally insured mortgage is provided by the U.S. Department of Housing and Urban Development (HUD). You have to first locate and speak with a HUD approved counselor before applying for this type of loan. The proprietary reverse mortgage is available through private companies. Although both of these types of loans have expensive up-front costs, they can be used for any purpose you choose.

The amount of your loan will depend on how old you are, the interest rate, your home appraisal value and the FHA mortgage limit that applies to your area. You can take the money as a lump sum, monthly payments or a combination of these two methods.

As with any type of mortgage look into different loan terms and offers available to you and read all of the paperwork before signing the contracts.