Most reverse mortgages come from non-bank lenders, not traditional banks
If you are looking for a reverse mortgage, you will not find them at most of the banks where you keep your checking account. The major national banks—Chase, Bank of America, Wells Fargo, Citibank—do not originate reverse mortgages. Instead, reverse mortgages are offered by specialized lenders, mortgage companies, and credit unions that have built their business around this specific product.
The reason is straightforward: reverse mortgages are complex, heavily regulated, and require staff trained in the specific rules that govern them. A traditional bank's mortgage department focuses on forward mortgages—loans where you make monthly payments. A reverse mortgage works backward: the lender pays you, and you repay when you sell the home or pass away. The underwriting, servicing, and regulatory compliance are different enough that most banks have decided not to enter the market.
This does not mean reverse mortgages are rare or hard to find. Hundreds of lenders offer them. But you need to know where to look and what to watch for.
Key Takeaways
- Major national banks do not offer reverse mortgages; you will need to work with a specialized mortgage lender, credit union, or non-bank financial company.
- The Federal Housing Administration (FHA) insures most reverse mortgages through its Home Equity Conversion Mortgage (HECM) program, which limits which lenders can offer them.
- Lenders must be FHA-approved and licensed in your state to offer reverse mortgages, so verify both before you talk to anyone.
- Credit unions sometimes offer reverse mortgages and may have lower fees than commercial lenders, though availability varies by location and membership.
- You will encounter both direct lenders (who fund the loan themselves) and mortgage brokers (who arrange loans with other lenders), and the difference affects your costs and timeline.
FHA-insured reverse mortgages and which lenders can offer them
About 90 percent of reverse mortgages in the United States are Home Equity Conversion Mortgages (HECMs), which are insured by the FHA. This insurance protects you: if the lender fails, the FHA guarantees your payments. But it also means only lenders approved by the FHA can offer them.
To become FHA-approved, a lender must meet strict capital requirements, pass audits, and maintain a clean compliance record. The FHA publishes a list of approved lenders on its website. You can search by state and see which companies are currently authorized. This list changes—lenders are added and removed—so checking the official FHA database is the only reliable way to know whether a lender is legitimate.
Beyond FHA approval, the lender must also be licensed to do mortgage business in your state. State licensing is separate from FHA approval. A lender can be FHA-approved but not licensed in your state, which means they cannot legally offer you a reverse mortgage there. When you contact a lender, ask them to confirm both their FHA approval and their state license number.
Specialized mortgage companies that focus on reverse mortgages
The largest reverse mortgage lenders are companies built specifically for this market. These include Reverse Mortgage Funding, Finance of America Reverse, American Advisors Group, and Longbridge Financial. These companies employ staff trained in reverse mortgage rules, maintain relationships with FHA underwriters, and have the infrastructure to service the loans over many years.
Working with a specialized lender has advantages. They move faster because reverse mortgages are all they do. Their staff can answer detailed questions about how the loan will affect your Social Security, Medicaid, or other benefits—questions a general mortgage officer may not be equipped to handle. They also typically have lower rejection rates because they understand which applications will pass FHA underwriting.
The trade-off is that specialized lenders often charge higher fees than traditional mortgage companies. Reverse mortgage fees include an origination fee (usually 1 to 2 percent of the loan amount), an FHA insurance premium (about 0.55 to 2.55 percent depending on the loan type), and closing costs. These add up quickly. A $300,000 reverse mortgage can carry $8,000 to $15,000 in total fees.
Credit unions and smaller lenders
Some credit unions offer reverse mortgages to their members. Credit unions are not-for-profit institutions, and some use that structure to offer reverse mortgages at lower costs than commercial lenders. However, not all credit unions offer them, and those that do may limit them to members who have been with the credit union for a certain period.
To find out whether your credit union offers reverse mortgages, call their mortgage department directly. If they do not, ask whether they can refer you to a lender they work with. Some credit unions have partnerships with reverse mortgage lenders and can help you through the process.
Smaller independent mortgage companies also offer reverse mortgages. These are often local or regional businesses that have been in the mortgage market for decades. The advantage is personal service and potentially lower fees. The disadvantage is that you have less recourse if something goes wrong, and you need to verify their FHA approval and state licensing yourself.
Mortgage brokers versus direct lenders
When you contact a reverse mortgage lender, you are dealing with either a direct lender or a mortgage broker. A direct lender funds the loan with their own money or their company's money. A mortgage broker arranges the loan with another lender and takes a commission.
Direct lenders typically have faster timelines because they control the underwriting and approval process. Mortgage brokers can sometimes offer more options because they work with multiple lenders, but they add a layer of cost. The broker's commission comes out of the loan proceeds, which means you receive less money or pay higher fees.
Ask any lender you contact whether they are a direct lender or a broker. If they are a broker, ask which lenders they work with and what their commission is. This information should be disclosed in writing before you proceed.
How to verify a lender is legitimate
Before you spend time on an process, verify the lender in three places. First, check the FHA's approved lender list on HUD.gov. Search by company name and state. Second, check your state's mortgage licensing database—each state maintains a public record of licensed mortgage lenders and originators. Third, search the company name plus "complaints" and "reverse mortgage" to see whether there are public records of problems.
Be cautious of lenders who contact you unsolicited by phone or mail. Reverse mortgage scams exist. Legitimate lenders do advertise, but they do not pressure you to decide quickly or promise specific loan amounts before a full financial review. If a lender tells you that you are may provide a certain amount or that you must decide today, that is a red flag.
Ask for references from people who have completed a reverse mortgage with that lender. A reputable lender will provide them. Call those references and ask about the timeline, the fees, and whether the lender explained everything clearly.
What to expect in the process process
Once you have chosen a lender, the process typically takes 30 to 45 days. You will need to provide financial documents (tax returns, bank statements), proof of homeownership, and a home appraisal. The lender will order a title search to confirm you own the home free and clear or that any existing mortgage can be paid off with the reverse mortgage proceeds.
You will also be required to attend a counseling session with a HUD-approved counselor. This is not optional—it is a federal requirement. The counselor reviews the loan terms, explains alternatives, and discusses how the reverse mortgage affects your taxes and benefits. This session usually takes 60 to 90 minutes and can be done in person or by phone.
After counseling, the lender submits your process to FHA underwriting. The FHA reviews your credit, your income, and the property value to decide whether to insure the loan. If approved, you move to closing, where you sign the final documents and receive the funds.
Frequently Asked Questions
Can I get a reverse mortgage from my regular bank?
Most traditional banks do not offer reverse mortgages. If your bank does, they likely partner with a specialized lender behind the scenes. Call your bank's mortgage department and ask directly. If they do not offer them, they can usually refer you to a lender they work with.
How do I know if a lender is FHA-approved?
Go to HUD.gov and search the FHA's approved lender database by company name and state. If the lender does not appear there, they are not authorized to offer FHA-insured reverse mortgages. You can also call the lender and ask for their FHA approval number, which you can verify on the same database.
What is the difference between a direct lender and a mortgage broker?
A direct lender funds the loan with their own money and controls the approval process. A mortgage broker arranges the loan with another lender and takes a commission. Direct lenders are usually faster; brokers may offer more options. Ask which one you are working with before you explore.
Do credit unions offer better rates on reverse mortgages?
Some credit unions offer reverse mortgages at lower costs than commercial lenders because they are not-for-profit. However, not all credit unions offer them, and those that do may limit them to long-term members. Call your credit union to ask whether they offer reverse mortgages and what their fees are.
What should I do if a lender pressures me to decide quickly?
Walk away. Legitimate lenders do not pressure you to decide on the same day or promise specific loan amounts before a full review. If a lender tells you that you must act now or that you are may provide a certain amount, that is a sign of a scam. Take your time and work with a lender who explains everything clearly.