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One in five seniors seeking reverse mortgages face budget shortfalls, report finds

Data suggest retirees turn to reverse mortgages when times are tough

Updated:

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Mark Huffman
Reporter

Mark Huffman has covered consumer issues since 2004, with a special focus on protecting and empowering older adults. A former news correspondent for the Associated Press Radio Network, Westwood One, and ConsumerAffairs, Mark brings decades of journalistic experience to RetirementLiving.com. He is passionate about giving consumers a voice and helping them make informed decisions. Mark has also created educational content, including Senior Scam Alert, a video resource designed to help seniors recognize and avoid fraud. He holds a B.A. from the University of Kentucky and lives with his family in Richmond, Virginia.

Key Insights

  • About one in five seniors seeking reverse mortgages have budget deficits, according to new data from GreenPath Financial Wellness.
  • Financial strain among older homeowners is worsening, with many unable to cover basic monthly expenses even before taking on new loans.
  • Housing costs, inflation, and fixed incomes are driving demand for reverse mortgages as a last-resort financial tool.

Retirees often have most of their wealth tied up in their homes, and when times get tight, they sometimes tap into that equity. A new report from GreenPath Financial Wellness finds that a growing share of older Americans who explore reverse mortgages are already struggling to make ends meet, highlighting mounting financial pressure among retirees.

The nonprofit’s analysis found that roughly 20% of seniors exploring reverse mortgages have budget deficits, meaning their monthly expenses exceed their income. The findings suggest that many borrowers are not using the loans simply as a financial planning tool, but as a way to cope with existing financial hardship.

GreenPath’s data underscore a broader trend: financial strain among older households is intensifying. Many seniors live on fixed incomes that have failed to keep pace with rising costs for housing, health care, and everyday essentials. As a result, more homeowners are looking to tap into their home equity to bridge the gap.

How reverse mortgages are used matters

Reverse mortgages, which allow homeowners age 62 and older to convert home equity into cash without monthly loan payments, have long been marketed as a way to supplement retirement income. But experts caution that the product is often used as a last resort rather than a proactive strategy.

The report suggests that a significant portion of applicants are entering the process already financially vulnerable, raising concerns about long-term sustainability. Borrowers must still cover property taxes, insurance, and maintenance costs — expenses that can trigger foreclosure if unpaid.

Demand is rising

At the same time, demand for reverse mortgages appears to be rising again, driven in part by demographic shifts and economic pressures facing retirees. Millions of older Americans lack sufficient savings to weather unexpected expenses, pushing them to rely on home equity as a financial backstop. 

The GreenPath findings highlight the delicate balance policymakers and financial counselors face: while reverse mortgages can provide needed cash flow, they may also expose already-strained seniors to additional risks if not carefully managed.

As the U.S. population ages and living costs remain elevated, the report points to a growing need for financial counseling and alternative solutions to help seniors maintain stability without jeopardizing their homes.