How does a reverse mortgage work in Arizona? The most common kind, an FHA-insured Home Equity Conversion Mortgage (HECM), lets homeowners 62 and older borrow against their home's equity with no required monthly mortgage payment. Interest and fees are added to the balance, so the amount you owe grows over time, and the loan is usually repaid when you sell, move out or pass away.
The 2026 limit: FHA's HECM maximum claim amount is $1,249,125 for all areas, up from $1,209,750 in 2025. That matters in Scottsdale, where Phoenix REALTORS put the October 2026 single-family median at $1,225,000. Here's what Arizona homeowners and buyers should know.
Data note: Program rules are from the CFPB's reverse mortgage guides, HUD's HECM limits page and Mortgagee Letter 2025-22 (Dec. 11, 2025), and HUD's FHA overview for housing counselors. The Scottsdale median is from the Phoenix REALTORS/ShowingTime Local Market Update, October 2026. Read November 12, 2026. Not financial advice.
HECM Basics at a Glance
- Minimum age: every borrower 62 or older at closing
- Occupancy: must be your principal residence
- Counseling: required, with a HUD-approved HECM counselor
- Ongoing obligations: pay property taxes, homeowners insurance and HOA dues, and keep the home in good repair
- 2026 maximum claim amount: $1,249,125 (case numbers assigned Jan. 1-Dec. 31, 2026)
- FHA mortgage insurance: 2% of the maximum claim amount up front, plus 0.5% a year on the outstanding balance
- Right to cancel: most reverse mortgages carry a three-business-day rescission period after closing
How Much Can You Borrow?
The $1,249,125 cap is the most home value FHA will count, not the amount you receive. Your actual borrowing limit depends on your age, the interest rate and your home's value, per the CFPB. Older borrowers and lower rates generally mean a larger amount.
The Scottsdale angle: with the city's single-family median at $1,225,000, many Scottsdale homes sit near or above the HECM cap. If yours is worth more, the calculation still stops at $1,249,125. Some lenders offer private, non-FHA "jumbo" reverse mortgages with different rules; compare carefully.
The Pros
- No monthly mortgage payment is required
- You keep title to your home
- Payout choices can include a lump sum, monthly payments or a line of credit, depending on the loan
- Non-recourse: with a HECM, you or your heirs won't owe more than the home's value when it's sold
- Can pay off an existing mortgage, freeing up monthly cash flow
The Cons
- The balance grows every month as interest and fees are added; your equity shrinks
- Upfront costs are significant, including the 2% FHA premium
- Default risk: falling behind on taxes, insurance or upkeep can trigger repayment or foreclosure
- Less to pass on: heirs usually repay the loan by selling the home
- Scams exist: the CFPB warns about contractors pushing reverse mortgages to pay for repairs, and notes the VA does not offer reverse mortgages
If property taxes are the pressure point, look first at Arizona's senior property tax valuation freeze.
HECM for Purchase: Downsizing Without a Mortgage Payment
A HECM for Purchase lets buyers 62 and older buy a new principal residence with reverse mortgage proceeds. You bring cash for the difference between the HECM proceeds and the price plus closing costs, and then there's no monthly mortgage payment. You still pay taxes, insurance and dues and live in the home.
This can make sense for someone selling a larger Phoenix or Scottsdale home and buying a single-level home closer to family. Not every property qualifies: the CFPB notes co-ops and some manufactured homes are ineligible, and condos need to meet FHA rules.
Questions to Ask Before You Apply
- How long do I plan to stay? Upfront costs make short stays expensive
- Can I keep up with taxes, insurance and HOA dues for the long run?
- What do my heirs want to happen with the house?
- Have I compared alternatives, such as downsizing, a HELOC or cash-out refinance, or selling and renting?
Bring a family member to counseling, and get quotes from more than one lender.
“When clients in their 60s and 70s ask me about reverse mortgages, the conversation is really about where they want to live for the next 15 years. Sometimes the answer is staying put with a HECM; sometimes it's selling and buying a single-level home outright. I help them see both sets of numbers side by side before they talk to a lender.”
— Elizabeth Vijan, Tackett Team, eXp Realty
Frequently Asked Questions
What are the requirements for a reverse mortgage in Arizona?
Age 62+, principal residence, HUD-approved counseling, no federal debt delinquency, and the ability to keep paying taxes, insurance and dues.
What is the maximum reverse mortgage amount for 2026?
The HECM maximum claim amount is $1,249,125. What you can borrow is lower and depends on age, rate and value.
How does a reverse mortgage work when you die?
The loan comes due, and heirs usually repay it by selling the home. They won't owe more than the home's value.
Can you use a reverse mortgage to buy a house?
Yes, through a HECM for Purchase, with cash for the difference plus closing costs.
Weighing a Move, a Downsize or Staying Put?
I'll show you what your home could sell for and what a right-sized home costs today, so you can compare every option with real numbers.
Elizabeth Vijan | Tackett Team, eXp Realty
Phoenix & Scottsdale Real Estate
Request a Home Valuation · Call or text 602-885-7752
Sources: CFPB: What is a reverse mortgage? · CFPB: Reverse mortgage loans · CFPB: Using a reverse mortgage to buy a home · HUD: HECM maximum claim amounts · HUD Mortgagee Letter 2025-22 (PDF) · HUD: FHA overview for housing counselors (PDF) · Phoenix REALTORS/ShowingTime: Scottsdale October 2026 (PDF)
Disclaimer: General information only, not financial, tax or legal advice. Loan terms, limits and eligibility are set by HUD/FHA and your lender and can change. Information deemed reliable but not guaranteed. Equal Housing Opportunity.
Tackett Team, eXp Realty · Get in touch