After retirement, many people find that their only sources of income are Social Security and a bit of savings, making it difficult to cover living expenses. In Denver, we often receive inquiries from individuals in this situation. While they own homes, they may lack cash, and a reverse mortgage is often considered as an option. This guide will clarify how this product works and what burdens come with it, supported by figures.

As of the end of July 2026, the average home value in Denver is $533,060 (Zillow). This figure indicates that many retirees who have owned their homes for a long time have already secured a significant amount of equity. A reverse mortgage is a product that allows homeowners aged 62 and older to borrow against this equity from a lending institution. Unlike a traditional mortgage, which requires monthly repayments, funds can be received as a lump sum, monthly payments, or a line of credit, with the principal and interest repaid when the home is sold, the owner passes away, or the home is no longer used as the primary residence. The Home Equity Conversion Mortgage (HECM), insured by the Federal Housing Administration, is the most commonly used type. Borrowers can choose from a lump sum, monthly payments, or a line of credit, and if they are short on monthly living expenses, the monthly payment option can help alleviate cash flow issues.

While this aspect is advantageous, eligibility requirements must also be considered. Borrowers must be at least 62 years old, the home must be their primary residence, and if there is an existing mortgage balance, it must be at a level that can be paid off with the reverse mortgage loan. Additionally, a financial assessment must be passed to ensure the borrower can continue to pay property taxes and insurance. The effective property tax rate in Denver County is approximately 0.48% (Ownwell). While this is lower than the national average, the fact that this burden recurs annually remains unchanged. Furthermore, there is a procedural requirement to undergo mandatory counseling from a HUD-approved counseling agency before applying for a HECM. This counseling provides explanations of loan terms, costs, and alternatives, which can be practically helpful in deciding whether to apply.

Costs must also be evaluated from both sides. The origination fee and mortgage insurance premium (initially around 2% and about 0.5% annually), along with closing costs, can result in higher initial costs compared to a traditional mortgage. Since interest accrues on the loan balance each month, the homeowner's equity decreases over time, which can lead to a reduction in the inheritance left for children. On the other hand, the non-recourse structure is beneficial. Even if the home value decreases below the loan balance in the future, thanks to FHA insurance, heirs are not required to pay the difference.

According to data from the Denver Association of Realtors, home values in the area have experienced gradual fluctuations over the past few years. In this market environment, it is safer to base reverse mortgage decisions on current equity rather than assuming that home values will always rise. Alternatives such as Home Equity Lines of Credit (HELOC) or downsizing should also be considered, allowing for a comparison of various options.

The percentage of the population aged 65 and older in Colorado is 13.8% (Colorado Health Institute), and it appears that the number of retirement households struggling to meet living expenses with fixed income will continue to rise in this region. However, the risk of losing a home due to inability to continue paying property taxes and insurance cannot be overlooked. Before applying for a HECM, mandatory counseling from a HUD-approved agency must be completed, and there have been reports of scams related to reverse mortgages targeting the elderly, so careful judgment is necessary. It is advisable to have thorough discussions with counselors and consult with family before making a decision. This article does not constitute investment or legal advice, and it is recommended to consult with a professional before entering into any contracts.