One of the topics that has seen an increase in consultation requests in Syracuse is the comparison between downsizing and reverse mortgages. Many households feel that their current home is too large for just the couple after retirement, leading them to consider whether to sell their home and move to a smaller place or to stay in their current home while accessing some of their equity. Looking at the recent market, both options have their merits, and this article will focus primarily on reverse mortgages based on the Syracuse context.

According to Zillow data, as of June 30, 2026, the average home value in Syracuse is $225,918, which has increased by 5.3 percent over the past year. While home prices are relatively lower compared to other major cities in New York State, the actual cash received after considering moving costs and brokerage fees when downsizing is often less than expected. In this context, reverse mortgages are being considered as an alternative to access equity without selling the home. However, whether choosing downsizing or a reverse mortgage, the requirement to be able to manage property taxes and maintenance costs remains the same.

A reverse mortgage is a product that allows homeowners aged 62 and older to receive funds from a lender by using their home equity as collateral. Unlike a traditional mortgage that requires monthly payments, funds can be received in a lump sum, monthly payments, or as a line of credit, with the principal and interest being settled 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), which is insured by the Federal Housing Administration, is a representative product and the only type of reverse mortgage backed by the federal government. Eligibility requirements include being at least 62 years old, meeting primary residence criteria, the ability to repay any existing mortgage balance, and passing a financial assessment to confirm the ability to pay property taxes and insurance premiums.

In terms of costs, reverse mortgages have higher initial costs compared to traditional mortgages due to origination fees, an initial mortgage insurance premium of about 2 percent, an annual insurance premium of around 0.5 percent, and closing costs. This aspect is particularly important when compared to downsizing. Downsizing incurs real estate brokerage fees and moving costs when selling the home, but there are generally no significant additional costs afterward, whereas reverse mortgages have ongoing annual insurance premiums in addition to the initial costs.

The property tax aspect also needs to be considered. According to propertytaxrates.org, the effective tax rate for Onondaga County in 2026 is 2.59 percent, which is higher than the New York State average, and the median effective tax rate in Syracuse is around 2.61 percent. Even with a reverse mortgage, the homeowner is still responsible for paying property taxes and insurance premiums, while downsizing to a smaller home can reduce the overall property tax burden. Conversely, receiving a reverse mortgage allows homeowners to maintain their neighborhood and community ties, which downsizing may not provide.

The advantages include the ability to create cash flow without monthly repayment obligations, and the non-recourse loan structure means that if the home value decreases below the loan balance, heirs are not required to pay the excess due to FHA insurance. However, a downside that downsizing does not have is that over time, the equity decreases, potentially reducing the assets left for children. In New York State, the population aged 65 and older makes up 18.9 percent of the total, which is higher than the national average, suggesting that such comparative consultations will continue to increase in Syracuse.

Which option is better between downsizing and a reverse mortgage varies by household. HECM requires mandatory counseling from a HUD-approved counseling agency before applying, where alternatives including downsizing can be compared. This is not investment or legal advice, and since tax and mortgage conditions can vary significantly based on county, school district, and individual financial situations, it is advisable to consult with HUD and discuss with family before making a final decision.