Yes — a reverse mortgage does not erase property taxes or homeowners insurance. Ryan and Steve help you budget those charges (and any LESA set-aside) so occupancy stays secure while you live in the home.
A HECM reverse mortgage typically waives required monthly principal-and-interest payments while you occupy the home as your primary residence. That does not mean housing costs disappear. FHA and your loan documents require you to keep property taxes, hazard insurance, flood insurance when applicable, and HOA or condo dues current.
Unpaid property charges are one of the most common reasons reverse mortgages go into default. Servicers monitor tax and insurance status. If charges fall behind and are not cured, the lender can advance funds, demand repayment, or ultimately foreclose — even when you still live in the home.
During underwriting, the financial assessment reviews whether your residual income can cover these ongoing costs. If the numbers are tight, a life-expectancy set-aside (LESA) may be required so taxes and insurance are paid from loan proceeds over time.
Several paths keep property charges current — choose the structure that fits your cash flow.
Many retirees continue paying taxes and insurance from Social Security, pensions, or investment income — just as they did before the reverse mortgage. This keeps more of your principal limit available as cash or a line of credit.
When the financial assessment flags risk, a LESA withholds part of your proceeds to pay property charges on a schedule. You receive less upfront cash, but the loan is better protected and default risk from missed taxes drops.
Some borrowers set aside reverse proceeds or monthly income in a dedicated account for annual tax bills and insurance renewals. Discipline matters — there is no automatic escrow on every HECM.
Homes in flood zones or with HOA master policies still need compliant coverage. Gaps in required insurance can violate loan terms even when taxes are paid on time.
How The 2 Mortgage Guys at Luminate Bank typically walk through tax and insurance readiness.
Step 1
Pull recent tax bills, insurance premiums, and HOA statements so the financial assessment uses real numbers — not guesses.
Step 2
Compare residual income to expected property charges, including modest future increases, before choosing payout options.
Step 3
If a set-aside is required or optional for peace of mind, model how it changes cash at closing versus long-term protection.
Step 4
Complete HUD counseling, confirm your payment plan for taxes and insurance, and close — subject to credit and property approval.
Related guides on reverse mortgage obligations and protections.
What you still pay when P&I is not required.
Why unpaid taxes and insurance are the top default risks.
HUD counseling covers property-charge responsibilities.
Ask Ryan & Steve about LESAs and property-charge budgeting.
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Yes. Even though a HECM typically does not require monthly principal-and-interest payments, you must keep property taxes, homeowners insurance, and any required HOA dues current. Falling behind can put the loan in default and risk foreclosure.
If the financial assessment shows you may struggle to pay future property charges, the lender may require a LESA — funds set aside from your reverse mortgage proceeds to pay taxes and insurance over time. That reduces cash available at closing but protects the loan and your occupancy.
Not unless a set-aside or similar arrangement is in place. Many borrowers continue paying taxes and insurance themselves from Social Security, pensions, or other income. Ryan and Steve review which structure fits your budget before you apply.
No. Property charges can rise, and coverage requirements can change. This page is educational — not a commitment to lend or a guarantee that charges will always be affordable.
Ryan & Steve can review your property charges and LESA options — not a commitment to lend; subject to credit and property approval.