Our content may contain affiliate links. If you click a link and make a purchase, we may receive compensation at no added cost to you. We work hard to provide great resources and information. We appreciate your support!

What is reverse mortgage tenure income?A tenure income plan distributes HECM reverse mortgage proceeds in the form of a monthly paycheck guaranteed for life (as long as program obligations are met).

A tenure plan is very similar to an annuity. In the case of an annuity, you give an insurance or investment company a lump sum investment and they give you a guaranteed income in return for life or a set number of years. The reverse mortgage tenure plan works in the same way, except the lump sum “investment” is the equity in your home.

Because tenure payments come with a lifetime guarantee, they’re often lower than what you might receive with a term income plan.

Tenure income is calculated on the assumption that you’ll live to age 99, but it’s guaranteed to continue even if you live longer than that.

Tenure income is also guaranteed to continue even if you use up all of the equity in your home. And if your loan balance exceeds the value of the home, not to worry! The HECM is a non-recourse loan; you, your heirs, and your estate are not the hook for the shortage if your home isn’t worth enough to settle the entire balance. Any shortage is covered by the FHA mutual mortgage insurance fund.

Many reverse mortgage applicants choose to split the proceeds between tenure income and a line of credit. This plan is called a modified tenure plan and can be a great way to add extra retirement income along with a reserve/emergency fund.

A tenure plan is only available through the variable-rate HECM. The variable-rate HECM is the most popular of the two main HECM products because it is more flexible and customizable. Borrowers can receive proceeds in the form of a line of credit, lump sum, term/tenure income, or some combination of all of these options. The fixed-rate HECM offers just the lump sum payout option.

Expert Tip

Picking the right income plan, whether it’s tenure or term, can be a little intimidating sometimes. Don’t feel like you’re stuck for the rest of your life with whatever plan you select at the start of the loan. The HECM is designed to change with your needs over time. If you need to restructure your plan or take out a lump sum, you can do that with a simple phone call to your lender.

Download Your Own FREE Reverse Mortgage Calculator

Download your own free Excel-based reverse mortgage calculator. Enter your first name and email address below, then click the Download button.

We hate spam as much as you do! We won’t give your email address to anybody else. We’ll send you updates from time to time, but you can unsubscribe at any time. Here is our privacy policy. The calculator requires Microsoft Excel 97 or later.

Mike Roberts Avatar
About Mike Roberts

Mike Roberts is the founder of MyHECM.com, a published author, and a highly experienced mortgage industry veteran with over a decade of mortgage banking experience. When he's not working, he enjoys spending time with his family, skiing, camping, traveling, or reading a good book. Roberts is the author of The Reverse Mortgage Revealed: An Industry Insider’s Guide to the Reverse Mortgage, which is available on Amazon.