Reverse Mortgages in Colorado: How They Work and Who They Actually Help

By Prerna Kapoor, CLHMS | REAL Brokerage | June 16, 2026

A lot of my older clients reach the same fork in the road. They love their home and want to stay in it, but a big chunk of their wealth is locked inside the walls, not sitting in the bank. That’s usually when the words “reverse mortgage” come up, and they often arrive with a lot of worry attached.

I’m a Realtor, not a lender, so I’m not here to sell you one. What I can do is explain how these loans actually work in plain language, point out the parts people miss, and help you figure out whether it’s even the right conversation for you. Let’s slow it down and look at it honestly.

What a Reverse Mortgage Really Is

The most common type is the Home Equity Conversion Mortgage, or HECM, and it’s insured by the federal government through the Department of Housing and Urban Development. To qualify, you need to be at least 62 years old, and the home has to be your primary residence.

Instead of you making a monthly payment to the bank, the bank pays you, drawing from the equity you’ve built. You keep living in your home and you keep the title. The loan balance grows over time rather than shrinking, and you don’t pay it back until you sell, move out for good, or pass away. You can read the basics straight from the source at the Consumer Financial Protection Bureau.

How Much You Can Borrow

The amount you can pull from your home depends on three things: your age, your home’s value, and current interest rates. Generally, the older you are and the more your home is worth, the more you can access.

There’s also a ceiling. For 2026, the national HECM lending limit is $1,249,125, so even with a very valuable home, the federally insured program caps what you can borrow. You can take the money as a lump sum, a line of credit you draw on as needed, or steady monthly payments. Many of my clients are surprised to learn the line-of-credit option exists, because it lets them leave the money untouched until they actually need it.

The Catch People Miss

Here’s the part I always make sure people hear. A reverse mortgage does not erase your responsibilities as a homeowner. You still have to pay your property taxes, keep up your homeowners insurance, pay any HOA dues, and maintain the home. Fall behind on those, and the loan can go into default, which can put your home at risk. That surprises people, and it’s the single most important thing to understand before signing anything.

The flip side is genuinely reassuring. A HECM is what’s called a non-recourse loan, which means you or your heirs will never owe more than the home is worth when it’s sold, even if the balance has grown past the home’s value. And your heirs have choices. They can repay the loan and keep the house, or sell it, settle the balance, and keep whatever is left over.

The Counseling Step Is Not Optional

Before you can even apply for a HECM, you’re required to complete a session with a HUD-approved counselor. This isn’t a formality someone can skip. The counselor walks through how the loan works, what it costs, what your obligations are, and what other options might serve you better. You can find an approved counselor through HUD or by calling 800-569-4287, and you’ll want to keep the certificate they give you, because your application requires it.

I’d add one more step that isn’t required but I always suggest: talk it through with a fee-only financial advisor and with your family. A reverse mortgage touches your estate and the people you’ll leave it to, so it deserves a real conversation, not a quiet decision made alone.

When It Makes Sense, and When to Look at Other Options

A reverse mortgage can be a good fit for someone who truly wants to age in place, has most of their net worth in their home, and needs more monthly breathing room. But it’s not the only way to get at your equity.

If you’re younger than 62 or you have steady income, a HELOC or a cash-out refinance might cost you less in the long run. And for some people, the better move isn’t tapping equity at all, it’s selling and right-sizing into something that fits this chapter of life. I walked through that whole decision in my downsizing guide for Colorado empty nesters. If selling is on the table, it’s also worth knowing how the tax side works, which I covered in my piece on capital gains when you sell a Colorado home.

In the Highlands Ranch and Centennial neighborhoods where many of my clients have owned for decades, I’ve watched both paths play out well. The deciding factor was never the product. It was whether staying put truly fit the life they wanted next.

Quick answers

Do I lose ownership of my home with a reverse mortgage?
No. You keep the title and keep living there. The loan is repaid when you sell, move out permanently, or pass away.

Can my kids inherit the house?
Yes. Your heirs can repay the loan and keep the home, or sell it, pay off the balance, and keep any remaining equity. Because it’s non-recourse, they’ll never owe more than the home’s value.

What happens if I can’t pay my property taxes?
Falling behind on taxes, insurance, or upkeep can trigger a default, which can put your home at risk. This is exactly why the required HUD counseling exists.

Prerna Kapoor | REALTOR® | Luxury Home Specialist
REAL Brokerage | 720-949-5450 | info@prernakapoor.com
CLHMS • RENE • PSA • ABR | International Sterling Society Award Winner

Prerna specializes in residential real estate across Parker, Aurora, Lone Tree, Castle Pines,
Highlands Ranch, Cherry Creek, Greenwood Village, and Centennial. She speaks English, Japanese,
and Hindi.