Not the whole house, not while the reverse mortgage is open. A reverse mortgage (an FHA-insured HECM) only stays in place while the home is the principal residence of at least one borrower. That leaves room for a lot of renting that families don't expect: a spare bedroom, a basement apartment, the other half of a duplex. What it rules out is the plan most people are actually searching about: Mom has moved in with you, or into assisted living, and the empty house could earn rent to help pay for her care.
If that's your situation, "can we rent it?" is the wrong question. The useful questions are which rule clock started when she left, how fast the loan balance is growing while the house sits there, and which of three exits gets the most out of the house. This page goes through all three with numbers.
What a borrower can rent while still living there
The rules are about who lives in the home, not about whether any rent changes hands. As long as the borrower still lives there as their main home, HUD allows several kinds of rental income:
- A room or part of the house. A boarder or lodger in a spare bedroom is fine. So is a live-in caregiver who pays reduced rent.
- The other units of a 2-4 unit home. HECMs are allowed on properties with up to four units if the borrower lives in one of them. The other units can be rented long term.
- An accessory dwelling unit (a backyard cottage or basement apartment) on a single-family home where the borrower lives in the main house.
Short-term and vacation rentals are a gray area. HUD's property rules bar transient (hotel-style) rentals on multi-unit and ADU properties, so check with your servicer in writing before listing any part of the home on Airbnb.
Why renting the whole house doesn't work
A tenant living in the whole house means the house is no longer the borrower's home, and the loan contract is built around that. Under HUD's regulation, the loan can be called due, with HUD's approval, once the property stops being the principal residence of at least one borrower for any reason other than death (24 CFR 206.27(c)(2)).
There's no short-term exception, either. Regular FHA mortgages have a rule that lets a lender approve renting the home out after certain moves. The HECM rules have nothing like it, so there's no approved way to rent out the whole house for a year while things settle down.
Renting quietly and hoping nobody notices is riskier than it sounds, for three reasons:
- The yearly occupancy certification. Every year the servicer asks the borrower to confirm that they still live in the home. The HUD form carries a federal false-statement warning above the signature line, and knowingly certifying occupancy that isn't true can be a federal crime (18 U.S.C. 1010).
- Servicers look. Mail that comes back, property inspections, a change in the tax bill's mailing address or the loss of a homestead exemption, and an insurance policy rewritten as a landlord policy all flag a home that may be vacant or rented.
- Insurance. The loan requires the home to stay insured. An ordinary homeowner's policy may not cover a house with a tenant living in it, so a fire or flood could leave the house uninsured and the loan in default at the worst possible moment.
Which clock started when she left
How long you have depends on why she left, and the two cases are treated very differently.
| Where she went | How HUD treats it | When the loan can be called due |
|---|---|---|
| Hospital, rehab, nursing home or assisted living, for health reasons | A temporary absence for illness | After more than 12 months in a row away, if no other borrower lives there |
| Moved in with you (or anywhere else) for good | The home has stopped being her principal residence | Now, with HUD's approval, if no other borrower lives there |
The 12-month allowance is for a stay in a health care facility. A planned, permanent move to an adult child's home usually doesn't get it, even when her health is the reason for the move. Either way, HUD tells servicers to ask borrowers to report any absence longer than two months, so the servicer doesn't decide on its own that the home has stopped being her residence (HUD Handbook 4000.1). Staying silent doesn't stop the clock; it just means the servicer decides what happened without hearing from you.
Two people can keep the loan running when the borrower leaves: a co-borrower who still lives there, or an eligible non-borrowing spouse on a loan from August 2014 or later. See the non-borrowing spouse rules for who qualifies. An adult child living in the house doesn't count, even if they've lived there for years. We cover the care-facility side, including what the money does to Medicaid, in reverse mortgages, Medicaid and moving into care.
The three real options, in dollars
Take the same borrower we use across this site. She took a reverse mortgage at 70 on a $400,000 house and used about $82,800 of it, including financed closing costs. Eight years later, at 78, she moves in with her daughter for good. If the house has gained 3% a year and the balance has grown at 7.5% a year (interest plus annual mortgage insurance), the picture looks like this:
| Line | Amount |
|---|---|
| Home value today | $506,700 |
| Reverse mortgage balance today | $147,700 |
| Added to the balance each year it stays open | about $11,100 (about $920 a month) |
Illustrations, not quotes. Same assumptions as our worked reverse mortgage example; your servicer's payoff statement gives the exact balance.
1. Sell the house and use the money for her care
Selling gets the most cash, and it's the route the loan is designed for. After about 6% in selling costs ($30,400) and the $147,700 payoff, she keeps roughly $328,600. That money is hers, and it can pay for years of care or help with the costs of living with you. There's no prepayment penalty, and the servicer doesn't need to approve the buyer when the sale pays the loan off in full. Selling a house that has a reverse mortgage walks through the steps, including what happens if the house is worth less than the loan.
2. Pay off the reverse mortgage, then rent the house
This is the only legal way to turn the house into a rental. Once the reverse mortgage is paid off, its occupancy rules go away with it (24 CFR 206.209). The money has to come from savings, a new loan on the house, or a family member buying it.
The rent has to carry that new loan. Replacing a $147,700 balance plus closing costs means borrowing about $150,000. At an illustrative 8% over 30 years, that's about $1,100 a month in principal and interest before property tax, a landlord insurance policy, repairs, empty months and any property manager. Loans on rental property usually cost more than loans on a home you live in, and the lender will want income to back it: her retirement income, the expected rent, or a family member's income if they buy or co-sign. If local rent clears all of that with room to spare, renting can beat selling for a family that wants to keep the house. If it only just covers the loan, the house becomes a second job that pays nothing. Our refinance or pay-off guide covers how payoff statements and refinancing into a regular mortgage work.
3. Keep the house empty while she might come back
This only makes sense when the stay really is temporary, like rehab after a fall or a trial stay in assisted living. The house has to sit empty or with a caregiver house-sitting, not a tenant. She still pays the property tax, insurance and upkeep, and the balance keeps growing by about $920 a month in this example. If everyone already knows she isn't going home, waiting costs her equity every month and the servicer can call the loan due anyway.
If the servicer calls the loan due
Once a loan is due, the servicer gives the borrower (or whoever manages her affairs) 30 days to choose: pay the balance, sell the house for at least the lesser of the balance or 95% of its appraised value, or hand the house over with a deed in lieu of foreclosure. The servicer has to start foreclosure within six months of the due date unless HUD grants extensions, up to two 90-day extensions while a sale or refinance is underway (24 CFR 206.125). Six months goes by fast when you're also arranging care, so if a sale or a payoff-and-rent plan is the answer, start before the letter arrives, not after.
Questions families ask next
Can I move into my mom's house to take care of her?
Yes. Anyone can live in the house with the borrower. Moving in to care for her doesn't affect the loan at all. But if she leaves for good, your living there doesn't keep the loan open: you would need to buy the house or refinance it into your own loan.
Can she rent out her basement apartment?
Generally yes, if she lives in the main house and the apartment is rented long term. Tell the servicer and her insurer about the tenant.
Would a HELOC or home equity loan have allowed renting?
There's no federal rule that ends a HELOC or home equity loan when the owner moves out, so renting is mostly a question of that lender's contract: some require you to tell them, and some can freeze or reduce a line. Read the agreement. Either way, it's a trade-off worth weighing before taking a reverse mortgage at all. See reverse mortgage vs. HELOC.
Before choosing between selling and renting, get a written payoff statement from the servicer and a rough rent estimate for the house. Those two numbers usually settle it. To see the numbers for a different age or home value, use our no-personal-info reverse mortgage calculator. A HUD-approved housing counselor can go through the options with you for free.
Sources
- 24 CFR 206.27, mortgage provisions (due and payable events)
- 24 CFR 206.3, definitions (principal residence; temporary absence in a health care institution)
- 24 CFR 206.45, eligible properties (1-4 units)
- 24 CFR 206.125, acquisition and sale of the property (30 days, 95% rule, 6 months)
- 24 CFR 206.209, prepayment without penalty
- HUD Handbook 4000.1, HECM servicing: occupancy certification
- CFPB, Reverse mortgages: a discussion guide