A reverse mortgage is a home loan that provides cash advances to a homeowner but does not require any certain repayment until the home is sold or the surviving homeowner dies or relocates. The funds from a reverse mortgage can be used for any purpose, including assisted living or nursing home costs. Reverse mortgage proceeds can also be used to repair home damages caused by storms.

For a traditional mortgage or a home equity line of credit, a homeowner must have sufficient income and little or no debt to qualify and must make monthly mortgage payments. In contrast, a reverse mortgage is available regardless of the homeowner's current income. A person's credit history is not considered in making a reverse mortgage loan, and the homeowner creating a reverse mortgage cannot face foreclosure or be forced to vacate the home because he does not make a mortgage payment.

The amount a homeowner can borrow on a reverse mortgage depends on the age of the youngest borrower, the current interest rate, and the appraised value of the home or the Federal Housing Administration's mortgage limits for the homeowner's county, whichever is less.

Generally, the more valuable the home, the older the homeowner and the lower the interest rate, the greater the amount that can be borrowed.

The FHA's maximum for lending in the Tampa Bay area ranges from $200,160 to $336,100, depending on the county in which the borrower lives.

While the homeowner is not required to make payments as long as the house remains her principal residence, she is required to pay the real estate taxes, assessments and property insurance. When the home is sold or is no longer the borrower's primary residence, she or her heirs must repay the cash received from the reverse mortgage, plus the accrued interest and closing costs. The remaining equity in the home, if any, belongs to the borrower or her heirs. None of the borrower's other assets will be affected by a reverse mortgage.

The most common reverse mortgage is the Home Equity Conversion Mortgage, the only reverse mortgage insured by the FHA. Approximately 181,813 seniors had taken advantage of FHA's Home Equity Conversion Mortgage by Dec. 31, 2005. All of the homeowners must be 62 and older in order to receive a conversion mortgage.

In contrast, a "proprietary" reverse mortgage is loaned by a private company that owns the mortgage. Loan costs can vary; not all reverse mortgages include the same loan costs. As a result, the true total cost of reverse mortgages can be difficult to understand and compare. That is why the federal Truth-in-Lending law requires lenders to disclose a "Total Annual Loan Cost" for these loans.

The money received from a reverse mortgage is generally not counted for Medicaid eligibility purposes as income to the nursing home spouse or to the community spouse. However, if funds drawn from a reverse mortgage are not spent in the same month they are received, they will be counted as available assets to the community spouse or the nursing home patient. These excess assets could disqualify the nursing home spouse's Medicaid eligibility for subsequent months if either spouse has too many countable assets. Medicare and Social Security benefits are not affected by funds from the reverse mortgage.