Reverse Mortgages in Texas: Lifeline or Trap for Retirees?

 Posted on August 29, 2025 in Elder Law

Elder law is a broad area of law that focuses on seniors and how their age can impact various aspects of their lives. For many retirees in Texas and across the nation, their home is likely to be their most valuable asset. A couple’s home may often be worth more than their entire retirement savings.

While a reverse mortgage can seem like a good way to access some needed cash while still owning the home, it is essential to understand the risks associated with this type of mortgage. Couples considering a reverse mortgage during their "golden" years should pause and discuss the issue with an experienced elder law attorney in Flower Mound, TX, before signing on the dotted line.  

What is a Reverse Mortgage and How Can It Benefit Seniors?

A reverse mortgage is a home loan for those who are 62 years of age or older. This type of loan converts home equity into cash, with no required monthly loan payments by the borrowers. The loan is repaid when the homeowner sells the home or when the last borrower dies. Key requirements include living in the home as a primary residence, ensuring property taxes and homeowner’s insurance are always paid up, and completion of a HUD-approved counseling session.

The money is given to the borrower as a lump sum amount, monthly payments, or a line of credit, and repayment is not required until the last borrower dies or sells the home. The reverse mortgage is secured by the borrower’s equity in the home. The amount available will depend on the home’s value and the age of the borrowers. Texas homestead protections remain in place for seniors with a reverse mortgage.  

What Are Some of the Downsides to a Texas Reverse Mortgage?

There are downsides to a reverse mortgage as well. A reverse mortgage can potentially cause conflicts among family members who are expecting to inherit the home and are unaware of the reverse mortgage. The home equity a couple has will reduce over time as a result of the reverse mortgage, while fees and interest will accumulate. Foreclosure is a possibility if the property taxes and homeowner’s insurance are not kept current. A surviving spouse could be forced to sell the home to satisfy the loan.

What Are Some Protections Offered by Texas to Seniors Who Take Out a Reverse Mortgage?

Texas offers "non-recourse" protections, which ensure that neither the borrowers nor their estates can ever owe more than the value of the home at the time the loan is repaid. The mortgage lender’s recovery is limited to the house itself, even if the loan balance exceeds the home's value.

This could occur if the housing market declines or if the loan has been in place for many years and has accumulated significant interest. The non-recourse feature ensures that heirs are never personally responsible for any shortfall between the loan amount and the house's worth, and the lender is not permitted to pursue other assets in the borrower’s estate to make up that difference.

When the last borrower dies, under non-recourse, heirs can pay off the loan for 95 percent of the current appraised value of the home, even if this amount does not equal the amount owed. Under the Texas Constitution, Article XVI, Section 50, senior Texans are afforded even more protections for reverse mortgages.

While a reverse mortgage can be a good move for homeowners who want to age in place but need cash for living expenses or care, other alternatives may exist. A home equity line of credit (HELOC) or refinancing the home, downsizing to a smaller home, or selling the property and renting a smaller place are all potential options.

Contact a Denton County, TX Elder Law Attorney

Reverse mortgages can be a lifeline, but only when used wisely and when weighed against long-term financial stability. Before you decide on a reverse mortgage, it is essential to speak to an experienced Flower Mound, TX estate planning lawyer from Colbert Law Group PLLC. Attorney Colbert’s extensive legal experience includes serving as an administrative law judge and a tribal judge for the Chickasaw Indian Nation. Call 972-724-3338 to schedule your initial attorney consultation.