You do not send a required monthly principal-and-interest payment on a HECM. You still repay the loan. The due date is a triggering event: death of the last borrower, sale, or a lasting failure of occupancy or property charges (24 CFR 206.27(c) and 206.205). Jay Zayer, a Certified Reverse Mortgage Professional serving California and Arizona, describes repayment as event-driven, not coupon-driven.
Until that event, interest, annual MIP of 0.50% of the outstanding balance, and any servicing fee accrue (Mortgagee Letter 2017-12 for the MIP rate). The balance grows. That growth is the repayment you postponed.
What “no monthly P&I” does not erase
Property taxes, homeowners insurance, and HOA dues remain yours. Failure can make the loan due. Occupancy as a principal residence remains yours (24 CFR 206.39). If the home stops being your principal residence, 24 CFR 206.27(c)(2)(i) can make the loan due. A health-care stay longer than twelve consecutive months is a separate trigger under 24 CFR 206.27(c)(2)(ii) and the definition in 24 CFR 206.3.
You may prepay without a HUD penalty schedule of the kind some forward ARMs once used. Extra principal reduces what heirs later face.
When HUD says the loan is due and payable
24 CFR 206.27 lists the events. Death of the last surviving borrower is the one families expect. Sale or transfer is another. Permanent occupancy failure is the one people miss. Conveyance of title without paying the HECM can also accelerate the debt.
A non-borrowing spouse may have a path to remain if HUD’s requirements were met at origination and after death. That path is a deferral of due-and-payable enforcement, not a new loan in the spouse’s name. It is not automatic for every household.
After the loan is due and payable, 24 CFR 206.125(a)(2) gives the estate a short window to pay the outstanding balance in full, sell for not less than the Commissioner-set amount (which shall not exceed 95 percent of appraised value), deed the home in lieu of foreclosure, or, in some cases, cure. Heirs should request a current payoff and an appraisal path from the servicer rather than mailing a guess.
How heirs usually close the file
Most files end in a sale. Sale proceeds pay the servicer. Surplus equity goes to the estate. If the home is worth less than the balance, FHA insurance and the non-recourse feature in 24 CFR 206.27(b)(8) stop the servicer from chasing other assets of the borrower for that deficiency.
Consider a homeowner who is 84 in Scottsdale and whose children will inherit a house with a growing HECM. The children do not “inherit the payment coupon.” They inherit a due-and-payable loan and a house. Their job is to sell, refinance, or deed-in-lieu within the servicer’s timelines.
Read the non-recourse feature before you assume heirs owe a shortage from their own pockets. For what you must still pay while you live there, see ongoing borrower obligations.
What is the repayment sequence after a due-and-payable letter?
You repay a HECM when a 24 CFR 206.27(c) event happens, not on a monthly coupon. Death of the last borrower, sale, or a lasting occupancy or property-charge failure starts the clock. 24 CFR 206.125 then gives the estate a defined set of choices.
- The servicer sends notice. Ask in writing for the outstanding balance, any HUD appraisal path, and the deadline.
- Heirs or the executor decide whether to pay the balance and keep the house (24 CFR 206.125(a)(2)(i)), sell for not less than the Commissioner-set amount that shall not exceed 95 percent of appraised value (206.125(a)(2)(ii)), deed the home in lieu, or, in some cases, cure.
- Sale proceeds pay the servicer up to the balance. Leftover equity goes to the estate.
- If the house sells for less than the balance, 24 CFR 206.27(b)(8) and FHA insurance stop the ordinary personal-deficiency path.
- An Eligible Non-Borrowing Spouse who was named at origination may have a deferral under 24 CFR 206.55. That is not a new loan and not automatic for every widow.
This product does not help a household that wants the loan to vanish when they move to a child’s spare room and keep title. Occupancy failure makes it due. It does not help someone who stops paying taxes and calls that “the no-payment feature.” 24 CFR 206.205 is the property-charge default path.
What can go wrong: heirs wait months to open the servicer letter, the due-and-payable clock runs, and a sale that would have cleared equity becomes a rushed listing. Call in the first week. For the calendar those heirs actually face, see heirs timeline.
Voluntary extra payments while you live there reduce the balance and can reopen unused credit on an adjustable HECM. They are optional. HUD does not mail a coupon. If the open question is how large the balance might be at a later sale, use the calculator for today’s capacity and remember accrual continues. This page does not quote a future payment or APR.