A “no-cost” reverse mortgage is a pricing slogan, not a HUD waiver. Appraisal, title, counseling, and, on a HECM, FHA initial MIP of 2.00% of maximum claim amount (Mortgagee Letter 2017-12) still happen. A lender may credit origination or third-party fees so your cash at closing is zero. Jay Zayer, a Certified Reverse Mortgage Professional serving California and Arizona, reads those credits as a trade against margin or proceeds, not as a gift from FHA.
If someone says HUD eliminated all fees, they are wrong. 24 CFR 206.31 still allows an origination charge within its cap. Mortgagee Letter 2017-12 still charges MIP on every HECM.
Are the origination and MIP charges actually gone?
Origination may be reduced or credited. MIP on a HECM is not optional. On a $750,000 home below the 2026 cap, initial MIP is $15,000 (2.00% × $750,000). On the $1,249,125 cap, it is $24,982.50 (hecm-factors.md, as of 22 September 2026). Annual MIP of 0.50% of the outstanding balance continues after closing.
Counseling is paid to a HUD-approved agency. Jay quotes $125–$175. Hardship waivers, when the agency allows them, are the agency’s call. See finding a HUD-approved counselor.
Proprietary “no-cost” files have no FHA MIP, which is why the slogan appears more often on private rate sheets. They still have title, appraisal, and origination economics hidden in the margin. HomeSafe, Longbridge Platinum, Finance of America, and Mutual of Omaha’s Secure Equity each price credits differently. Compare the note, not the flyer.
How do lender credits change the note rate or margin?
Credits are paid for. On an adjustable HECM, a higher lender margin raises the note rate that accrues and the rate that feeds unused line-of-credit growth. You may pay more over a long stay than you “saved” at the table. On a closed-end fixed HECM, a higher note rate accrues on the lump sum you already took.
Here is what this looks like in practice: a credit covers $6,000 of origination at HUD’s 24 CFR 206.31 cap. The margin on the ARM is higher than the margin on the “pay origination” quote. Over a decade of accrual, the extra compounding can exceed $6,000. The break-even depends on how long you keep the loan and whether you draw the line. Price both quotes with the same appraisal and the same age.
California Civil Code section 1923.2 still requires counseling list and cooling-off even when the lender advertises no closing costs. Arizona HECM files skip 1923.2(k) and still pay MIP.
When is a credit a poor trade for a long stay?
When you expect to occupy for many years, when you want unused funds to grow (growth uses note rate plus 0.50% MIP), and when the credited loan’s margin is materially higher. When you might sell in a short period, a credit that truly eliminates cash to close can be the cheaper friction — if you also accept that HECM MIP is still there and a short stay is a poor MIP story anyway.
Ask for a Loan Estimate that shows credits as line items, not as a verbal “we will take care of it.” If the originator cannot produce that form, stop. Boutique comparison across lenders is the point. One slogan is not a comparison.
For the fee stack without slogans, see the fee breakdown. For what you still pay after closing, see ongoing obligations.
Third-party fees such as appraisal and title are still incurred even when credited. Someone pays the appraiser. A credit shifts that cost into the rate. It does not make the work free in the economic sense.
If two lenders both advertise no closing costs, compare margins, origination credits, and whether unused credit grows. The louder slogan is not the cheaper loan over a ten-year stay.
Who should not shop a slogan instead of a Loan Estimate?
“No cost” on a HECM does not erase 2.00% initial MIP on the maximum claim amount (Mortgagee Letter 2017-12). A lender credit can offset origination or third-party fees by raising the margin or the note rate. The work still happens. The cost moves into accrual.
This slogan does not help a household that will occupy for many years and is trading a higher lifetime margin for a smaller check at signing. Jay will show both Loan Estimates and say when the credit is a poor trade. It does not help someone who thinks FHA waived MIP. HUD did not.
What can go wrong: two “no-cost” quotes with different margins, and the louder ad wins. Compare the note, the credit line items, and whether unused credit grows. Use the calculator for principal-limit shape, then read the estimates for the credit. See the fee breakdown.
A follow-up: can a credit erase annual MIP too? No. Annual MIP of 0.50% of the outstanding balance (Mortgagee Letter 2017-12) keeps accruing on a HECM. A lender credit is an origination or third-party offset. It is not a HUD waiver of mortgage insurance. Anyone who says “no MIP” on a HECM is not describing Mortgagee Letter 2017-12.