Inheriting a Florida Home With a Reverse Mortgage: The 95 Percent Rule, Deadlines and Selling Options

An inherited home reverse mortgage can catch a family off guard. Your parent may have lived in the house for decades, and now a letter from a loan servicer says the full balance is due. The deadlines feel short, and grief makes every decision harder. Still, federal rules give heirs real protection. In most cases, you will never owe more than the home is worth, and you keep any equity left after the loan is paid. This guide explains how the rules work for a Florida home, what the 95 percent rule means and how to decide whether to sell or keep the property.

Key takeaways

• Most reverse mortgages are federally insured Home Equity Conversion Mortgages, or HECMs. The loan comes due when the last borrower dies or moves out, unless an eligible non-borrowing spouse still lives there.
• After the servicer sends a due and payable notice, heirs have 30 days to respond. The CFPB says that time can often be extended up to six months to sell or arrange financing.
• To keep the home, heirs pay the lesser of the loan balance or 95% of the appraised value.
• If the home is worth less than the loan, heirs can sell it for at least 95% of the appraised value. FHA insurance covers the rest, and heirs owe nothing more.
• If the home is worth more than the loan, heirs keep the difference after the payoff and closing costs.

How an inherited home reverse mortgage comes due

A reverse mortgage lets an owner aged 62 or older borrow against the home without monthly payments. Instead, interest and fees are added to the balance over time. As a result, the balance grows each year, while the owner keeps living in the house.

The loan becomes due when the last borrower dies. However, there is an exception. If a spouse who was not on the loan qualifies as an eligible non-borrowing spouse, that spouse may be able to stay in the home. According to the CFPB, the rules depend on when the loan was made, so a surviving spouse should call the servicer right away.

Once no borrower or eligible spouse remains, the servicer reports the death to HUD. Then it sends a due and payable notice to the estate and the heirs.

Deadlines for an inherited home reverse mortgage

Timing is the hardest part. Under 24 CFR 206.125, heirs get 30 days from the notice to choose a path. They can pay the balance, sell the home, give the servicer a deed in lieu of foreclosure or ask for more time.

In practice, most families need more than a month. The CFPB notes that the timeline can often be extended up to six months so heirs can sell or arrange financing. In some cases, the servicer may ask HUD for more time if a sale is in progress. Even so, extensions are not automatic. You must stay in touch with the servicer and show that you are working on a sale or a payoff.

What to send the servicer first

• A copy of the death certificate.
• Proof that you are an heir or the personal representative of the estate.
• A short letter saying whether you plan to sell or keep the home.
• A signed listing agreement or sales contract, once you have one.

Keep copies of everything, and write down the date and name of each person you speak with. A clear paper trail makes it easier to ask for extra time.

The 95 percent rule on an inherited home reverse mortgage

The 95 percent rule protects heirs when the loan balance has grown larger than the home's value. Under HUD rules, heirs who want to keep the home pay the lesser of the full balance or 95% of the current appraised value. For example, say the balance is $420,000 and the home appraises at $380,000. To keep it, the heirs would pay 95% of $380,000, which is $361,000.

Likewise, heirs who sell an underwater home can satisfy the loan if the sale price is at least 95% of the appraised value. In that case, FHA mortgage insurance covers the shortfall. HECMs are non-recourse loans, so the estate and the heirs do not owe the difference.

Note that the appraisal must come from an FHA-approved appraiser. The servicer usually orders it. If you think the value is wrong, ask about a review before you price the home.

When the home is worth more than the loan

Many families find that the home is worth well over the balance. In that case, the 95 percent rule does not apply. Instead, the heirs pay off the full balance and keep the rest.

This is common in parts of Palm Beach County where values have climbed. For instance, the county's single-family median reached $650,000 in August 2026, according to Miami Realtors. A parent who took a modest reverse mortgage years ago may have left a lot of equity behind. So do not assume the house is lost just because a loan is on it.

What comes out of the sale price

At closing, the title company pays several items before the heirs see any money. First, it pays the servicer the full payoff, including interest and fees added since the death. Next, it pays the usual seller costs, such as the agent commission, title charges and Florida doc stamps on the deed. Then it settles any unpaid property taxes, HOA dues or utility bills tied to the home.

Whatever is left goes to the estate or to the heirs, depending on how title is held. Because interest keeps growing each month, a faster sale usually means more money for the family. Ask the servicer for an updated payoff letter a week or two before closing.

Options for an inherited home reverse mortgage

Sell the home on the open market

For most heirs, a listing brings the highest price. In August 2026, Palm Beach County single-family homes went under contract in a median of 40 days. Condos took 69 days. Add 30 to 45 days to close, and a well-priced listing usually fits inside a six-month window. However, an estate home may need cleaning, repairs or a clear-out first, so start early.

Sell quickly as-is

If the deadline is close or the home needs major work, a fast as-is sale may make sense. Cash buyers can close in a few weeks. On the other hand, they usually pay less. If the home is underwater, check that any offer meets the 95% mark, or the servicer may not accept it.

Keep the home

To keep it, you must pay the lesser of the balance or 95% of the appraised value. Most heirs do this with a new mortgage in their own name. Talk to a lender early, because loan approval takes time.

Hand the home back

If there is no equity and no one wants the house, heirs can sign a deed in lieu of foreclosure. This avoids a foreclosure on the property, and the heirs owe nothing more.

Florida probate and the authority to sell

Before anyone can sell, someone must have legal authority to sign the deed. In Florida, that usually means a personal representative appointed by the probate court, or heirs who hold title under a court order. Florida also has special rules for homestead property that can limit who inherits and how. Because of this, talk with a Florida probate attorney early. Our page on probate and inherited property explains the basic steps.

Probate can take months. So tell the servicer right away that an estate is open, and send proof as the case moves forward.

Steps to take in the first 30 days

1. Call the servicer. Report the death, ask for the payoff amount and confirm your deadlines in writing.
2. Secure the house. Keep insurance active, pay utilities and check on the home often. A vacant home can lose value fast.
3. Talk to a probate attorney. Find out who has authority to sell and how long that will take.
4. Get a value estimate. A free home value report shows whether there is equity above the loan.
5. Choose a path. Decide whether to list, sell as-is, keep or hand the home back, then tell the servicer.
6. Consider a HUD-approved housing counselor. The CFPB suggests one for free guidance on your options.

Frequently asked questions

Do I have to pay off an inherited home reverse mortgage myself?

No. You are not personally liable for the loan. You can sell the home to pay it, keep the home by paying it off, or hand it back to the servicer.

How long do heirs have to sell an inherited home with a reverse mortgage?

You have 30 days after the due and payable notice to respond. The CFPB says the timeline can often be extended up to six months, and more time may be possible if a sale is underway.

What if the inherited home reverse mortgage balance is higher than the home's value?

You can sell for at least 95% of the appraised value, and FHA insurance covers the gap. Or you can keep the home by paying 95% of its appraised value.

Can a surviving spouse stay in the house?

Possibly. An eligible non-borrowing spouse may be able to stay. The rules depend on when the loan was made, so call the servicer.

Do heirs get the equity after a sale?

Yes. After the loan and closing costs are paid, any money left goes to the estate or the heirs.

Sources

• 24 CFR 206.125, acquisition and sale of the property
• CFPB, can my heirs keep or sell my home after I die
• CFPB, what happens to my reverse mortgage when I die
• Miami Realtors, Palm Beach County August 2026 market report

This article is general information, not legal, tax or financial advice. Reverse mortgage and probate rules depend on your loan and your family's situation, so speak with the servicer, a HUD-approved counselor or a Florida attorney.

Inherited a home with a reverse mortgage? A Pure Equity agent can compare a quick cash offer with a full listing, with no obligation, so you can meet the servicer's deadline with the best result. If you decide to buy a home of your own later, our buyer agents can help with that too. Talk with our team.