GreenPath Financial Wellness — a nonprofit approved by the U.S. Department of Housing and Urban Development (HUD) and the National Foundation for Credit Counseling — reviewed data from its reverse mortgage counseling clients over the past two years. It found that more older homeowners are turning to home equity to close widening monthly budget gaps.
In 2025, 21.1% of GreenPath’s reverse mortgage clients entered counseling with a deficit in their monthly budget, nearly double the 12.2% share in 2024, according to the organization’s internal client data. The average monthly shortfall also grew, from $1,498 in 2024 to $1,793 in 2025.
“These are not small gaps,” said Jennifer Fraser, director of stakeholder engagement and grants at GreenPath. “Budget shortfalls of this size often mean struggling to afford essential living costs like housing, healthcare, utilities and food. Since funds from a reverse mortgage can be used for almost anything, it becomes a lifeline in times of financial hardship.”
Reverse mortgages, primarily Home Equity Conversion Mortgages (HECMs) insured by the Federal Housing Administration (FHA), have long been used as a retirement income tool for homeowners 62 and older. The GreenPath data suggests that for many seniors with limited or fixed incomes, the product is increasingly functioning as a last-resort cash-flow strategy rather than a discretionary planning option.
Income profiles for counseling clients underscore how financially fragile many reverse mortgage prospects are. In 2025, half of GreenPath’s reverse mortgage clients lived on less than 50% of their area median income (AMI), the analysis found.
Across 2024 and 2025 combined, roughly 23% of clients fell into the very low-income category, with household income below 30% of AMI. These levels are commonly used by federal housing programs to identify households with the greatest affordability challenges.
For lenders, servicers and housing counselors, these income benchmarks matter because they signal that a growing segment of potential reverse mortgage borrowers may have little margin for error if housing costs, medical bills or other essentials increase. That heightens the importance of counseling and clear communication about ongoing obligations such as property taxes, homeowners insurance and maintenance.
“Reverse mortgages go beyond a retirement planning tool to be a strategy to make ends meet for many households,” GreenPath said in summarizing the data.
Financial strain deepens with age
The nonprofit’s data also points to a strong age-based pattern. Budget deficit rates increased for older age groups, with the share of clients 80 and older who reported a budget deficit more than doubling — from 12.6% in 2024 to 25.8% in 2025.
As seniors age, fixed income streams often fail to keep pace with rising living and health care expenses, leaving fewer levers to address shortfalls. Among GreenPath’s 80-plus cohort, 58.8% live on less than 50% of AMI, compounding the risk that unexpected costs or market changes could quickly erode their financial position.
For the reverse mortgage sector, this trend intersects with broader demographic shifts. The U.S. population is aging, many retirees have limited retirement savings, and housing costs have outpaced income growth in many markets. Reverse mortgages can unlock housing wealth but also introduce long-term obligations and complexity, making suitability analysis more critical as borrowers get older and more income-constrained.
To respond to rising demand and deeper financial strain among clients, GreenPath said it received a supplementary award under HUD’s Comprehensive Housing Counseling grant program.
The $455,000 award will fund HECM reverse mortgage counseling sessions through September 2026 or until funds are exhausted. The organization said the grant will allow it to provide the required counseling at no cost to seniors nationwide who are facing increased financial hardship.
“Many seniors have spent their lives working hard to own a home, so drawing on its equity can seem like an obvious choice. But there are a lot of pros and cons to consider first. This grant helps ensure that older adults living on strained incomes don’t have to navigate complex financial decisions alone,” Fraser said.
Under HUD rules, most HECM borrowers must complete independent counseling before moving forward with a loan. For low-income seniors, counseling fees can be a barrier to accessing that advice. Grant-funded counseling can help ensure that financially vulnerable borrowers receive objective guidance on reverse mortgage terms, alternatives and potential long-term impacts before committing.
GreenPath said its counselors work with seniors to review budgets, explain reverse mortgage structures and discuss other options that may help stabilize housing and household finances.
This article was generated using HousingWire Automation and reviewed by a HousingWire editor before publication. The system helps convert company announcements and industry data into HousingWire-style news coverage.
