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Which homes qualify for a reverse mortgage: condos, manufactured homes, ADUs and repairs

By Tom Jarboe, NMLS #210600Facts checked November 3, 2026

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The property types at a glance

These are the HECM rules from HUD Handbook 4000.1 and HUD's regulations (24 CFR 206.45, 206.47 and 206.51).

A HECM is insured by the FHA, but that insurance protects the lender, not you. New American Funding is not acting for HUD, FHA or any government agency.

Not sure which option fits you? Ask Tom for a personal estimate →

Homes with 2 to 4 units

Here's the short version. HUD limits HECMs to homes with one to four units, and you must live in one of them as your principal residence. The other units can be rented.

Live in one side of a duplex in Pomona and rent the other, for example, and the home can qualify, as long as it meets the property rules and you meet the loan terms.

ADUs and backyard homes

HUD defines an ADU as a single living unit, smaller than the main home, with its own way in and out, that's inside or detached from a one-unit home and sits on the same parcel. A one-unit home with a single ADU stays a one-unit property under HUD's rules.

On a home that already has two or more units, an ADU counts as another unit, so a duplex plus an ADU is treated as a three-unit property.

Each living unit has to meet HUD's basics: safe water, a bathroom with a toilet, sink and tub or shower, heat, hot water, electricity, and a kitchen area with a sink and a stove hookup. If you're thinking about building an ADU, ask the lender how a home that's still under construction is handled before you apply.

Questions about your own situation?

Talk with Tom Jarboe. He's been helping families with home loans since 1986. You'll get plain answers, and he'll tell you if a reverse mortgage isn't the right fit.

Call Tom: (909) 869-6588Get my personal estimate

Condos

Condos are where I want you to slow down and ask questions. A condo unit qualifies for a HECM in one of three ways:

1. The project is on FHA's approved list. You or the lender can search it on HUD's condo lookup.
2. The unit gets Single-Unit Approval. This is for a unit in a project that isn't FHA-approved. The rules are tighter. The project must have at least five units, at least half the units must be owner-occupied, the homeowners association (HOA) must be in control (not the builder), its reserves and finances must meet FHA's tests, and no more than a small share of units can already have FHA loans. You as the borrower must also meet the Financial Assessment's residual income standard and have a good property tax and insurance payment history, without exceptions. A manufactured home condo can't use Single-Unit Approval.
3. It's a site condominium. This is a condo project made up of detached homes (or townhouse-style homes where you own the land) with no manufactured homes. Site condos don't need project or single-unit approval.

Two more condo points:

• The HOA may have to sign off. If the condo's recorded rules require the association to approve a new mortgage that isn't a purchase loan, the lender must get that approval in writing before the loan.
• Insurance. The association needs a master policy on the building. If that policy doesn't cover the inside of your unit, you'll need your own walls-in (HO-6) policy. See earthquake and fire insurance in California.

You keep paying HOA dues with a reverse mortgage. Unpaid HOA dues are a loan default, the same as unpaid property taxes or insurance.

Manufactured homes

To qualify for a HECM, HUD Handbook 4000.1 says a manufactured home must:

• be designed as a one-family home with at least 400 square feet of floor space;
• have a HUD certification label (or a label verification letter) showing it was built on or after June 15, 1976, to the federal manufactured home code;
• be classified as real estate;
• be built on, and stay on, a permanent chassis;
• sit on a permanent foundation built to HUD's Permanent Foundations Guide, certified by a licensed engineer or architect; and
• have been moved directly from the factory or dealer to the site where it sits now.

That last rule matters. A home that was moved from one site to another after it was first set up doesn't meet it. Homes built before June 15, 1976 (often called mobile homes) don't qualify for a HECM.

The land matters too, so here's what I'd check first. HUD requires that you own the land, or hold a lease long enough to meet its rule (for example, a renewable 99-year lease). A month-to-month space rental in a park doesn't meet that.

If your label is missing, the lender can order a label verification. If you've added a room or porch, the foundation certification has to cover it.

Repairs and the repair set-aside

The appraiser lists any repairs needed to meet HUD's property rules, with a cost estimate. What happens next depends on the repair:

With a Repair Set-Aside, part of your loan is held back to pay for the work: 150% of the estimated repair cost, plus a repair administration fee that HUD caps (ask for the exact amount in writing).

The work must be finished within the time in your repair rider, and no later than 12 months after closing. The lender inspects the work before paying the contractor, and it can't pay you for your own labor, only for materials.

Money left over after the repairs is generally made available to you; on a fixed-rate loan, unused repair funds aren't released. The set-aside lowers how much you can borrow, and the repair money you use is added to your loan balance, which grows over time with interest, mortgage insurance and fees.

After closing, keeping the home in good repair stays your job. If your servicer finds the home has deteriorated, HUD's rules give you 60 days to start fixing it before the loan can be called due.

Common California items the appraiser checks include peeling exterior paint, roof and foundation problems, pool safety, overhead power lines over the house or pool, and solar panels. Leased solar panels or other leased equipment are left out of the home's value, and the lease can't block a future sale.

A PACE loan (property-assessed clean energy financing, paid on your tax bill) must be paid off at or before closing; HECM money can be used for that.

Made-up example: Norma, 74, owns a two-bedroom condo in Diamond Bar, paid off, and wants to keep living there. Before she pays for anything, she asks the lender to check the project on FHA's list.

It isn't there, so the lender looks at Single-Unit Approval and asks the HOA for its budget, reserve figures and owner-occupancy count.

The appraisal also notes peeling paint on her patio railing, a small repair well under 15% of the maximum claim amount, so it can be done after closing with a repair set-aside.

Norma meets with a counselor, reads her estimate, and understands she'll keep paying her property taxes, insurance and HOA dues, and that her balance will grow over time. A made-up example. Norma is not a real person.

Questions so far? Tom is glad to walk you through it. Call Tom: (909) 869-6588 →

Questions families ask

Your next step

Talk with me first. I'll answer your questions, check whether your home's type is likely to qualify, go over your options and tell you plainly if a reverse mortgage isn't the right fit, with no pressure. Call (909) 869-6588 or email [email protected]. About me

Before you can apply for a HECM, you'll meet with an independent HUD-approved counselor. It's required, and I'll give you a list of agencies. In California there's also a 7-day wait after counseling before a final application or any fees. Find one on HUD's site or call (800) 569-4287. See also who qualifies and counseling near Diamond Bar.

Talk with Tom

Tom Jarboe, Regional Sales Manager, New American Funding, NMLS #210600, Diamond Bar.

As a loan officer, I want you to be able to check everything. That's why I give you honest answers on both sides, cite the official rules, and make sure you meet an independent HUD-approved counselor before you apply. My goal is that you make an honest, educated decision. More about me.

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