Reverse mortgage · 24 CFR 206.125Selling a house with a reverse mortgage after the borrower dies
When the last borrower dies, the reverse mortgage (FHA-insured HECM) becomes due and payable. After notifying HUD, the servicer notifies the estate and heirs, who have 30 days from that notice to pay the balance, sell the property, give a deed in lieu of foreclosure, or take another action HUD allows (24 CFR 206.125(a)(2)). A sale may be for an amount set by HUD that cannot exceed 95% of the appraised value – so heirs can sell for less than the loan balance when the house is worth less than what is owed – with closing costs no higher than the greater of 11% of the price or HUD's fixed amount; the net proceeds go to the servicer. The servicer orders the appraisal from an FHA-roster appraiser within 30 days of the request and, if the loan is due, pays for it subject to reimbursement from the sale (§206.125(b)). The servicer releases the mortgage to let the sale close if there are no junior liens and all net proceeds are paid to it (§206.125(c)).
What 24 CFR 206.125 says
Notice
Servicer notifies HUD, then the estate and heirs within 30 days that the loan is due (a)(1)–(2).
30 days to act
Pay in full, sell, deed in lieu, or another action HUD allows (a)(2)(i)–(vi).
Sale price
At least the amount HUD sets, which cannot exceed 95% of the appraised value (a)(2)(ii).
Closing costs
No more than the greater of 11% of the price or HUD's fixed dollar amount (a)(2)(ii).
Appraisal
FHA-roster appraiser, within 30 days of the request; at the servicer's expense when the loan is due, reimbursed from the sale (b).
Release
The servicer satisfies the mortgage if there are no junior liens and all net proceeds go to it (c).
What heirs should do early
- Tell the servicer about the death in writing and ask for the due-and-payable notice and payoff.
- Request the appraisal right away – the 30-day clock and HUD's sale price both depend on it.
- Ask the servicer in writing for more time if a sale is in progress; extensions are by HUD's rules, not automatic.
What the TC tracks
- The date of the servicer's notice – the 30-day window counts from it.
- The appraisal date and value, and the minimum sale price the servicer accepts.
- Any junior liens – they block the release unless paid.
Questions heirs ask
How long do heirs have to sell a house with a reverse mortgage?
The servicer's due-and-payable notice gives 30 days to pay, sell or give a deed in lieu (24 CFR 206.125(a)(2)); servicers may grant more time under HUD's rules, but it is not automatic.
Can heirs sell for less than the reverse mortgage balance?
Yes. A due-and-payable HECM can be sold for HUD's set amount, which cannot exceed 95% of the appraised value, with the net proceeds going to the servicer (§206.125(a)(2)(ii)).
Who pays for the appraisal?
When the loan is due and payable, the servicer pays and is reimbursed from the sale proceeds (§206.125(b)).
Related guides
Put the 30-day window, the appraisal request and the payoff on the deal in ClosingCode as dated tasks, with reminders before each one is due.
Start free trialSource: 24 CFR 206.125 (HUD Home Equity Conversion Mortgage rules, eCFR, read October 25, 2026).
General information, not legal advice. ClosingCode is software; it is not a law firm, lender or brokerage. This guide is not a substitute for the advice or services of an attorney.