Reverse Mortgages in Canada: How They Work, Who Offers Them, and the Real Costs (2026)

What Is a Reverse Mortgage?

A reverse mortgage lets homeowners aged 55 and older borrow against their home's equity without making regular payments. The interest is added to the loan balance, and the whole amount is repaid when the home is sold, the last borrower moves out, or the last borrower passes away.

The money is tax-free because it is a loan, not income, so it does not affect Old Age Security or the Guaranteed Income Supplement.

Who Qualifies?

• All owners on title must be at least 55 • The home must be your principal residence in Canada • The property must meet the lender's minimum value and location requirements • Any existing mortgage must be paid off from the proceeds

There is no income test and no stress test. Lenders look at your age, the home's value and location, and the property type.

How Much Can You Borrow?

Canadian reverse mortgage lenders advance up to about 55% of the home's appraised value. The older you are, the more you can borrow, because the lender expects the loan to run for a shorter time. Location and property type also matter: a detached house in a major city qualifies for more than a condo in a small town.

You can usually take the money as a lump sum, scheduled advances, or a mix of both.

Who Offers Reverse Mortgages in Canada?

Only a handful of regulated lenders offer them:

• HomeEquity Bank (CHIP Reverse Mortgage), the largest and longest-running • Equitable Bank (Flex reverse mortgage products) • Bloom Finance • Home Trust (EquityAccess) • Fraction

Most are available through mortgage brokers as well as directly, so a broker can compare rates, fees, and maximum amounts across lenders.

What Does It Really Cost?

Reverse mortgage rates are higher than regular mortgage rates, and because no payments are made, the interest compounds on itself. On top of the rate, expect a closing or setup fee, an appraisal, and independent legal advice, which is required.

Example (illustrative): a $200,000 reverse mortgage growing at 7% with no payments roughly doubles in about 10 years, to around $400,000. Whether that is a problem depends on how much the home is worth by then and what you want to leave to your estate.

Most lenders guarantee you will never owe more than the home's fair market value when it is sold, as long as you keep the property maintained and the taxes and insurance paid.

What Happens to Your Estate?

When the last borrower dies or sells, the loan, including all accumulated interest, is repaid from the sale. Whatever is left belongs to you or your estate. Heirs can also repay the loan with other funds and keep the home.

Lenders give the estate a set period to sell or repay. Talking to your family before you sign avoids surprises later.

Alternatives to Compare First

A reverse mortgage is one of several ways to use home equity in retirement: