How a Reverse Mortgage Can Help in a Divorce After 62: A Sioux Falls Guide
Divorce is never simple. When it happens after 60, it can be even harder. Many couples have spent 30 or 40 years building a life together, and the house is often their biggest shared asset. Deciding who keeps it, who moves, and how both people will pay for retirement afterward can feel overwhelming.
It is also more common than many people think. According to the Pew Research Center, the divorce rate for Americans 65 and older has roughly tripled since 1990.¹ This trend is often called "gray divorce" or "silver divorce."
For homeowners 62 and older, a reverse mortgage in a divorce can open options a traditional mortgage cannot. Jeff Buum, a Certified Retirement Mortgage Specialist at Fairway Heartland in Sioux Falls, helps older homeowners across the Sioux Empire understand how a reverse mortgage works in a divorce settlement, what it can and cannot do, and whether it fits their situation.
Why the House Is So Hard to Divide in a Gray Divorce
In a younger divorce, one spouse might refinance the home into their own name and keep making payments. After 62, that path is harder. Income may be fixed. A new 30-year mortgage payment may not fit a retirement budget. Selling the home can leave both people wondering where they will live next.
Here are the questions Jeff hears most from Sioux Falls homeowners going through a later-life divorce:
Can one of us stay in the house without taking on a monthly mortgage payment?
How do we pay the other spouse their share of the equity?
If we sell, will either of us have enough to buy another home?
What happens to the mortgage we still owe?
A reverse mortgage can help answer each of these questions.
How a Reverse Mortgage Works
The most common type of reverse mortgage is the Home Equity Conversion Mortgage, or HECM. It is the only reverse mortgage insured by the Federal Housing Administration (FHA).
A HECM lets homeowners 62 and older turn part of their home equity into cash. Funds can come as a lump sum, monthly payments, a line of credit, or a mix of the three. No monthly mortgage payment is required as long as at least one borrower lives in the home as a primary residence and meets the loan terms. Borrowers can still make voluntary payments if they choose.
The amount available depends on the youngest borrower's age, current interest rates, and the home's value. For 2026, FHA caps the home value used in the calculation at $1,249,125.² Most homes in Sioux Falls, Harrisburg, Tea, and Brandon fall well under that limit. You can learn more about reverse mortgage loans in Sioux Falls and who qualifies on Jeff's reverse mortgage page.
What You Still Pay For
A reverse mortgage removes the monthly mortgage payment, but not every housing cost. Borrowers must still:
Pay property taxes and homeowners insurance on time
Keep the home in good repair
Live in the home as their primary residence
Falling behind on any of these can cause the loan to come due, so plan for them in your post-divorce budget.
When the Loan Comes Due
The loan is usually repaid when the last borrower sells the home, moves out permanently, or passes away. In most cases, the home is sold to pay off the balance. A HECM is a non-recourse loan, which means the borrower or their heirs will not owe more than the home is worth when it sells. Any equity left after the loan is repaid belongs to the borrower or their estate.
Option 1: One Spouse Keeps the Home
Say one spouse wants to stay in the home and the other wants to move. The departing spouse is owed their share of the equity. This is one of the most common ways to use a reverse mortgage in a divorce. The loan can provide cash for the buyout, and the spouse who stays has no monthly mortgage payment afterward.
A Simple Example
Picture a couple in Harrisburg. Their home is worth $400,000, and they still owe $60,000 on the mortgage. That leaves $340,000 in equity, or $170,000 for each spouse.
The spouse keeping the home, who is 72, takes out a reverse mortgage. The HECM first pays off the $60,000 balance. The remaining proceeds, after closing costs, go toward the $170,000 owed to the departing spouse. If the reverse mortgage does not cover the full amount, the settlement can make up the difference with other assets, such as giving the departing spouse a larger share of a retirement account.
The result: one spouse stays in a familiar home with no monthly mortgage payment, and the other walks away with their share of the equity. These numbers are for illustration only. Actual proceeds depend on age, interest rates, and the appraised value.
What to Know Before Choosing This Route
The spouse keeping the home must be at least 62 and qualify for the loan on their own.
Reverse mortgage proceeds must pay off any existing mortgage first.
The lender will typically need the final divorce decree showing who is awarded the home.
The departing spouse is removed from the title as part of the settlement.
Every borrower must complete counseling with a HUD-approved agency before closing.
Option 2: Sell the Home, and Each Spouse Buys Again
Sometimes neither spouse wants to stay, or the home is simply too big for one person. In that case, the couple can sell, split the proceeds, and each use a HECM for Purchase to buy a new home. It is the second main way to use a reverse mortgage in a divorce.
A HECM for Purchase lets buyers 62 and older buy a primary residence with a reverse mortgage. The buyer makes a larger down payment, often around half the purchase price depending on age and interest rates, and the reverse mortgage covers the rest. Afterward, there is no monthly mortgage payment as long as the buyer lives in the home and keeps up with taxes, insurance, and maintenance.
A Simple Example
A Sioux Falls couple sells their home, and each spouse nets about $200,000 after selling costs. Paying cash, each could afford a home around $200,000. With a HECM for Purchase, that same $200,000 can go toward a down payment on a higher-priced home, in some cases up to about $350,000 to $400,000, depending on each spouse's age and current rates.
One spouse might choose a low-maintenance townhome in southwest Sioux Falls. The other might move closer to family in Brandon or Dell Rapids. Jeff also helps buyers with home loans in Brandon and nearby Sioux Empire communities.
Either way, each spouse gets a home that fits their next chapter and keeps more of their savings and retirement accounts in place.
What If One Spouse Is Under 62?
A reverse mortgage is only available to borrowers 62 and older. If one spouse is younger, that spouse can still take their share of the equity and buy a home with a conventional, FHA, or VA loan. A younger spouse who wants to keep the home might look at a cash-out refinance in Sioux Falls to pay the other spouse's share.
For a side-by-side look at each loan type, see Jeff's guide to mortgage loan programs explained.
Questions to Settle Before You Sign
A reverse mortgage is one piece of a divorce settlement, not the whole plan. Before anything is final, Jeff recommends working through these questions with your attorney and financial advisor:
Who is keeping the home, and does the divorce decree spell that out?
Can the spouse who stays afford property taxes, insurance, and upkeep on one income?
Would a buyout or a sale leave each person in a better spot for retirement?
Are there tax effects from selling the home or moving retirement funds?
Jeff can run reverse mortgage numbers for both options, so everyone at the table is working from real figures instead of estimates.
Talk Through Your Options with Jeff Buum
A later-life divorce comes with a lot of hard decisions. The mortgage does not have to be one of them. Jeff Buum works with homeowners 62 and older across Sioux Falls, Harrisburg, Tea, Brandon, Dell Rapids, and Southeast South Dakota, and he is happy to coordinate with your attorney or financial advisor. You can learn more about Jeff Buum and his 20+ years of lending experience before you reach out.
If you are 62 or older and weighing a reverse mortgage in a divorce, a free consultation is a good place to start. It is a conversation, not a commitment.
Book a free consultation with Jeff Buum
¹ Pew Research Center, "Led by Baby Boomers, divorce rates climb for America's 50+ population," March 9, 2017.
² U.S. Department of Housing and Urban Development, "HUD's Federal Housing Administration Announces 2026 Loan Limits," December 11, 2025.
This article is for educational purposes only and does not constitute legal, tax, or financial advice. Consult an attorney and a tax or financial advisor about your specific situation. Reverse mortgage borrowers are required to receive counseling from a HUD-approved agency. The youngest borrower must be at least 62 years old. Borrowers must live in the home as their primary residence, pay property taxes and homeowners insurance, and maintain the home. HECM for Purchase requires a down payment, which varies based on age, interest rates, and the lesser of the appraised value or purchase price. These materials are not from HUD or FHA and were not approved by HUD or any government agency. Not all borrowers will qualify. Programs are subject to change without notice. Jeff Buum NMLS #400290. Fairway Independent Mortgage Corporation NMLS #2289. Equal Housing Opportunity.
