Selling a House With a Reverse Mortgage in Central Arkansas

By Amanda Galbraith | August 2, 2026

If you took out a reverse mortgage years ago and now want to downsize, move closer to family, or move into a care community, you may be worried you're stuck. You're not. A reverse mortgage is a loan like any other — it just gets paid back when you sell instead of month by month.

The same is true if you've inherited a home from a parent who had one. It feels overwhelming at first, but the path is clear once you understand how the payoff works. Here's exactly how it plays out in Central Arkansas.

How the payoff works when you sell

A reverse mortgage — for most people, a HECM, or Home Equity Conversion Mortgage insured by the FHA — becomes "due and payable" when the last borrower sells, moves out permanently, or passes away.

When you sell, the order of operations at the closing table is simple:

1. The home sells at the agreed price.
2. The reverse mortgage payoff comes off the top — that's the original amount drawn, plus the interest and mortgage insurance that have accrued over the years, plus any servicing fees.
3. Normal seller closing costs come out next — agent fees, your share of the Arkansas transfer tax, and title and closing charges.
4. Whatever is left is yours.

The one thing that catches sellers off guard is the balance. Unlike a regular mortgage that shrinks as you pay it down, a reverse mortgage balance grows over time because you're not making monthly payments — the interest is added on. So the payoff figure is almost always larger than the amount you originally borrowed.

The single most important step is to request a written payoff statement from your loan servicer before you list. That number tells you your true starting point, and it's the figure your title company will use at closing.

The non-recourse protection that matters most

Here's the part that puts most people at ease. A HECM is a non-recourse loan. That means you can never owe more than the home is worth at the time it sells.

If your loan balance has grown past your home's value, FHA mortgage insurance — which you paid into the whole time — covers the difference. Not you, and not your heirs. Nobody has to write a check to make up a shortfall.

In practice, this rarely comes up here. Central Arkansas homes have appreciated roughly 4 to 6 percent a year, so a homeowner who's held a property in Maumelle, Sherwood, or west Little Rock for a decade or more usually has substantial equity sitting above the loan balance. For most of my clients in this situation, the question isn't "will I owe money" — it's "how much will I walk away with." That final number after payoff and costs is your net proceeds, and it's worth running before you make any decisions.

If you've inherited a home with a reverse mortgage

This is where the anxiety usually spikes, because now there's a clock. Take a breath — the timeline is more forgiving than it looks.

Within about 30 days of the last borrower's passing, the servicer sends a "due and payable" notice to the estate or the heirs. From there:

• You generally have six months to act.
• That can be extended up to 12 months total, in 90-day increments, as long as you're actively working to sell or pay off the loan and you request the extensions through the servicer.
• If nothing happens by around the one-year mark, HUD requires the servicer to start foreclosure — which is exactly what the extensions are designed to help you avoid.

As an heir, you have four options:

1. Sell the home, pay off the loan, and keep any remaining equity. This is the most common choice when there's equity to capture.
2. Pay off the balance and keep the home — either with cash or by refinancing into a traditional mortgage.
3. Pay 95% of the appraised value to keep the home if the loan balance is higher than the value. FHA insurance covers the rest. This 95% rule is the same non-recourse protection working in your favor.
4. Sign a deed-in-lieu — hand the home back to the lender and walk away owing nothing.

One important exception: if you're a surviving spouse, you can often stay in the home and defer repayment, even in some cases where you weren't named as a borrower. Confirm your status with the servicer before assuming you have to do anything at all.

The heir situation shares a lot of ground with any estate sale — if this describes you, our guide on selling an inherited house in Arkansas walks through probate, agreement among multiple heirs, and the step-up in cost basis that can wipe out capital gains tax.

What's different about closing in Central Arkansas

A few local specifics make this smoother here than in some states:

• Title companies handle closings. Your title company coordinates directly with the reverse-mortgage servicer to get the exact payoff and clear the lien at closing. An attorney is optional, not required.
• Arkansas has no estate tax and no inheritance tax. Heirs aren't taxed by the state simply for inheriting the property.
• Get the payoff early. Reverse-mortgage servicers can be slow to produce statements, so ordering the payoff the moment you decide to sell keeps your closing on schedule.

Selling a home with a reverse mortgage takes a little more coordination than a standard sale, mostly around timing the payoff and, for heirs, tracking the HUD deadlines. But the mechanics are well-worn, and the non-recourse protection means the downside is capped no matter what.

Frequently Asked Questions

Do I need to pay off the reverse mortgage before I list the house?

No. You sell the home like any other listing, and the payoff happens at closing out of the sale proceeds. You just need a current payoff statement from your servicer so you and your title company know the exact number.

What if the reverse mortgage balance is more than the house is worth?

You're protected. A HECM is non-recourse, so the most that has to be repaid from a sale is 95% of the appraised value, and FHA insurance covers any remaining balance. You won't owe the difference, and neither will your heirs.

How long do heirs have to sell a house with a reverse mortgage?

Roughly six months from the due-and-payable notice, extendable up to 12 months total in 90-day increments if you're actively marketing the home and request the extensions through the servicer. Staying in contact with the servicer is what keeps foreclosure off the table.

Do I keep the money left over after the reverse mortgage is paid?

Yes. After the loan payoff and standard closing costs, any remaining equity belongs to you or, in an estate, to the heirs. In Central Arkansas's appreciating market, that leftover equity is often significant.

Can I use a reverse mortgage to buy my next home?

Yes — it's called a HECM for Purchase, and it lets buyers 62 and older put down a portion of the price and finance the rest with no monthly mortgage payment. It's a common downsizing move worth exploring with a reverse-mortgage lender.

Deciding your next step

Selling a home with a reverse mortgage is entirely doable, and in this market it usually ends with equity in your pocket rather than a bill. The keys are getting your payoff statement early, understanding the non-recourse protection, and — if you're an heir — staying ahead of the HUD timeline.

Every situation is a little different, and the only way to know your real number is to run it against your home's current value and your loan balance. That's exactly the kind of walk-through I do with sellers and families before we ever put a sign in the yard.

If you're weighing this for your own home or a loved one's, download our free Central Arkansas Home Sellers Guide — or reach out and I'll help you map it out.

About Amanda Galbraith
Amanda Galbraith is the Broker/Owner of Arkansas Property Management & Real Estate, serving the greater Little Rock area. She specializes in helping first-time sellers navigate the process from pricing to closing, as well as investors looking to grow their portfolios. Connect with Amanda at www.ar-property.com.

This article is general information, not tax, legal, or financial advice. Reverse-mortgage terms and HUD rules vary by loan and situation — confirm the specifics with your loan servicer, and consult a qualified professional about your circumstances.