A reverse mortgage in Canada lets homeowners aged 55+ borrow up to 55% of their home’s appraised value (in some cases up to 59% for older borrowers) without making monthly payments. Interest accrues and the loan is repaid when the home is sold, both spouses move out, or the last borrower dies. As of 2026, the dominant provider is HomeEquity Bank (CHIP), with Equitable Bank as the main alternative. Rates are higher than regular mortgages: roughly 6.5-8.5% in 2026.
Quick answer: Borrow up to 55% of home value at age 55+, no monthly payments required, interest compounds until you sell or die. 2026 rates are ~6.5-8.5%. Closing fees run about $1,795 plus appraisal and legal.
What this means: A reverse mortgage trades long-term home equity for current cash flow. It is useful for cash-poor seniors who plan to stay in their home. It is expensive over time because interest compounds — a $100,000 reverse mortgage at 7% doubles to $200,000 in about 10 years.
What to do next: See what reverse mortgage amount you could qualify for based on your age and home value. Calculate reverse mortgage →
How a reverse mortgage works
- Eligibility: You and your spouse (if on title) must both be 55 or older. The home must be your primary residence.
- Appraisal: Lender appraises your home’s current market value.
- Loan offer: Lender offers a percentage of appraised value — from 15% (younger borrowers, lower-value homes) up to 55% or 59% (older borrowers in major markets). Borrower’s age and home location determine the maximum.
- Receive funds: Take the amount as a lump sum, scheduled monthly advances, or a flexible line.
- No monthly payments: Interest accrues against the loan balance. The total balance compounds.
- Loan ends when: the home is sold, both borrowers move out (e.g., long-term care), or the last borrower dies. The estate or sale proceeds repay the loan.
Canadian lenders and 2026 rates
| Lender | Product | 5-year fixed rate (2026) | Notes |
|---|---|---|---|
| HomeEquity Bank | CHIP Reverse Mortgage | ~6.64% (APR ~7.06%) | Largest provider. Lump sum or planned advances. |
| Equitable Bank | Flex Reverse Mortgage | ~6.5-7% | Lower closing fees, smaller maximum LTV in some cases. |
Variable rates are typically 0.5-1% above the equivalent fixed. Six-month and 1-year terms exist but most borrowers choose 3 or 5 years.
How much you can borrow
The maximum loan amount depends on three factors:
- Age — older borrowers can borrow a higher percentage. A 55-year-old might max at 25-35%; a 75-year-old can reach 50%+.
- Home value — higher-value homes in stable markets get higher percentages.
- Location — Toronto, Vancouver, Calgary, Ottawa, Montreal, Edmonton, and Hamilton get full LTV; rural and smaller markets get less.
Approximate maximum borrowing percentage by age (CHIP-style schedule):
| Age | Approximate max LTV |
|---|---|
| 55 | 25-30% |
| 65 | 35-40% |
| 75 | 45-50% |
| 85 | 50-55% |
| 90+ | Up to 59% |
Costs to expect
- Closing fee: ~$1,795 (HomeEquity Bank standard)
- Appraisal: $300-$500
- Independent Legal Advice (ILA): $500-$1,200 (required by lender)
- Discharge fee: ~$300 when loan is paid off
- Penalty for early repayment: Up to 5% of balance in first 3 years (drops over time)
The compounding cost over time
Because interest compounds and is not repaid monthly, balances grow quickly. A $150,000 reverse mortgage at 7% compounded semi-annually:
| Years elapsed | Balance owed |
|---|---|
| 0 | $150,000 |
| 5 | $211,250 |
| 10 | $297,490 |
| 15 | $418,955 |
| 20 | $589,820 |
If the home appreciates at 3% annually from a $700,000 starting value, after 20 years it’s worth $1,265,000. The reverse mortgage at $589,820 still leaves $675,000 in home equity. Home appreciation usually preserves significant equity for the estate, but the borrowed amount can outpace appreciation in flat or down markets.
When a reverse mortgage makes sense
- Senior (65+) with significant home equity but limited cash flow
- Wants to stay in the home permanently rather than downsize
- Children are independent and inheritance preservation is not the priority
- Other options (line of credit, downsizing, family loan) have been considered and ruled out
- Long-term care or major home repair needs are imminent
When a reverse mortgage doesn’t make sense
- You plan to move within 3-5 years (closing costs and prepayment penalties eat the benefit)
- You have other lower-cost borrowing available (HELOC for those still working with income)
- Inheritance preservation matters and home equity is the primary asset
- Cash needs are small ($10,000-$30,000) — fees make the math poor
- You qualify for GIS — the lump sum doesn’t count as income but spending it on other taxable income could affect GIS
Alternatives to a reverse mortgage
- HELOC: Lower rate (~6.5-7%) but requires monthly interest payments and income to qualify. Best for working-age homeowners.
- Downsizing: Sell the home, buy a smaller condo or move to a lower-cost area, invest the difference.
- Renting your home: Move out, rent the property, use rental income to fund a smaller rental for yourself.
- Family loan: Children loan against future inheritance at lower or zero interest, formalized through a lawyer.
Key consumer protections
- You cannot owe more than the home is worth when the loan ends (no negative equity guarantee).
- Independent Legal Advice is mandatory before signing.
- You keep title to the home.
- You cannot be forced out as long as you maintain the home, pay property taxes, and keep insurance.
Frequently asked questions
- What is a reverse mortgage in Canada?
- A loan that lets homeowners aged 55+ borrow up to 55% of their home’s value with no monthly payments. Interest accrues until the home is sold or both borrowers die or move out.
- What are reverse mortgage rates in 2026?
- HomeEquity Bank’s CHIP 5-year fixed rate is approximately 6.64% in 2026, with an APR around 7.06% including fees. Equitable Bank is similar. Variable rates are slightly higher.
- Who qualifies for a reverse mortgage?
- Canadian homeowners 55 or older (both spouses if on title), occupying the home as their primary residence, with sufficient home equity in an eligible location.
- How much can I borrow?
- Between 15% and 55% of the home’s appraised value, depending on your age and the home’s location. Older borrowers in major Canadian markets can reach up to 59%.
- Do I make monthly payments?
- No. Interest accrues and is added to the loan balance. You don’t pay anything until the home is sold, both borrowers move out, or the last borrower dies.
- Can I owe more than my home is worth?
- No. Canadian reverse mortgages include a no-negative-equity guarantee. The lender cannot collect more than the home’s sale proceeds.
- What are the closing costs?
- About $1,795 closing fee (HomeEquity Bank), plus $300-$500 for appraisal, $500-$1,200 for mandatory Independent Legal Advice, and ~$300 discharge fee when repaid.