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Reverse Annuity Mortgage Program

Program Overview

The Reverse Annuity Mortgage Program (RAM) offers lump sum loans and or monthly installment loans to elderly homeowners with long-term care needs over a term of five or ten years.  The amount of the RAM loan is based on the equity in the borrower’s home and is repaid to CHFA in one payment when the property is sold, transferred or no longer occupied by the borrower. 

By offering creative loan options like RAM to homeowners, CHFA, with its partner in this program, the Connecticut Department of Social Services (DSS), is helping Connecticut’s older residents maintain their homes during periods of chronic illness or disability. 

Prospective borrowers of a RAM loan should contact DSS, Aging Services Division, for an initial eligibility assessment.  RAM loans are originated, closed and serviced directly through CHFA’s Single-Family Underwriting Department. 

Follow the links below for more information regarding the Reverse Annuity Mortgage Program.   

 

Reverse Annuity Mortgage Program Interest Rates

Currently, the Reverse Annuity Mortgage Program is providing mortgages at the following rate:

    • **Interest rate: 1.5 % above the CHFA Homebuyer Mortgage Program rate
    • Fees: Approximately $1500 - including a $600 Loan origination fee, Appraisal fee, Long Term Care assessment fee, title search, title insurance, legal fee, and recording costs
    • Term: open-ended mortgage

** Please note, this rate is subject to change and additional fees may apply.


 

Who can apply for a Reverse Annuity Mortgage Program loan?

Homeowners of single family houses or condos who are at least 70 years old and have a long-term care need may apply for a RAM loan.  A borrower’s spouse must also be at least 70 years old and have a joint ownership interest in the property with rights of survivorship, unless he or she is permanently institutionalized.

  • What are the income guidelines to qualify for a RAM loan?

    A qualified borrower’s household income must not exceed the statewide income limit of $89,200.

  • How is household income calculated?

    Household income is calculated by combining the adjustable gross income of all resident adults over 18 who are not full-time students, plus non-taxable income such as Social Security or municipal bond interest.

  • What types of Long Term Care needs qualify for a RAM loan?

    Long Term Care (LTC) describes a range of medical and supportive services provided to individuals who have lost some or all of their capacity for independent function, as a result of a chronic illness or condition.   Usually, a Long Term Care need requires at least six months of sustained services.

    Homeowners who are receiving out-of-home care can still qualify for a RAM loan so long as their spouse, who is a joint-owner of the property, continues to remain in the home. The following specific types of LTC costs will be considered when applying for a RAM loan. 

    • Out-of-home care: including but not limited to hospitals, convalescent nursing homes, homes for the aged, or rest homes with nursing supervision; adult day care; counseling and physical therapy;
    • In-home care: including but not limited to nursing, personal care attendants, homemaker or chore services, nutrition services and transportation;
    • Durable medical equipment;
    • Medically-indicated home alterations;
    • LTC insurance premiums;
    • Uninsured recurring and catastrophic medical expenses and prescription drugs.

 

What types of property are eligible for a Reverse Annuity Mortgage? 

The RAM Program requires that eligible property meet specific guidelines.    

    • The property must be either a single family house or a unit in a condominium complex or Planned Unit Development (PUD) complex that is on FHA's Approved Condominium list.  (This list includes eligible PUDs.)  
    • The home may not be a recreational, vacation, investment or rental property and no part of the home may be designed for a commercial purpose.  
    • The home must be free of any mortgage or lien at the time of closing a RAM loan.  (A RAM loan can provide an additional $5,000 to pay off liens.)
    • In contrast to many of the CHFA home loan programs that apply sales price limits to eligible properties, a home eligible for a RAM loan is not subject to a maximum appraised value.  However, the maximum RAM loan available is $417,000.

 

How much can you borrow under the Reverse Annuity Mortgage Program?

Under the RAM program, a borrower can receive a loan of up to 70% of the appraised value of his or her home, as long as the loan amount does not exceed $417,000, the maximum loan available under this program.  CHFA will arrange for the home appraisal, the cost of which will be covered in the loan amount.     

A borrower can opt for a lump sum payment of up to $5,000 at the time of the closing of a RAM loan.  The lump sum can be used to pay off small liens, back taxes, outstanding bills, medical expenses or minor home repairs and improvements.  If a borrower requires medical or supportive services, a lump sum payment of as much as $25,000 is permitted.    

A borrower will receive tax-free monthly payments of the balance of the loan over a five-year or ten-year term.   The monthly payments will increase by 3% each year of the loan, to keep pace with cost of living increases.  A lump sum payment at the loan closing will reduce the amount of the monthly payment by approximately $19 for each $1,000 of the lump sum payment, based on a five-year term.  (See, table of RAM payments.)


 

What else should you know about a Reverse Annuity Mortgage? 

The following considerations apply to Reverse Annuity Mortgage Program loans.

  • You continue to own your home during the term of the RAM loan.  

    A RAM borrower will continue to own his or her home and will benefit from any appreciation in value of the home that may occur during the loan term.  

  • You may sell your home before the term of the loan ends.  

    At any time within the five-year or ten-year payment period, RAM borrowers may sell their homes.  The sale of the home, however, will signal the end to the monthly loan payments and the time when full repayment of the outstanding balance of the RAM loan comes due.  

  • There is no pre-payment penalty.  

    A RAM loan is pre-payable at any time for any reason.   

  • Repayment is not required at the end of the loan term.  

    At the end of the five-year or ten-year payment period, CHFA will not require RAM borrowers to pay off the loan or sell their home.  Though the monthly payments stop, CHFA will continue to carry the loan balance which accrues each year at the rate locked in when the RAM application was taken.  

    Generally, full repayment of the loan will come due when the home is eventually sold, transferred or when the borrower no longer occupies the home.  If the proceeds of the home sale do not cover the full value of the RAM loan, CHFA has the right to seek repayment by looking at other assets of the borrower.  Heirs will not have any personal liability for this debt.  

  • You can choose to have your own home appraisal.  

    The lender will arrange for an appraisal of a RAM borrower’s home.  However, at their own out-of-pocket expense, RAM borrowers can choose to have an independent appraisal of their home. The results of this appraisal will determine maximum loan eligibility.  

  • Real estate taxes and insurance must be current at the closing of a RAM loan and during the loan term.  

    Although CHFA will not escrow for real estate taxes and insurance premiums, CHFA does require that a borrower’s real estate and property insurance payments are current at the loan closing and during the life of the loan.

    A RAM loan can provide a lump sum of $5,000 to pay off any outstanding tax liens and some utility arrearages at the time of the loan closing.  This sum is then included in the value of the total loan and will reduce the monthly installment amount.  

  • A RAM loan could affect some of your rights to public benefits.  

    A RAM loan would not affect a borrower’s rights under Social Security, Medicare, Energy Assistance, Property Tax Relief, or the Pharmaceutical Assistance Program (CONNPACE).  

    However, it might affect a borrower’s rights under Medicaid, Food Stamps, Supplemental Security Income (SSI) or the State Supplement to SSI.  Borrower(s) should check with the administrator of any of the above programs they may be participating in to determine their rights.


 

How do you apply for a Reverse Annuity Mortgage?

RAM loans are originated, closed and serviced directly by CHFA.   However, prospective borrowers should first contact the Aging Services Division of the Connecticut Department of Social Services to obtain a preliminary eligibility assessment and a referral.  They may call 1-866-218-6631, toll-free within Connecticut.

If a prospective borrower is referred to CHFA for a RAM loan, a CHFA representative will schedule a meeting in order to review the RAM loan application in greater detail.

  • Are any application fees associated with a RAM loan?

    No, there are no application fees for a RAM loan; however, several upfront one-time costs are added to the value of the RAM loan.  These include a $600 fee for the cost of the loan origination and a $900 fee to cover the costs of the home appraisal, the LTC assessment, the title search, title insurance and other costs. A RAM borrower must also pay for the cost of retaining an attorney to represent his or her interests at the loan closing.


 

Questions?  Contact CHFA

Please direct questions and comments related to the Reverse Annuity Mortgage Program to the “Single Family Underwriting” department of the Connecticut Housing and Finance Authority.

Phone:     (860) 571-3502
Fax:(860) 571-3550
Email:singlefamilyunderwriting@chfa.org


Mailing Address:
CHFA
Attn: Single Family Underwriting
999 West Street
Rocky Hill, CT 06067-4005


 

Documents related to the Reverse Annuity Mortgage Program

The following documents are related to the Reverse Annuity Mortgage Program.  To open and view the document, click on the document title.  Please note that some documents may need client software to view the document.

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Table of Ram Payments
This table calculates the monthly payments available under five-year and a ten-year Reverse Annuity Mortgage loans, with and without initial lump-sum payments.
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