Here’s a clear, breakdown of reverse mortgage costs, and the one figure you should actually compare lenders on.
1. The interest rate
This is the cost most people fixate on, and it’s the biggest one over time. Reverse mortgage rates run higher than a conventional mortgage because there are no required payments and the lender waits years to be repaid but the gap has narrowed as more lenders compete. As of early 2026, fixed-term reverse mortgage rates have generally sat in the mid-6% to high-7% range depending on the lender, term, and how much you’re borrowing relative to your home’s value. (Rates move; confirm current numbers before deciding.)
A few things shape your rate:
- You can usually choose variable, or fixed terms such as 6-month, 1-year, 3-year, or 5-year. Some lenders now offer a rate fixed for the life of the loan.
- How much you borrow. As a rule, the more you borrow relative to your home’s value, the higher the rate.
- Your age band and product. Products built to lend higher percentages to older borrowers often carry higher rates.
Because there are no required payments, interest compounds onto the balance. That compounding is what grows the debt, which is why how much and how long matter as much as the headline rate.
2. The setup and closing fees
Every lender charges an administrative/closing fee, deducted from your proceeds so there’s nothing out of pocket. These vary: some lenders charge under $1,000 for setup, others around $1,795 for standard products, and certain specialty products (like open, repay-anytime options) may carry higher closing costs. Some newer lenders advertise a single transparent flat fee. The closing fee typically covers things like title search, title insurance, and mortgage registration.
3. The appraisal
An independent appraisal of your home is required so the lender knows its value. Some lenders pay this on your behalf but not all of them do. Expect roughly $400–$800 for most properties, more for large homes.
4. Independent legal advice (ILA)
This one is mandatory in every province, and it’s there to protect you. Before closing, you must review the mortgage with a lawyer of your own choosing, who confirms you understand the commitment. Budget roughly $600–$1,500, sometimes more if there are title complications. It’s a safeguard for you.
5. Prepayment charges (if you repay early)
Reverse mortgages are designed to stay in place until you sell or move out, so repaying early can trigger a prepayment charge though most lenders build in ways to avoid it. Commonly, you can prepay a percentage each year without penalty, charges reduce or disappear after a number of years, and some lenders waive them entirely in events like the borrower’s death or a move to long-term care. If you might repay early, this is a key feature to compare.
The one number to actually compare: APR
Here’s the figure most marketing glosses over. The Annual Percentage Rate (APR) bundles the interest rate and the mandatory fees into a single annualized cost of borrowing. Two reverse mortgages can show similar posted rates but have different APRs once fees are included which means the one with the lower sticker rate isn’t always the cheaper loan.
When you compare lenders, compare the features too: a slightly higher APR can be worth it for rate certainty, a higher borrowing limit, or better prepayment terms. The cheapest rate and the best fit aren’t always the same loan.
Putting it in perspective
Yes, a reverse mortgage costs more than a conventional mortgage. But the relevant comparison for a retiree isn’t a conventional mortgage you can’t qualify for on retirement income or can’t afford the payments on, it’s the alternatives actually available to you: a callable HELOC with monthly payments, selling appreciated investments and paying tax, or selling the home and absorbing commissions and transfer tax. Seen against those, the all-in cost often looks very different.
We lay out every cost: rate, fees, APR, and prepayment terms in one side-by-side view, so you can see the true cost before you commit to anything.
Get a full, no-surprises cost comparison, free and with no obligation.