How reverse mortgages work in Illinois, the state rules and property tax programs that matter, and what Chicago-area condo owners should know. From Dan Frio, NMLS #246527, who helps homeowners in all 50 states. For how reverse mortgages work everywhere, start with my reverse mortgage guide.
Yes. FHA-insured reverse mortgages, called HECMs, are available in every Illinois county, from Chicago and the collar counties to downstate. To qualify you need to be 62 or older, live in the home as your primary residence, have enough equity, complete HUD-approved counseling, and show you can keep paying property taxes, insurance and upkeep. Unlike regular FHA loans, the HECM limit is the same nationwide: in 2026 a home's value counts up to $1,249,125, whether you live in Naperville or Peoria. Homes worth more can look at a proprietary (jumbo) reverse mortgage.
Illinois property taxes are among the highest in the country, and with a reverse mortgage they remain your responsibility. Falling behind is one of the main reasons a reverse mortgage can become due, so it pays to use every senior program you qualify for. Here are the main ones:
| Program | Who qualifies | What it does |
|---|---|---|
| Senior Citizens Homestead Exemption | Age 65+ and live in the home | Cuts the taxable value of your home by $8,000 in Cook County and its neighboring counties and $5,000 elsewhere. |
| Senior Citizens Assessment Freeze | Age 65+ with household income under the state limit | Freezes your home's taxable value. Under a 2025 law the income limit rises in steps from $65,000 to $75,000, then $77,000 and $79,000 in later years. |
| Senior Citizens Real Estate Tax Deferral Program | Age 65+ with household income under the state limit | Lets you put off up to $7,500 a year in property taxes. The deferred amount becomes a lien that is repaid when the home is sold or transferred. |
Apply through your county assessor (exemptions) or county treasurer (tax deferral). If you are already in the tax deferral program, or thinking about it, tell me up front: Illinois law specifically warns that a reverse mortgage can affect eligibility for it, so we plan around it before you close. If your assessment looks too high, read my guide to appealing your Illinois property taxes.
Many Chicago-area homeowners 62+ live in condos. A HECM on a condo requires the building to be FHA-approved, or the unit to qualify for a single-unit approval. Many buildings are not on the FHA list. If yours is not, a proprietary reverse mortgage may still work, because some private lenders approve condos that FHA does not. I can check your building before you spend money on an appraisal.
You also need to keep homeowners insurance in force, and Illinois premiums have risen sharply. A reverse mortgage financial assessment looks at whether your income and assets can cover taxes and insurance. If they are tight, part of the loan can be set aside to pay them for you. See my Illinois homeowners insurance guide for current costs and lender rules.
I work with reverse mortgage borrowers in all 50 states. In Illinois that includes Chicago and Cook County, DuPage, Kane, Lake, Will and McHenry counties, communities like Naperville, Aurora, St. Charles, Elgin, Schaumburg and Joliet, and downstate. Everything is handled by phone, video and e-signing, so you never need to visit an office.
It can be if you plan to stay in your home, want to stop making a mortgage payment, or want a line of credit that cannot be frozen. Because Illinois property taxes are high, make sure your budget covers them for the long run.
Reverse mortgage money is loan proceeds, not income, so it is generally not taxed as income. Ask your tax advisor about your situation.
Yes. A HECM can be used on a 2 to 4 unit home as long as you live in one of the units.
Use the CFPB housing counselor search to find HUD-approved agencies near you, many of which counsel by phone.
Reviewed by Dan Frio, NMLS #246527, PBT Bancorp, NMLS #257781. Updated October 2026. Figures reflect 2026 FHA HECM rules and Illinois programs as of this date; check with your county for current limits. Borrowers must live in the home, maintain it, and pay property taxes, insurance and HOA dues. Not all applicants qualify. This is general information, not a commitment to lend.
