The Financial Services Commission announced measures to strengthen income benefits and enhance convenience for reverse mortgage subscribers on February 5.
Background
The reverse mortgage program in Korea allows subscribers to take out reverse mortgage loans (monthly payments) using their houses as collateral in their lifetime, guaranteeing senior citizens a certain level of monthly income while continuing to live in their homes in retirement.
Since the reverse mortgage program was first introduced in Korea back in 2007, there have been continuous efforts to expand the eligibility requirement regarding the age of subscribers and the price of houses. As a result, some 150,000 households were found to have subscribed to reverse mortgages in cumulative terms as of the end of 2025 (2% subscription rate). However, given the tendency of heavily concentrated wealth in real estate among senior citizens and rapidly aging population in Korea, it remains necessary to further promote the use of the reverse mortgage program. In this regard, the following measures have been prepared to make reverse mortgage loans as a more mainstream source of retirement income generation for the elderly.
Key Measures
a) Increasing reverse mortgage payments
Through a redesigning of the actuarial model used in the reverse mortgage program, subscribers will be able to receive increased payments. For an average subscriber (aged 72 with home value of KRW400 million), his or her monthly payments will increase by about 3.13 percent from KRW1,297,000 previously to KRW1,338,000. Over an entire subscription period (17.4 years for 72 y/o), the total amount of payments is forecast to be increased by about KRW8,490,000. This change will take effect for new subscribers from after March 1, 2026.
In addition, there will be expanded support for low-priced homeowners residing in houses valued below a certain level. Currently, there is extra payment benefit provided to the subscribers who meet certain conditions (recipient of the basic livelihood security program, single-home owner, and resident of house with market value below KRW250 million). Under this program, the average low-priced homeowner who signed up for reverse mortgage (aged 77 with home value of KRW130 million) is currently entitled to extra monthly payments of KRW93,000. However, this extra payment benefit will be expanded for low-priced homeowners who live in houses with market value below KRW180 million. This change will increase the amount of extra monthly payments provided to an average low-priced homeowner (with home value of KRW130 million) to KRW124,000 from the current level of KRW93,000. This change will take effect for new subscribers from after June 1, 2026.
b) Lowering initial cost burden for subscribers
The initial guarantee fee rate for subscribing to reverse mortgage will be lowered to 1.0 percent from the current level of 1.5 percent, and the eligible refund period for guarantee fee will be extended to five years from three years currently. For an average subscriber (with house value of KRW400 million), the initial guarantee fee will go down from KRW6 million currently to KRW4 million. However, to prevent a potential decline in monthly payments, the annual guarantee fee rate charged on the outstanding balance of loan will be slightly increased to 0.95 percent from the current level of 0.75 percent. The initial cost burden has been acting a source of barrier for potential subscribers thus far. In this regard, the lowering of the initial guarantee fee rate will help to reduce the financial and psychological burden placed on potential subscribers. The change will take effect for new subscribers from after March 1, 2026.
c) Improving convenience for subscribers
Under the current primary residency requirement, reverse mortgage subscribers are required to demonstrate that their homes are their primary residence without exception. However, certain exceptions will be allowed for subscribers under unavoidable circumstances, such as attending to one’s health condition, being under the care of another family member, or residing in nursing home facilities. This change will take effect from June 1, 2026.
Additionally, there will an improvement made to facilitate the child (aged 55 years or older) of the deceased subscriber to sign up for reverse mortgage using the same house previously owned by the deceased parent as collateral without first having to go through a debt repayment process. Currently, the deceased parent’s reverse mortgage debt needs to be repaid in its entirety before the heir is able to sign up for reverse mortgage using the same house as collateral. This change will help the child of the deceased subscriber to more easily subscribe to reverse mortgage without the need to prepare lump-sum cash to make debt repayment first.
Expectation & Further Plan
The FSC and the Korea Housing Finance Corporation (HF) expect that the changed measures intended to increase payment benefits and remove barriers for subscription will offer more incentives for senior citizens to sign up for reverse mortgage loans. However, there needs to be continuous efforts to upgrade rules in order to make reverse mortgage as a more mainstream source of retirement income generation for the elderly. Thus, the authorities plan to continue to work with related ministries to seek areas for further improvement especially for the subscribers residing outside the Seoul metropolitan area.
* Please refer to the attached PDF for details.