Yes. Interest accrues just like on any loan. The difference is that no monthly payment is required, so the interest gets added to the balance, and the balance grows over time instead of shrinking. A few common misconceptions worth clearing up: - The bank does not take the home when the owner passes away. A reverse mortgage is a normal mortgage lien. When a qualifying event happens (the borrower permanently moves out, for example into a care facility, or passes away), the loan comes due. - Heirs get time, and they keep the equity. On the FHA reverse mortgage (the HECM), the estate generally has an initial six months to sell or refinance, and HUD allows up to two 90-day extensions (up to 12 months total) while a sale or refinance is actively in the works. Heirs can also satisfy the loan at the lesser of the balance or 95% of the appraised value. Whatever equity remains after payoff belongs to the estate. - You can pay if you want to. Some borrowers voluntarily pay at least the monthly interest, which keeps the balance from compounding upward. One caution: this corner of the market has attracted people who take advantage of seniors, so the counterparty and the terms matter a lot. Used appropriately, a reverse mortgage can be a genuinely useful retirement tool. Walk the specifics through a HUD-approved counselor and a trusted advisor before signing anything.