Reverse Mortgage Canada (CHIP) Guide

How Canadian seniors can access home equity without monthly payments — the CHIP reverse mortgage explained.

What Is a Reverse Mortgage in Canada?

A reverse mortgage is a loan secured against your home that requires no monthly payments. Instead, the interest accumulates and is added to the loan balance, which is repaid in full when you sell the home, move out permanently, or die. In Canada, the dominant reverse mortgage product is the CHIP Reverse Mortgage, offered by HomeEquity Bank — the only federally regulated provider of this product in Canada.

A competing product, the Equitable Bank Reverse Mortgage (PATH Home Plan), also offers this product at slightly different terms. Both products are designed exclusively for older Canadians who are house-rich but cash-poor.

Who Qualifies for a Canadian Reverse Mortgage?

• Must be 55 years of age or older (all borrowers on title must be 55+)
• The home must be your primary residence in Canada
• The property must meet the lender's standards (type, condition, location)
• No income or credit score minimum is required — qualification is based primarily on age and home equity
• The home must be owned with sufficient equity to support the loan

How Much Can You Borrow?

The maximum loan amount depends on your age, your home's appraised value, and the property's location. HomeEquity Bank allows borrowing up to 55% of your home's appraised value. Older borrowers qualify for higher percentages — the rationale being that the expected loan term is shorter, so interest accumulation risk is lower.

Age (Youngest Borrower)	Approximate Maximum LTV
55–59	15%–25%
60–64	25%–35%
65–69	35%–45%
70–74	45%–50%
75+	Up to 55%

CHIP Reverse Mortgage Rates (2025)

Reverse mortgage rates are higher than conventional mortgage rates because the lender bears the risk of compounding interest without monthly payment protection. Current CHIP rates in 2025 are approximately:

• 5-year fixed: approximately 6.59%–7.29%
• 3-year fixed: approximately 6.39%–7.09%
• 1-year fixed: approximately 6.79%–7.49%
• Variable: approximately prime + 1.0% to 1.5%

These rates are significantly higher than conventional mortgages, and the compounding effect is dramatic over time. A $200,000 reverse mortgage at 6.75% doubles to approximately $400,000 in just over 10 years with no payments.

The "No Negative Equity" Guarantee

One of the most important features of the CHIP Reverse Mortgage is the no negative equity guarantee. HomeEquity Bank guarantees that as long as you maintain the property, pay your property taxes and insurance, and comply with mortgage obligations, you will never owe more than the fair market value of your home when it is sold. If home values drop and the accumulated loan balance exceeds the sale price, HomeEquity Bank absorbs the difference — not you or your estate.

Pros and Cons of a Canadian Reverse Mortgage

Pros	Cons
No monthly payments required	High interest rates vs conventional mortgages
Tax-free cash from home equity	Rapidly compounding balance reduces estate value
Stay in your home	Setup fees: appraisal, legal, administration ($1,500–$2,500)
No income or credit minimum	Early repayment penalty (3-month interest typical)
No negative equity guarantee	Less flexibility than HELOC

Alternatives to Consider First

Before committing to a reverse mortgage, consider whether these alternatives might better serve your needs:

• HELOC: If you can qualify based on income, a HELOC has much lower rates and full flexibility
• Downsizing: Selling a larger home and buying a smaller one releases equity tax-free (principal residence exemption)
• Renting a suite: Adding a rental unit to your home generates income without depleting equity
• Government programs: Provincial programs for seniors may offer property tax deferrals or housing allowances