The lender must be repaid when the borrower passes away, sells the home, fails to live in the house for 12 consecutive months (this includes time spent in a nursing home), fails to pay property taxes or insurance, or lets the property fall into disrepair beyond normal wear and tear.

When the loan is due -- generally when the last surviving borrower moves out of the house, sells the house, or dies -- the mortgage principal, interest charges, and closing costs are repaid from the proceeds of the house sale (or from estate assets, if the house isn't sold).