Hi, Gilbert. Debdeb and Wizjp are correct. The rest are all wrong. You definitely need to have enough equity in your home in order to pay off all the current mortgages and liens on the property, but it does NOT need to be free and clear. It works the same just like if you were to refinance; you have to pay off all the existing loans on the property. The reverse mortgage must be first lien holder; you will not be allowed to keep a 2nd. Income and credit scores are not a criteria: you don't need to be employed, we don't care how much credit card debt you have or if you have filed for bankruptcy before.
For some folks, just getting rid of the monthly mortgage payment is all that they are looking for; because they know that once they have the reverse mortgage, they will no longer have any monthly mortgage payment. Some who do not have sufficient equity to pay off the existing loans will find the extra cash (sell investments, a 2nd car, etc.) to bring to the closing table just to make it work, so they no longer have the noose of a mortgage payment around their neck every month. For example, if your current mortgage payment is $1900 a month, and you are $8000 short to close, if you can find the extra $8000 by selling some of your other assets, in 4 months you will have broken even and will be free from monthly payments for as long as you live there, and it is still your home and the lender cannot foreclose on you for non-payment. If there is anything left over, you can keep the rest in a line of credit.
The older you are, typically, the more money you are eligible for. I would not suggest you go by percentages and loan to value ratios; speak to someone and ask them to run the numbers with your unique data. Or go online and use one of the free calculators like at www.nrmla.org. They are the national organization and will not solicit your information. You just need to enter your date of birth, realistic home value, and current loan balance. The generic websites that ask you for your contact information, phone and address, typically will sell your information to a lot of lenders.