The entire loan balance is payable when the borrower dies, moves away permanently or sells their home. The loan is structured so that the borrower or the borrower's estate won't be held responsible should the difference between the loan balance becomes larger than the home's market value or if the borrower lives a long time.
A reverse mortgage works the opposite of a traditional mortgage. Instead of the borrower paying the bank, the bank pays the borrower and the interest is rolled into the loan balance. The proceeds of the reverse mortgage are not taxable - the IRS considers them as loan advances.