A long step finally has been taken toward making a good reverse mortgage widely available. No news could be better for elderly homeowners. Reverse mortgages are their only hope of increasing their income markedly in old age.

Widows especially need these loans. When a husband dies, his wife loses part of his Social Security income and part or all of his private pension. Without help, she may not be able to keep up her home.

Eventually, she may get that help. A pilot program, newly authorized by Congress, will encourage reverse mortgages by providing private lenders with government insurance against the risk of loss.

Don't rush to apply. It will be a year or more before the program gets off the ground. And even then, only 2,500 insured mortgages will be made over a three-year period, while the concept is tested.

But assuming that it works, you can expect reverse mortgages to start showing up on the loan menus offered by banks and S&Ls all over the country.

Here's what reverse mortgages do:

Assume you own a house free and clear that's worth $80,000. A lender -- a bank or public agency -- might agree to loan you up to $64,000, usually at a fixed interest rate. But the money isn't paid to you all at once. Instead, you receive it in monthly installments -- in effect, creating a regular, tax-free income.

You make no interest payments on the loan. At the end of the term, however, all the principal and compounded interest falls due at once. At that point, the house usually has to be sold to pay off the mortgage. The lender's fee may also include a portion of the appreciation on the property.

Twenty small programs in 14 states now offer reverse mortgages. But most require that the loan be repaid in a fixed number of years, usually no more than 10. So these loans make sense chiefly for people who expect to be moving into a nursing home within that time.

What's really needed is a loan that's good for a lifetime or until the borrower wants to move. But right now, only four programs work this way.

Three are connected with state or local government agencies: the RAM Program, run by Connecticut's Department of Aging in Hartford; Elderly Equity, run by Rhode Island Housing in Providence; and Buffalo, N.Y.'s Home Equity Living Plans. There's only one private-sector program: IRMA, offered by American Homestead Mortgage Corp. of Mt. Laurel, N.J., and available in seven states -- Connecticut, Delaware, Maryland, Ohio, Pennsylvania, New Jersey and Virginia.

The new pilot program is for lifetime loans. (The law does recognize some extreme circumstances that might force eviction -- for example, if the borrower lets the property decay.) The government will guarantee payments to the borrower, so you're protected if your bank fails. And it will guarantee the lender all the money owed, even if the value of the house declines.

Specifics on how this mortgage will work await the writing of regulations. However, the law requires that applicants receive independent counseling, so they'll know what they're getting into. "Many in the older population have trouble handling major decisions like these," said Bronwyn Belling, an independent consultant on reverse-mortgage programs.

There will be some sort of cap on the loan. Reading the law literally, you wouldn't be eligible if your maximum mortgage could exceed the FHA limits (currently $67,500 to $80,000 in lower-priced areas, and around $90,000 in high-priced areas).

But Katie Sloan of the American Association of Retired Persons (AARP) thinks that people with higher-priced homes will be able to participate, although their loan would be limited to the FHA amounts. In another development, the AARP recently announced that it's looking into the possibility of offering some type of reverse-mortgage product in the future.

Belling has been working on ways to develop home-equity lines of credit for older borrowers. A credit line lets you withdraw money in whatever amounts you need, and whenever you want.

Progress has been slow. Belling says that Virginia is close to announcing a program, with Maryland close behind. But it costs more to run a credit line than to offer a straight reverse mortgage, says American Homestead's president, James Burke. And besides, a straight monthly income is usually what people want.