Reverse mortgage calculator

What this number means

The maximum claim amount is the lower of the home value and the FHA lending limit. The principal limit is that amount multiplied by the HUD factor: the total the loan may advance. The cash available is what is left after the existing mortgage is cleared, which is mandatory and comes first.

Every one of these is before costs. Origination fees, the initial mortgage insurance premium, closing costs and any set-aside for taxes and insurance all come out of the principal limit, and they are not small. Expect the real cash figure to be meaningfully below the estimate here.

This page does not tell you whether a reverse mortgage is a good idea. It is a loan that compounds against an asset most people intend to leave behind, and whether that trade is right depends on your health, your other income, your housing plans and your family, none of which a calculator can see.

How this is calculated

• Maximum claim amount is the lesser of the appraised home value and the FHA lending limit for the year.
• Principal limit is the maximum claim amount multiplied by the principal limit factor.
• Cash available is the principal limit less the existing mortgage balance, which must be paid off from the proceeds.

Why the factor is an input rather than a calculation

HUD publishes the principal limit factors as a table indexed by the age of the youngest borrower and the expected interest rate. It is not derived from a formula, and it is revised. Any calculator that produces an exact figure from age and home value alone has embedded a guess at that table, and it will drift out of date silently.

Asking for it is less convenient and more honest. Your counsellor or lender will give you the current factor for your situation, and this page will then do the arithmetic exactly.

Programme rules are consolidated in HUD Single-Family Housing Policy Handbook 4000.1, and the HECM regulations are at 24 CFR Part 206. The counselling requirement is at 24 CFR 206.41.

What this does not account for

• Costs. Origination fee, initial mortgage insurance premium, appraisal, title and closing costs all reduce what you actually receive.
• Set-asides. If a financial assessment finds a risk of missed property charges, a portion is reserved for taxes and insurance and is not available as cash.
• The growing balance. A reverse mortgage accrues interest and ongoing insurance premiums onto the balance. It does not stay still, and over a long tenure it can approach the value of the home.
• First-year draw limits. HECM rules cap how much of the principal limit can be taken in the first twelve months.
• Payout structure. Lump sum, tenure payments, a line of credit or a combination all behave differently over time. This estimates the limit, not a schedule.
• The effect on an estate, and on means-tested benefits such as Medicaid, both of which need advice specific to you.

The obligation to keep paying property taxes, insurance and maintenance, and to live in the home, continues throughout. Failing any of those can trigger foreclosure even though no monthly mortgage payment is due.

Questions

Do I have to give my phone number to use this?

No. Nothing you type here leaves your browser, there is no form, and there is nobody to pass your details to. This site earns from advertising, not from selling enquiries, which is why it can afford not to ask.

What is a principal limit factor and why do I have to enter it?

It is the percentage of your home value that HUD allows a HECM to lend, and it comes from a published table indexed by the age of the youngest borrower and the expected interest rate. The table is not a formula, it changes, and it is issued by HUD rather than derived. A calculator that produces an exact figure without asking for it is guessing at yours. Typical factors run from roughly 0.30 at age 62 up to around 0.55 in the late seventies at low expected rates. A HUD-approved counsellor will give you the current one.

Why is my expensive house capped?

The maximum claim amount on a HECM is capped at the FHA lending limit, which is a statutory ceiling. Above that, the extra value of the home does not increase what you can borrow. It is the most common reason a homeowner’s expectation is far above the real figure.

Does the loan have to be repaid?

Yes. A reverse mortgage is a loan, and the balance grows because interest and insurance premiums are added to it every month and never paid down. It becomes due when the last borrower dies, sells, or stops using the home as their principal residence. A HECM is non-recourse, meaning the repayment cannot exceed the home value at that point, but the debt is real and it compounds.

What else do I still have to pay?

Property taxes, homeowners insurance, and maintenance, and you must keep living there. Failing on any of those can trigger foreclosure even with no monthly mortgage payment due. This is not a detail: it is the most common way a reverse mortgage goes wrong.

Is counselling really required?

Yes, for a HECM. You must complete a session with a HUD-approved counselling agency before an application can proceed. It is a consumer protection built into the programme, and it is where you get numbers specific to your situation, which this page cannot produce.