Reverse Mortgage Calculator – HECM Loan Amount and Costs

{tocify}

What a reverse mortgage is

A Home Equity Conversion Mortgage (HECM) is the FHA-insured reverse mortgage, the most common kind. It lets homeowners 62 and older borrow against their home equity without making monthly loan payments. Interest and mortgage insurance are added to the balance, so what you owe grows over time instead of shrinking (CFPB).

The loan is repaid when the last borrower dies, sells the home or moves out for more than 12 months in a row. It can also come due earlier if you don’t pay property taxes or insurance or don’t keep the home in good repair.

Who qualifies

HUD requires that you (HUD):

• are 62 or older and live in the home as your principal residence;
• own the home outright or have paid down a considerable amount; any existing mortgage is paid off from the HECM;
• are not delinquent on any federal debt;
• have the resources to keep paying property taxes, insurance and HOA fees;
• attend a counseling session with a HUD-approved HECM counselor.

Eligible homes include single-family homes, 2–4 unit homes where you live in one unit, FHA-approved condos and manufactured homes that meet FHA standards.

How much you can borrow

Your principal limit is the most you can borrow. It is the maximum claim amount times a principal limit factor (PLF) from HUD’s table:

• Maximum claim amount: the lesser of your home’s appraised value and the $1,249,125 limit (or the sale price, for a purchase).
• Age: the age of the youngest borrower or eligible non-borrowing spouse. Older ages get higher factors.
• Expected rate: for an adjustable-rate HECM, the 10-year Treasury rate (or a similar 10-year index) plus the lender’s margin, rounded to the nearest 1/8%. Higher rates mean lower factors. HUD’s table starts at 3%, so a lower rate gets the 3% factors (NRMLA). For a fixed-rate HECM, the expected rate is the note rate.

With the 10-year Treasury near 4.9% in late October 2026 (FRED), a 2% margin gives an expected rate of about 7%.

How this calculator gets the factor. HUD publishes the full table only as an Excel file, which we couldn’t load into the page. Instead, the calculator interpolates between published values from that table: ages 62, 66, 70, 72, 74, 78, 82 and 92 at expected rates of 3% to 8% (NRMLA; Forbes; lender rate sheet). Checked against 69 other published values, the estimate was within 0.4 percentage points. It is less certain above age 82, and it can’t estimate factors under age 62 or above 8%. Enter the factor from a lender quote to use HUD’s exact number.

Upfront costs

The origination cap is set by 24 CFR 206.31; lenders may charge less. On a $400,000 home the cap is $6,000 and the upfront premium is $8,000. Costs can be paid from the loan, but then they add to the balance and accrue interest.

The first-year limit

In the first 12 months you can receive up to 60% of the principal limit, or, if your mandatory obligations are larger, those obligations plus 10% of the principal limit (Mortgagee Letter 2013-27). Mandatory obligations include the upfront premium, origination fee, closing costs and any mortgage being paid off. The rest of an adjustable-rate loan becomes available after the first year.

How you can take the money

• Line of credit: draw what you want, when you want. The unused part grows each month at the loan rate plus 0.5%, whether or not your home value rises.
• Tenure: equal monthly payments for as long as one borrower lives in the home.
• Term: equal monthly payments for a set number of months.
• Modified tenure or term: monthly payments plus a line of credit.
• Single lump sum: the only option with a fixed rate. You get one payment at closing, limited by the first-year rule, and the rest of the principal limit is not available later.

Payments are figured as if made at the start of each month, at the expected rate plus 0.5%. Tenure payments are calculated to age 100 (age 95 for borrowers older than 95), but continue for life (HUD Handbook 4235.1).

Worked example

A 72-year-old with a $400,000 home and a $50,000 mortgage, at a 7.000% expected rate and a 6.5% loan rate:

• Principal limit: $400,000 × 37.2% = $148,800.
• Mandatory obligations: $8,000 premium + $6,000 origination + $3,000 closing costs + $50,000 payoff = $67,000.
• Net available: $148,800 − $67,000 = $81,800.
• First-year limit: the greater of 60% × $148,800 = $89,280 or $67,000 + $14,880 = $81,880. That’s $89,280, so after the $67,000 of obligations you can take $22,280 in the first year.
• As a line of credit left untouched, the $81,800 grows at 7% a year to about $164,390 in 10 years.
• As tenure payments: $579.50 a month for life. As 10-year term payments: $964.95 a month.

With no mortgage, at a 7.000% expected rate and the same costs:

Repayment, heirs and the 95% rule

A HECM is non-recourse: you have no personal liability for the balance, and the lender can only collect from the sale of the home (24 CFR 206.27). When the loan comes due, you or your heirs can keep the home by paying off the balance, or sell it. If the balance is more than the home is worth, the loan can be settled by selling the home for at least 95% of its appraised value, and FHA insurance covers the rest (CFPB; 24 CFR 206.125). Heirs usually have 30 days after the due notice to act, which can be extended up to six months to sell or arrange financing.

Financial assessment and set-asides

Lenders review your credit, your history of paying property taxes and insurance, and your income after expenses (Mortgagee Letter 2014-21). If the review raises concerns, the lender can require a life expectancy set-aside (LESA): part of your principal limit is held back to pay taxes and insurance, which reduces the money available to you. Enter it in the calculator if your lender requires one.

Spouses who are not borrowers

If your spouse is younger than 62 or not on the loan, the factor is based on the younger spouse’s age, which lowers the amount you can borrow. In return, an eligible non-borrowing spouse who was married to you at closing, is named in the loan documents and keeps living in the home can usually stay after you die or move into care for more than 12 months, as long as the loan terms are met. No more money can be drawn during that time (24 CFR 206.27; CFPB; Mortgagee Letter 2021-11). The calculator can’t estimate factors under 62; ask a lender for that factor.

Risks to weigh

• The balance grows, so you leave less equity to your heirs and have less to move with later.
• Upfront costs are high compared with a HELOC or home equity loan, which makes a HECM a poor fit if you may move within a few years.
• You can lose the home if you fall behind on taxes, insurance or upkeep, or leave it for more than 12 months.
• Adjustable rates can rise, which makes the balance grow faster.
• Be wary of anyone pushing you to use the money for an investment, annuity or insurance product.

Alternatives

Counseling comes first

You must meet with a HUD-approved HECM counselor before you apply (24 CFR 206.41). The counselor is independent of the lender, goes over costs, alternatives and what happens to your spouse and heirs, and gives you the certificate the lender needs. Find one through HUD’s HECM counselor list. Take this calculator’s results with you, and compare quotes from more than one lender.

Results are estimates, not a loan offer or financial advice. Last reviewed: November 1, 2026.