Reverse Mortgage Calculator
Estimate HECM reverse mortgage proceeds based on your age, home value, and current interest rates.
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How It Works
A Home Equity Conversion Mortgage (HECM) is a federally insured reverse mortgage that allows homeowners aged 62 and older to convert part of their home equity into cash without selling or making monthly mortgage payments. The loan is repaid when the borrower moves out, sells, or passes away. Available proceeds depend on age, home value, and interest rates.
The Formula
Net Proceeds = Principal Limit - Upfront MIP - Origination Fee - Closing Costs - Existing Mortgage
Variables
- PL Factor — Principal limit factor based on age (higher percentage for older borrowers)
- HECM Limit — FHA maximum claim amount ($1,209,750 for 2025)
- MIP — Mortgage insurance premium (2% upfront, 0.5% annual on balance)
- Origination Fee — Lender fee (2% of first $200,000 + 1% thereafter, capped at $6,000, minimum $2,500)
Worked Example
A 70-year-old with a $400,000 home, $80,000 existing mortgage, and 6.5% rate has a principal limit of about $215,000. After $8,000 upfront MIP, $6,000 origination, and $3,500 closing costs, minus the $80,000 mortgage payoff, net proceeds are approximately $117,500.
Practical Tips
- The older you are when you take a reverse mortgage, the more you can borrow because the principal limit factor increases with age.
- You must continue paying property taxes, homeowners insurance, and maintenance costs or the loan can become due.
- A reverse mortgage line of credit grows over time at the same rate as the loan balance, giving you access to more funds if you wait.
- Shop multiple HECM lenders because origination fees, interest rates, and closing costs vary significantly.
- Consider a reverse mortgage only after exploring other options like downsizing, a home equity loan, or state assistance programs for seniors.
Frequently Asked Questions
Can I lose my home with a reverse mortgage?
You cannot be forced out for not making mortgage payments because there are none. However, you can lose your home if you fail to pay property taxes, homeowners insurance, or maintain the property. You must also continue living in the home as your primary residence. If you move to a nursing home for more than 12 consecutive months, the loan becomes due.
What happens to the loan when I die?
Your heirs have several options: sell the home and keep any equity above the loan balance, pay off the loan and keep the home, or walk away if the loan exceeds the home value. Because HECMs are non-recourse loans, neither you nor your heirs will ever owe more than the home is worth at sale, even if the loan balance has grown larger than the home value.
How does the interest rate affect my available proceeds?
Higher interest rates reduce your principal limit factor, meaning you can borrow less. This is because the lender expects the loan balance to grow faster at higher rates, so they lend less upfront to stay within FHA insurance limits. Even a 1% rate difference can change available proceeds by 10-15%.
Can I take a reverse mortgage on a condo or manufactured home?
HECMs are available for single-family homes, FHA-approved condos, and some manufactured homes built after June 1976 that meet HUD standards. The property must be your primary residence. Investment properties and vacation homes do not qualify. Condo projects must be on the FHA-approved list or get a single-unit approval.
Is there a required counseling session for reverse mortgages?
Yes. HUD requires all prospective HECM borrowers to complete a counseling session with an independent HUD-approved counselor before applying. The counselor explains how reverse mortgages work, discusses alternatives, and reviews your financial situation. This is a consumer protection measure and costs approximately $125.