What is a reverse mortgage?

A reverse mortgage lets homeowners 62+ borrow against home equity without monthly payments. The loan balance grows over time and is repaid when you sell, move out, or pass away. The HECM (Home Equity Conversion Mortgage) is the most common type, backed by FHA.

How much can I get from a reverse mortgage?

The amount depends on your age (older = more), home value (capped at $1,149,825 in 2024), and current interest rates. A 72-year-old with a $450,000 home and no existing mortgage might receive $200,000–$250,000 in available funds after costs.

Do I have to make monthly payments on a reverse mortgage?

No — that's the defining feature. No monthly mortgage payments are required. You must continue paying property taxes, homeowners insurance, and maintain the home. The loan balance grows as interest accrues.

When does a reverse mortgage have to be repaid?

The loan becomes due when: you sell the home, you permanently move out (into assisted living for 12+ months), you pass away, or you fail to pay taxes/insurance. Heirs can repay the balance to keep the home or sell it and keep any remaining equity.

What is a HECM and how does it differ from other reverse mortgages?

HECM (Home Equity Conversion Mortgage) is FHA-insured and accounts for 95%+ of reverse mortgages. It has a 2024 lending limit of $1,149,825, requires HUD-approved counseling, and is non-recourse (you never owe more than the home is worth). Proprietary reverse mortgages from private lenders may go above this limit.

Reverse Mortgage Calculator

Estimate how much you can receive from a HECM reverse mortgage based on your age, home value, and interest rate. No monthly payments required.

Home Value

Your Age

yrs

Existing Mortgage Balance

Expected Interest Rate

Preferred Payout Type

Available Lump Sum

$160,750

Principal Limit: $258,750 · PLF: 57% of eligible value

Eligible Home Value

$450,000

Principal Limit Factor

57.5%

Upfront MIP (2%)

$9,000

Origination & Closing Costs

$9,000

Existing Mortgage Payoff

$80,000

Net Available Funds

$160,750

Remaining Equity Projection (3% annual home appreciation)

Year 5 Equity

$296,213

Year 10 Equity

$288,543

Year 15 Equity

$257,571

Year 20 Equity

$190,698

Projection assumes 3% annual home appreciation. Actual results will vary. Reverse mortgages are non-recourse — you never owe more than the home is worth.

How to Use This Reverse Mortgage Calculator

Enter your home value, age, existing mortgage balance, and expected interest rate to see your estimated available funds. The calculator uses a simplified version of HUD's Principal Limit Factor (PLF) tables.

Age Matters Most

Older borrowers receive a higher percentage of their home's value. A 62-year-old might access 50–55% of eligible home value, while an 80-year-old might access 65–70%. This reflects the shorter expected loan term for older borrowers.

Payout Options

You can receive funds as a lump sum (fixed rate only), monthly tenure payments (for life), monthly term payments (for a set period), a line of credit (grows over time), or a combination. The line of credit option is often the most flexible and grows at the loan interest rate.

Existing Mortgage

Any existing mortgage must be paid off at closing using reverse mortgage proceeds. Enter your current balance to see your net available funds after payoff.

How Reverse Mortgage Amounts Are Calculated

Eligible Home Value = min(Home Value, HECM Limit of $1,149,825)

Principal Limit = Eligible Value × Principal Limit Factor (PLF)

PLF depends on: Borrower Age + Expected Interest Rate
(Higher age and lower rates = higher PLF)

Net Available = Principal Limit − Existing Mortgage − Upfront Costs

Upfront Costs = Upfront MIP (2%) + Origination Fee + Closing Costs

Annual MIP (ongoing) = 0.5% of outstanding balance

The principal limit factor is published in HUD tables. This calculator uses an approximation. Actual amounts will be determined by a HUD-approved HECM lender using current tables.

Example: Retired Homeowner in Florida

Margaret, Age 75, Home Value $400,000

Margaret has a $60,000 remaining mortgage balance and wants to supplement her Social Security income.

Home Value	$400,000
Age	75
Expected Rate	6.5%
Principal Limit Factor (PLF)	~62%
Principal Limit	~$248,000
Upfront MIP (2%)	$8,000
Origination & Closing	~$11,000
Existing Mortgage Payoff	$60,000
Net Available Funds	~$169,000
Est. Monthly Payout (tenure)	~$950/mo

Margaret chooses the monthly tenure option, receiving ~$950/month for life. She never makes a mortgage payment again. As long as she lives in the home and pays taxes and insurance, she can stay indefinitely.

Frequently Asked Questions

A reverse mortgage allows homeowners 62 and older to convert home equity into tax-free cash without selling or making monthly mortgage payments. The loan balance grows over time as interest accrues. The HECM (Home Equity Conversion Mortgage), backed by the FHA, is the most common type. It must be repaid when you sell, permanently move out, or pass away.

Yes. You remain the owner of your home with a reverse mortgage. The lender places a lien on the home (just like a regular mortgage), but you keep title. You must maintain the home, pay property taxes, and keep homeowners insurance current. Failure to do so can trigger the loan to become due.

Heirs have several options: (1) Pay off the loan balance and keep the home; (2) Sell the home, pay the loan, and keep any remaining equity; (3) Walk away if the loan balance exceeds the home's value — HECM is non-recourse, so neither you nor your heirs can owe more than the home sells for. Heirs typically have 6 months to decide, with possible extensions.

Reverse mortgage interest is not deductible annually — it accrues but isn't paid. When the loan is eventually repaid (at sale or death), the accumulated interest may be deductible at that point. The proceeds you receive from a reverse mortgage are not taxable income. Consult a tax advisor for your specific situation.

Alternatives include: (1) HELOC — requires monthly payments but preserves more equity; (2) Home equity loan — lump sum with fixed payments; (3) Downsizing — sell and buy a smaller home, pocketing the difference; (4) Rental income — rent a room or accessory dwelling; (5) State/local assistance programs for seniors. A reverse mortgage makes the most sense if you plan to stay in your home long-term and need supplemental income.