Reverse Mortgage Calculator

A reverse mortgage lets a homeowner age 62 or older convert part of their home equity into cash without selling the home or making a monthly mortgage payment — and a HECM is the federally insured version, the Home Equity Conversion Mortgage backed by the FHA.

Instead of you paying the lender each month, the lender pays you — as a lump sum, a line of credit, monthly payments, or a combination. The loan balance grows over time as interest and fees are added, and it is repaid later, usually when the last borrower sells the home, moves out permanently, or passes away.

The vast majority of reverse mortgages in the U.S. are HECMs, insured by the Federal Housing Administration (FHA). That insurance is what makes the loan non-recourse — you or your heirs never owe more than the home is worth when it is sold. There are also proprietary reverse mortgages (often branded HomeSafe) for higher-value homes, which are not government-insured.

To qualify for a HECM you must be at least 62 years old, own a home that is your primary residence with substantial equity, and pass a financial assessment showing you can keep up with property taxes, insurance, and maintenance.

The core requirements:

• Age 62 or older — every borrower on title must meet the age rule for a HECM. (Proprietary HomeSafe products can start as young as 55 in some states — see below.)
• Primary residence — the home must be where you live most of the year. Vacation homes and most rentals do not qualify.
• Substantial equity — you generally need to own the home outright or have a low remaining mortgage balance, because any existing mortgage must be paid off at closing from the reverse mortgage proceeds.
• Financial assessment — the lender reviews your income and credit history to confirm you can afford ongoing taxes, insurance, and home upkeep. If there is concern, part of the proceeds may be set aside to cover those costs.
• HUD counseling — you must complete a session with an independent HUD-approved counselor before the loan can close.

Eligible property types include single-family homes, 2–4 unit homes where you occupy one unit, HUD-approved condominiums, and many manufactured homes that meet FHA standards.

The amount is set by your principal limit — your age (or the youngest borrower’s age), your home’s value, and current interest rates — and the single biggest driver is age: the older you are, the larger the percentage you can borrow.

Lenders multiply your home value (capped at the FHA limit — see below) by a principal limit factor (PLF). Older borrowers get a higher factor because the loan is expected to be repaid sooner. Here is roughly how the factor and the resulting principal limit scale by age on a $500,000 home at a representative expected rate:

Two important notes: the factor is based on the youngest borrower (or eligible non-borrowing spouse), and the principal limit is the gross figure — closing costs, any existing mortgage payoff, and a first-year limit (next question) all reduce what actually reaches your pocket.

Yes — in year one you can generally access no more than 60% of your principal limit (with an exception if you have a large existing mortgage to pay off), a rule designed to slow how fast the balance grows.

This is the first-year disbursement cap. On a 62-year-old with a $178,500 principal limit, that means about $107,100 is available in the first 12 months; the rest stays in reserve and becomes available afterward (most often as a growing line of credit). If your mandatory obligations — an existing mortgage balance plus closing costs — exceed 60%, you are allowed to draw enough to cover them plus a small additional cushion.

The practical effect: if you still owe a meaningful amount on your home, much of your first-year proceeds may go straight to paying off that loan, leaving less cash in hand. The calculator shows this split — available proceeds, line-of-credit reserves, and your remaining equity — so you can see exactly where the money goes.

Yes — you keep title to your home and remain the owner; the lender simply holds a lien, just like any other mortgage.

You do not sign your home over to the bank. But to keep the loan in good standing you must continue to meet the homeowner obligations that come with owning property:

• Property taxes — paid on time, every year.
• Homeowners insurance — kept active and adequate.
• Home maintenance — the property kept in reasonable repair.
• Occupancy — the home must remain your primary residence.

A reverse mortgage becomes due and is repaid when the last borrower sells the home, permanently moves out, or passes away — and because it is non-recourse, you never owe more than the home’s value at that time.

You make no required monthly principal-and-interest payments while you live in the home. Instead, the balance — the money you received plus accumulated interest and fees — is paid off later, almost always from the sale of the home. The triggering events are:

• The last surviving borrower sells the home or passes away.
• The last borrower no longer lives in the home as a primary residence for more than 12 consecutive months (for example, a long-term move to assisted living).
• The borrower fails to meet the obligations above (taxes, insurance, upkeep, occupancy).

Non-recourse is the key protection: if the loan balance ends up higher than the home sells for, FHA insurance covers the shortfall on a HECM — neither you nor your heirs are personally on the hook for the difference. You can also repay early at any time, with no prepayment penalty.

A HECM’s main costs are an upfront FHA mortgage insurance premium of 2.0% of your home value (up to the FHA limit), a lender origination fee, third-party closing costs, ongoing servicing, and interest that accrues on the balance over time.

Here is how the major cost pieces break down on a HECM:

Most of these costs can be financed into the loan rather than paid in cash, which is convenient but means they are added to your balance and accrue interest. The calculator shows your estimated UFMIP, origination, and closing costs as part of your mandatory obligations.

A HECM is government-insured by the FHA and capped at the FHA lending limit, while a proprietary HomeSafe loan is a private, non-insured product designed for higher-value homes that exceed that cap.

The FHA caps how much home value a HECM can count: the maximum claim amount is the lower of your home’s value or the FHA HECM lending limit of $1,209,750. If your home is worth more than that, a HECM simply ignores the excess. A proprietary loan can lend against the full value.

For a home worth more than about $1.2 million, a HomeSafe loan can unlock more proceeds because it lends against the full value and skips FHA insurance — though pricing and availability vary by lender and state. The calculator estimates both so you can compare side by side.

Yes — completing a counseling session with an independent, HUD-approved counselor is mandatory before any HECM can close. There are no exceptions.

This requirement exists to protect you. An impartial counselor — who does not work for the lender — walks you through how the loan works, what it costs over time, how it affects your equity and your heirs, and what alternatives might fit better. You can complete the session by phone or in person, and you receive a certificate that the lender needs to proceed.

Treat counseling as a feature, not a hurdle: it is your chance to ask hard questions with no sales pressure before you commit to a major financial decision.

Your heirs inherit the home along with the reverse mortgage balance, and they typically have several months to repay the loan — by selling the home, refinancing, or paying it off — and they keep any equity that remains after the balance is settled.

What happens after the last borrower passes away or permanently leaves:

• The loan becomes due, and the servicer notifies the heirs.
• Heirs choose how to settle it — sell the home and keep any leftover equity, refinance into their own mortgage to keep the home, or pay the balance from other funds.
• Non-recourse protects them — if the balance is higher than the home’s value, heirs can satisfy the loan by paying the lesser of the balance or 95% of the appraised value on a HECM; they are never personally liable for a shortfall.
• Remaining equity is theirs — if the home sells for more than the balance, the difference goes to the estate.

The practical trade-off: a reverse mortgage spends down home equity over time, so it generally leaves a smaller inheritance than if the home were owned free and clear. That is the central planning conversation to have with your family.

A HECM lets you receive funds as a lump sum, a line of credit, fixed monthly payments, or any combination — and the option you choose has real consequences for cost and flexibility.

Remember the first-year cap: regardless of which option you pick, you generally cannot access more than 60% of your principal limit in the first 12 months. For many borrowers the growing line of credit is the most powerful feature, because the available amount increases over time whether or not you use it.

Enter your home value, any existing mortgage balance, and your birth date — the calculator estimates your HECM principal limit, first-year proceeds, and costs, alongside a HomeSafe comparison.

• Enter your home value and the balance on any existing first mortgage (it must be paid off from the proceeds).
• Enter your birth date — the tool computes your age and applies the principal-limit factor for it. You must be at least 62 for HECM figures to appear.
• Read the total proceeds, the split between available proceeds and line-of-credit reserves, your remaining equity, and the estimated costs (UFMIP, origination, closing).
• Compare the HECM and HomeSafe result cards side by side.

This is an estimate to help you understand your options — not a loan offer or financial advice. Actual figures depend on a full appraisal, current rates, your financial assessment, and program rules. When you are ready, we will walk through the real numbers with you.