Reverse Mortgage Calculator: How Much Could You Borrow?

Less than most people expect, and less the younger you are. A Home Equity Conversion Mortgage, the FHA-insured reverse mortgage that makes up most of the market, lends a share of your home's value called the principal limit. HUD sets that share with three inputs, and the calculator above uses the same three (HUD; 24 CFR part 206):

• The maximum claim amount. The appraised value (or the price, for a purchase), but never more than the national limit, $1,249,125 for case numbers assigned in 2026, up from $1,209,750 the year before (HUD Mortgagee Letter 2025-22).
• The age of the youngest borrower, or of an eligible spouse who is not on the loan. Older means a larger share, because the loan is expected to run for fewer years.
• The expected rate.For an adjustable HECM, the 10-year index rate plus the lender's margin. Higher rates mean a smaller share, because the balance is expected to grow faster. HUD floors the expected rate at 3%.

HUD publishes the factors as a table (HUD principal limit factor tables). The calculator looks up your age and the expected rate, rounded to the nearest eighth of a percent, and multiplies the factor by the maximum claim amount. Then it subtracts everything that must be paid at closing: the upfront insurance premium, the origination fee, third-party costs and any mortgage still on the house. What is left, the net principal limit, is the money you can actually use.

Illustrative example: the people and figures below are hypothetical, not real clients. Numbers are calculated from the stated assumptions.

The calculator opens on the classic case: the youngest borrower is 70, the home is worth $500,000 and there is no mortgage. At an illustrative expected rate of 6.5%, the factor is 39.2%, so the principal limit is $196,000. Upfront costs of $19,000 come out of that, leaving $177,000, a little over a third of the home's value. If the lender's quote showed an expected rate of 5.5% instead, the same person could use $200,500. The rates in this example are round numbers chosen for illustration, not today's market; enter the expected rate from a lender's written quote.

Two things stand out. Age matters a great deal: at a 6% expected rate, waiting from 62 to 80 adds $65,500to the limit on the same house. And the expected rate matters nearly as much, which is why comparing lenders' margins is worth an afternoon. The index is set by the market; the margin is set by the lender and differs from one lender to the next.

When the home is worth more than the limit

Only the first $1,249,125 counts. A $1,600,000 home at the same age and rate has a principal limit of $489,657, and after costs $455,675 is available. The other $350,875 of value adds nothing to the loan, although it all still belongs to you and your heirs. For readers with expensive homes, that cap is the main reason to look at a proprietary loan, discussed below.

The costs are front-loaded and they are not small. There are three kinds (CFPB; HUD Mortgagee Letter 2017-12):

• An initial mortgage insurance premium of 2% of the maximum claim amount, charged at closing whether you draw anything or not: $10,000 on the example home, and $24,983 on any home worth the full limit or more.
• An origination fee for the lender, capped by regulation at 2% of the first $200,000 of the maximum claim amount plus 1% of the rest, with a $2,500 minimum and a $6,000 ceiling (24 CFR 206.31). Lenders may charge less, and some will for a larger loan. The example uses the maximum, $6,000.
• Third-party closing costs: appraisal, title insurance, recording and the counseling fee. The calculator's default of $3,000 is an assumption; use the figures on your loan estimate.

Together that is $19,000 on a $500,000 home, or 3.8% of its value. It is usually financed into the loan rather than paid in cash, which feels painless but means it accrues interest from the first day.

The annual premium compounds

On top of the interest, the balance is charged 0.5% a year for mortgage insurance, added to what you owe. So the balance grows at the note rate plus 0.5%: 6.50% a year in the example. That compounds. If the example borrower takes nothing but the closing costs, the $19,000 financed at closing grows to $36,331 after ten years and $69,472 after twenty, all of it repaid from the house. If she takes a lump sum, the balance of $117,600 at closing is charged about $588 of insurance in the first year alone, and more every year after as the balance grows.

What you get for the insurance is real: the loan is non-recourse, so neither you nor your heirs can ever owe more than the home is worth, and the FHA guarantees your line of credit and monthly payments even if the lender fails. Whether that protection is worth the price depends on how long you expect to keep the loan and how much of the line you expect to use.

HUD limits how much you can take in the first twelve months, to discourage borrowers from spending the equity at once. You may draw up to 60% of the principal limit in the first year, or, if your mandatory obligations are larger than that, the obligations plus 10% of the principal limit (HUD Mortgagee Letter 2014-21). Mandatory obligations are the upfront costs and any existing mortgage or lien the loan must pay off.

In the example, 60% of $196,000 is $117,600. Subtract the $19,000 of costs and $98,600 is available in year one; the remaining $78,400 of the line opens up after the first anniversary. Add a $150,000 mortgage to the same house and the obligations, $169,000, exceed the 60% mark. The first-year cash is then 10% of the principal limit, $19,600, and the net principal limit is only $27,000. For a borrower whose main goal is to stop making a mortgage payment that may be enough; for anyone hoping for spending money as well, it is a sobering number, and it is why the calculator flags a large mortgage. If the mortgage is bigger than the principal limit can cover, the calculator says how much cash you would need to bring to closing.

An adjustable-rate HECM lets you take the net principal limit in any mix of the following, and change the mix later for a small fee (24 CFR 206.19). A fixed-rate HECM allows only a single lump sum at closing.

Line of credit

Draw when you want, repay when you want, with no monthly payment required. The unused part grows (see the next section). This suits people who want a reserve: for repairs, for care costs, or for years when selling investments would be a mistake. In the example the line starts at $177,000.

Tenure: monthly for life

Equal monthly payments for as long as at least one borrower lives in the home, even if the payments eventually add up to more than the house is worth. HUD sizes them as if the youngest borrower will live to 100, using the expected rate plus the annual premium. In the example that is $1,171 a month. It works like a modest annuity backed by the house, and suits someone who needs steady income and expects to stay put.

Term: monthly for a set number of years

Larger payments for a fixed period: $2,043 a month for 10 years in the example. A common use is bridging the years until Social Security at 70 or a pension begins. When the term ends the payments stop, but you can stay in the home and the loan is not due.

Lump sum

One draw at closing, capped by the first-year limit: $98,600 in the example. On a fixed-rate HECM the rest of the principal limit is simply never available. It fits a specific need, such as paying off a mortgage or buying out a sibling, and fits poorly as a source of spending money, because every dollar accrues interest from day one.

The table assumes the home gains 3% a year and the note rate stays at 6%. On an adjustable loan it will not; change both in the calculator to see a less kind decade.

The unused part of an adjustable HECM line grows every month at the same rate as the balance: the note rate plus the annual premium (24 CFR 206.3). It grows whether the house rises or falls in value. In the example, a line of $177,000 at 70 becomes $338,457 at 80 and $647,191 at 90, while the home itself is projected at $903,056. That is the feature behind the “standby reverse mortgage” strategy: open a line early, draw nothing or little, and keep it as a reserve.

The research behind it is real. Barry and Stephen Sacks (Journal of Financial Planning, 2012) and later work by Wade Pfau and others found that drawing from a HECM line after poor market years, instead of selling investments at a loss, improved the odds that a portfolio would last, compared with treating the house as a last resort. Those studies modeled earlier rules, though. Before HUD Mortgagee Letter 2017-12, a borrower who drew little in the first year paid a much smaller upfront premium; today everyone pays 2% of the maximum claim amount at closing, which makes opening an unused line more expensive than it was when the strategy was studied.

The non-recourse guarantee is what makes the growth matter. The line can grow larger than the house is worth, and whatever you draw is still limited to the house when the loan is repaid. In the example, if the whole line had been drawn and the home sold at 80, the heirs would net $297,170. Leave it until 100 and a fully drawn line would leave them $0, but never a bill: the FHA, not the estate, absorbs any shortfall. Our guide to how reverse mortgages work compares the HECM line with a HELOC and walks through a standby reserve for a larger home.

A fair summary: the standby line is a reasonable tool for people who plan to stay in the home for many years, have a large portfolio they would rather not sell in a downturn, and would otherwise hold extra cash for that purpose. It is a poor one for people who may move, who have little other wealth, or who would be tempted to spend it.

A reverse mortgage removes the monthly mortgage payment, not the costs of owning a home. The loan can be called due if you stop paying property taxes, homeowner's insurance or HOA dues, let the house fall into disrepair, or no longer live there as your main home. An absence of more than 12 consecutive months for health reasons, such as a move to a nursing home, counts as moving out (CFPB). You will certify your occupancy every year.

Before approving the loan, the lender runs a financial assessment of your credit history and residual income. If it doubts you can keep up with taxes and insurance, it can require a life expectancy set-aside, or LESA: part of the principal limit reserved to pay those bills for you. A set-aside is not a refusal, but it reduces what you can draw, and the calculator does not model it. If your lender proposes one, ask for the amount and subtract it from the net principal limit.

Couples sometimes leave the younger spouse off the loan because they are under 62. For HECMs with case numbers assigned since August 2014, an eligible non-borrowing spouse, married to the borrower at closing and named in the loan documents, can stay in the home after the borrower dies, as long as the home remains their principal residence and the taxes, insurance and upkeep are paid (24 CFR 206.55). They cannot draw any more money from the loan, so an unused line stops at the borrower's death.

The protection has a price: HUD bases the principal limit on the younger spouse's age, using a separate table for spouses aged 50 to 61. If the example borrower, 70, has a spouse of 60, the factor falls to 31.1% and the net principal limit to $136,500, against $177,000 for a 70-year-old alone. To model it, enter the spouse's age and answer “Yes” to the non-borrowing spouse question. If both spouses are 62 or older, putting both on the loan is usually the safer choice.

The loan becomes due when the last borrower (and any eligible non-borrowing spouse) dies or moves out. The servicer notifies the estate, and heirs have 30 days to say what they intend to do and generally up to six months to sell or refinance, with up to two 90-day extensions if HUD approves them (HUD, Inheriting a HECM; CFPB). They have three choices: sell the home and keep whatever is left after the loan, keep the home by paying it off, or hand over the deed.

The non-recourse rule protects them on the downside. If the balance is larger than the home is worth, heirs who sell need only sell for at least 95% of the appraised value, and heirs who want to keep the house pay the balance or 95% of the appraised value, whichever is less (24 CFR 206.125). FHA insurance pays the lender the rest.

The example borrower on tenure payments shows how this plays out. The table follows her to 100, with the home growing 3% a year:

At 100 the balance, $1,434,924, is more than the house is worth. The heirs receive nothing from a sale, but owe nothing either; to keep the house they would pay $1,152,950 rather than the full balance, and insurance absorbs $221,292. Selling costs, typically several percent of the price, come out of what heirs net, and the calculator's figures are before them.

HECM for Purchase

A HECM can also help buy a new home, often a smaller one closer to family. You put down the difference between the price and what the HECM lends, and never make a monthly mortgage payment on the new house. With the example's age and rates, buying a $500,000 home would take a down payment of about $323,000 from the sale of the old home or savings, with the loan covering the rest and its costs. It is worth pricing next to a cash purchase of a cheaper home; our downsizing guide covers that choice.

Proprietary “jumbo” reverse mortgages

Some lenders offer their own reverse mortgages, not insured by the FHA, for homes worth well above $1,249,125. They usually have no mortgage insurance premiums and can lend more on an expensive home, but their rates, fees, protections for a non-borrowing spouse and line-of-credit features vary by lender and by state, and none of them are guaranteed by HUD. This calculator does not model them; ask any lender for a side-by-side comparison with a HECM on the same house.

Before you can apply for a HECM you must meet with a HUD-approved counselor who is independent of the lender, and receive a certificate that you did (24 CFR 206.41). A non-borrowing spouse attends as well. Some agencies charge a fee; ask before booking. You can find an agency through HUD's list of HECM counseling agencies.

Treat the session as free professional time rather than a box to tick. Bring the figures from this calculator and a lender's quote, and ask the counselor to walk through the total annual loan cost disclosure, the effect of a set-aside, and what happens to a spouse and heirs in your case. A counselor who works for the lender, or who recommends a product, is not doing the job HUD intends.

• A home equity line of credit. Much cheaper to open, but it needs monthly payments, has a fixed draw period, and the bank can freeze or reduce it, often in exactly the downturn when you would want it. Our reverse mortgage guide compares the two.
• Paying off or refinancing a forward mortgage. If the goal is only to remove a payment, run the mortgage payoff calculatorfirst; paying it from savings may cost less than the HECM's upfront premium.
• Downsizing. Selling and buying something smaller turns equity into cash with no loan and no insurance premium, and often lowers taxes and upkeep. See downsizing in retirement.
• Selling and renting. Simple and flexible, at the cost of rent rising with inflation and the loss of the house as a hedge.
• Drawing more from the portfolio. The retirement withdrawal calculator shows whether your savings can carry the spending without the house. Seeing the house next to everything else on the net worth calculator helps decide how much of it you are prepared to use.

Older homeowners with equity are a target, and reverse mortgages have attracted their share of bad actors (CFPB). Be wary of anyone who:

• says the loan is a government benefit or a “free” way to stay in your home;
• urges you to use the proceeds to buy an annuity, insurance or an investment (a HECM lender may not require you to buy another financial product);
• is a contractor who offers to arrange the loan to pay for repairs;
• presses you to sign quickly, skip counseling, or put a relative's name on the deed;
• asks you to sign documents with blank spaces, or to sign the house over to them.

The same warning signs apply to any pitch for your money; our list of investment scam red flags covers the common ones. You have a three-business-day right to cancel most reverse mortgages after closing, and a counselor or elder law attorney can review the papers before you sign.