How is the reverse mortgage principal limit calculated?

The principal limit is determined by multiplying your home value by a Principal Limit Factor (PLF) set by HUD. The PLF increases with age — at 62 it starts around 40%, and by 82 it reaches roughly 60%. Our calculator uses the simplified approximation PLF ≈ 0.40 + (age − 62) × 0.01, capped at 75% for age 95+. Actual HUD tables also factor in the expected interest rate, so real amounts may differ.

What is the minimum age for a reverse mortgage?

For an FHA-insured HECM (the most common type), the youngest borrower must be at least 62 years old. If you have a spouse under 62, they can be listed as a non-borrowing spouse — which provides protections allowing them to remain in the home, but it may reduce the principal limit. Some proprietary reverse mortgages have lowered this threshold to 55, but they are not FHA-insured.

What are the typical upfront costs of a reverse mortgage?

The two largest upfront costs are the Mortgage Insurance Premium (MIP) and the origination fee. The upfront MIP is 2% of your home value (or the FHA lending limit, whichever is less). The origination fee is capped at 2% of the first $200,000 of home value plus 1% of the remainder, with a minimum of $2,500 and a maximum of $6,000. Third-party closing costs (appraisal, title, etc.) typically add another $2,000–$5,000.

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

No monthly mortgage payments are required on a reverse mortgage — that is the defining feature. The loan balance grows over time as interest accrues. The loan becomes due when the last borrower permanently leaves the home, sells, or passes away. You must still pay property taxes, homeowner's insurance, and maintenance to stay in compliance with the loan terms.

How does the tenure payout option work?

The tenure payout provides equal monthly payments for as long as you live in the home as your primary residence — it never runs out, regardless of how long you live. Our simplified estimate divides available equity by life expectancy months (85 minus your current age × 12). Actual tenure amounts depend on current interest rates, your exact PLF, and lender calculations. A HUD-approved counselor can provide precise figures.

Can I get a reverse mortgage if I still have a mortgage?

Yes. One of the most common uses of a reverse mortgage is to pay off an existing mortgage, eliminating the monthly payment obligation. The existing mortgage balance is deducted from your principal limit to determine your available equity. You must pay off any existing liens on the property at closing using reverse mortgage proceeds.

What happens to a reverse mortgage when I die?

Your heirs have options: they can sell the home and keep any equity above the loan balance; they can pay off the loan (at the loan balance or 95% of appraised value, whichever is less) and keep the home; or they can simply walk away and the lender takes the home. Because HECMs are non-recourse loans, heirs are never personally liable for any difference between the loan balance and home value.

Reverse Mortgage Calculator — Principal Limit & Payout

Estimates HECM principal limit, available equity, monthly tenure payout, and upfront loan costs for homeowners 62+.

How to Use This Reverse Mortgage Calculator

This reverse mortgage calculator estimates your HECM principal limit, available equity, monthly tenure payout, and upfront loan costs. Enter your home's current market value, the age of the youngest borrower on the loan, and your existing mortgage balance (enter 0 if the home is paid off). All figures are simplified estimates — see the disclaimer for details.

Before proceeding with a reverse mortgage, HUD requires a counseling session with a HUD-approved counselor (call 1-800-569-4287 to find one). This is a safeguard — not a formality. Use our home sale calculatorto understand your net proceeds if you're comparing selling versus a reverse mortgage.

How a Reverse Mortgage Works

A Home Equity Conversion Mortgage (HECM) — the FHA-insured reverse mortgage — lets homeowners aged 62 and older convert home equity into cash without selling the home or making monthly mortgage payments. Instead of you paying the lender, the lender pays you. The loan balance grows over time and is repaid when you sell, move out permanently, or pass away.

The maximum you can borrow is called the principal limit, set by HUD based on your age, home value (up to the FHA lending limit of $1,209,750 in 2025), and current interest rates. The older you are, the higher your principal limit — because the lender expects a shorter loan duration and thus lower total accrued interest.

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Understanding the Principal Limit Factor (PLF)

The Principal Limit Factor is a percentage applied to your home value to determine the maximum loan amount. HUD publishes official PLF tables based on age and the Expected Average Mortgage Interest Rate. As a simplified approximation, PLF starts near 40% at age 62 and increases roughly 1 percentage point per year of age, capping around 75% for borrowers in their mid-90s. A 70-year-old with a $350,000 home might expect a principal limit of around $140,000–$165,000 depending on current rates.

Payout Options: Tenure, Term, Line of Credit, and Lump Sum

Once you know your available equity, you can receive it in several ways:

Tenure: Equal monthly payments for as long as you live in the home. Never runs out. Good for income replacement.
Term: Equal monthly payments for a fixed number of months you choose. Higher monthly amount than tenure.
Line of credit: Draw funds as needed; unused portions grow at the loan interest rate. Flexible and popular.
Lump sum: Fixed-rate HECM option; receive all proceeds upfront. Useful for paying off an existing mortgage.
Modified combinations: Mix a partial lump sum with a line of credit or monthly payments.

Upfront Costs: MIP, Origination Fee, and Closing Costs

Reverse mortgages have higher upfront costs than traditional mortgages. The main fees are:

Upfront MIP (Mortgage Insurance Premium): 2% of your home value (capped at the FHA lending limit). On a $350,000 home, that's $7,000.
Origination fee: Lender-set, capped by HUD at 2% of the first $200,000 + 1% above that, minimum $2,500, maximum $6,000.
Annual MIP: 0.5% of the outstanding loan balance per year — accrues over time and is not paid upfront.
Third-party closing costs: Appraisal ($500–$800), title, recording, attorney fees — typically $2,000–$5,000.

Most of these costs can be financed into the loan — meaning you don't pay them out-of-pocket, but they reduce your net available equity. Compare this to the equity available from selling using our closing cost calculator.

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Reverse Mortgage vs. HELOC vs. Selling

A reverse mortgage is one of three main ways to access home equity in retirement:

Reverse mortgage: No monthly payments required, loan balance grows over time, non-recourse. Best when you plan to stay in the home long-term and want to eliminate mortgage payments or supplement income.
HELOC: Monthly interest payments required, flexible draws, typically lower fees. Best if you need occasional access to funds and can afford monthly payments.
Selling: Maximum equity extraction, no ongoing loan obligations. Best if you want to downsize, relocate, or move to assisted living. Use our home sale calculator to model net proceeds.

Key Risks and Considerations

A reverse mortgage is a long-term financial decision with significant trade-offs. Key risks include: the loan balance growing over time (reducing or eliminating equity for heirs); the requirement to stay current on property taxes and insurance (default triggers foreclosure); limits on renting or leaving the home for more than 12 months; and the complexity of spousal protections if one spouse is under 62. Always work with a HUD-approved counselor and an independent financial advisor before proceeding.

Financial Disclaimer

This calculator provides simplified estimates for educational purposes only. Actual HECM amounts are determined by official HUD Principal Limit Factor tables, current expected interest rates, lender margins, your specific property appraisal, and other underwriting factors. Results from this tool should not be used to make financial decisions. Consult a HUD-approved reverse mortgage counselor and a licensed financial advisor for personalized guidance.

Reverse Mortgage Calculator