Finance calculators

Reverse Mortgage Calculator

Updated Sep 11, 2026 By Jehan Wadia
Rate Formulas Sources
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Property & Borrower Details
Current appraised or estimated value.
The 2026 HECM maximum claim amount is $1,249,125. Your HECM calculation will be based on this maximum, not the full home value.
Enter a valid home value
Must be 62 or older for HECM eligibility.
Borrower must be at least 62 years old
Using younger age of 62 for PLF lookup (HECM rule).
Co-borrower must be at least 62
Used by HUD for principal limit factor lookup.
Enter a valid interest rate
Outstanding mortgage balance to be paid off at closing.
Loan Projection Settings
Ongoing line-of-credit or tenure payment draws.
Standard HECM compounds monthly.
How many years to project the loan balance.
Enter 1–30 years

Standard HECM Estimate

Gross Principal Limit
$0
Net Principal Limit
$0
Net Available Proceeds
$0
Principal Limit Factor
0%
Proceeds Breakdown
Home Value (or FHA Cap)$0
Principal Limit Factor (PLF)0%
Gross Principal Limit$0
Less: Initial MIP (2.0%)−$0
Less: Estimated Closing Costs−$0
Less: Set-Aside (Servicing Fee)−$0
= Net Principal Limit$0
Less: Existing Mortgage Payoff−$0
= Net Available Proceeds$0
Loan Balance & Equity Projection
Year-by-Year Projection
Assumes 3% annual home appreciation for equity projection. Actual results will vary.
Year Age Loan Balance Home Value Remaining Equity Equity % Annual Draws Annual Interest Annual MIP

Introduction

A reverse mortgage lets homeowners aged 62 or older turn part of their home equity into cash.1 Instead of making monthly payments to a lender, the lender pays you. The loan is paid back when you sell the home, move out, or pass away.4 This Reverse Mortgage Calculator helps you estimate how much money you could receive based on your age, home value, and current interest rates. Use it to get a clear picture of your options before making any decisions about your home equity.

How to Use Our Reverse Mortgage Calculator

Enter a few details about your home and loan to find out how much money you could get from a reverse mortgage.

Your Age: Type in your current age. You must be at least 62 years old to qualify for a reverse mortgage.2 The older you are, the more money you may be able to borrow.

Home Value: Enter the current market value of your home in dollars. This is how much your home would sell for today. A higher home value means you could receive more money.

Existing Mortgage Balance: Enter the amount you still owe on your current mortgage. If your home is fully paid off, enter zero. Any remaining balance will be paid off first using the reverse mortgage funds. If you're unsure of your remaining balance, our Mortgage Payoff Calculator can help you figure it out.

Interest Rate: Enter the expected annual interest rate for the reverse mortgage. This rate affects how much you can borrow and how fast your loan balance grows over time.

Payment Option: Choose how you want to receive your money. Options typically include a lump sum (one large payment), monthly payments, or a line of credit you can draw from when needed.

Loan Term: Enter the number of years you plan to stay in your home. This helps estimate how much interest will build up on the loan and what the total balance will be over time. You can explore how compound interest works to better understand how loan balances grow.

What Is a Reverse Mortgage?

A reverse mortgage is a special type of home loan available to homeowners who are 62 years or older.1 Instead of you making payments to a lender, the lender pays you. It lets you turn part of the equity in your home into cash without having to sell your house or make monthly mortgage payments.

How Does a Reverse Mortgage Work?

With a regular mortgage, you borrow money to buy a home and pay it back over time. A reverse mortgage works the opposite way. You already own your home (or most of it), and the lender gives you money based on how much your home is worth. The loan doesn't have to be paid back until you move out, sell the home, or pass away.4

The amount you can borrow depends on a few key things:

  • Your age: the older you are, the more you can borrow.5
  • Your home's value: a higher home value means more money available to you.
  • Current interest rates: lower rates mean you can get more money.
  • Your existing mortgage balance: any remaining balance on your current mortgage must be paid off first using the reverse mortgage funds.

Types of Reverse Mortgages

The most common type is the Home Equity Conversion Mortgage (HECM), which is backed by the federal government through the FHA.1 There are also proprietary reverse mortgages offered by private lenders, which can sometimes allow you to borrow more if your home has a high value.

Things to Keep in Mind

While a reverse mortgage can be a helpful tool, there are important costs and risks to understand. You will still need to pay property taxes, homeowners insurance, and maintenance costs on your home.1 If you fall behind on these, you could lose your home.4 The loan balance also grows over time because interest is added to what you owe each month.1 This means the equity in your home goes down as the loan balance goes up.1

There are also upfront costs like origination fees, closing costs, and mortgage insurance premiums.3 These can be rolled into the loan, but they reduce the amount of cash you receive.3

Who Should Consider a Reverse Mortgage?

A reverse mortgage can be a good fit for retirees who own their home, plan to stay in it for a long time, and need extra income. It is not ideal if you plan to move soon or want to leave your home to your heirs free of debt. You must receive counseling from a HUD-approved reverse mortgage counseling agency before you can get a HECM.2

Formulas used

Principal Limit Factor (PLF) Approximation
PLF = PLF_{\text{base}}(\text{age}) + (5.0 - r_{\text{expected}}) \times 0.048
Gross Principal Limit
GPL = \min(\text{Home Value},\ \text{FHA Cap}) \times PLF
Initial Mortgage Insurance Premium (MIP) 6
MIP_{\text{initial}} = \min(\text{Home Value},\ \text{FHA Cap}) \times 2\%
Net Principal Limit
NPL = GPL - MIP_{\text{initial}} - C_{\text{closing}} - S_{\text{set-aside}}
Net Available Proceeds (Standard HECM)
\text{Net Proceeds} = \max(0,\ NPL - M_{\text{existing}})
Monthly Loan Balance Growth 6
B_{m} = B_{m-1} + B_{m-1} \times \frac{r}{12} + B_{m-1} \times \frac{0.50\%}{12} + D_m
Projected Home Value
HV_y = HV_0 \times (1.03)^{y}
HECM for Purchase Down Payment
\text{Down Payment} = \max(0,\ \text{Purchase Price} - NPL)

Frequently asked questions

What is a HECM reverse mortgage?

A HECM (Home Equity Conversion Mortgage) is the most common type of reverse mortgage.1 It is backed by the FHA and lets homeowners aged 62 or older borrow against their home equity.2 You do not make monthly payments. The loan is repaid when you sell, move out, or pass away.4

What is the FHA lending limit and how does it affect my calculation?

For 2026 the HECM maximum claim amount is $1,249,125.7 If your home is worth more than this amount, the calculator uses $1,249,125 as the basis for your HECM calculation, not the full home value. This cap applies to all HECM loans regardless of your actual home value.

What is the Principal Limit Factor (PLF)?

The PLF is a percentage set by HUD that determines how much of your home value you can access. It depends on two things: the age of the youngest borrower and the expected interest rate.5 A higher age or lower interest rate gives you a higher PLF, which means more money available to you.

What is the expected interest rate and is it the same as my loan rate?

No, they are not the same. The expected interest rate is used by HUD only to look up your Principal Limit Factor. For adjustable-rate HECMs it is the lender's margin plus the 10-year Constant Maturity Treasury yield (or an approved SOFR index); for fixed-rate HECMs it equals the note rate.5 Your actual loan rate may be different and can be fixed or adjustable.

What is the initial MIP and why is it 2%?

The initial Mortgage Insurance Premium (MIP) is a one-time fee of 2% of the maximum claim amount, which is your home value or the FHA cap, whichever is lower.6 It goes to the FHA to insure your loan.3 The insurance guarantees that you receive your expected loan advances.3

What is the ongoing MIP charge?

The ongoing MIP is an annual charge of 0.5% of your outstanding loan balance.3 It is added to your loan balance each month.3 A HECM is non-recourse: you have no personal liability for the loan balance, and the lender can recover the debt only through the sale of the property.5

What is the difference between Gross Principal Limit and Net Principal Limit?

The Gross Principal Limit is the total amount calculated by multiplying your home value (or FHA cap) by the PLF. The Net Principal Limit is what remains after subtracting the initial MIP, estimated closing costs, and servicing set-aside fees. The net amount is what is actually available to you.

What are Net Available Proceeds?

Net Available Proceeds is the cash you actually receive after all costs are subtracted. It equals the Net Principal Limit minus any existing mortgage balance that must be paid off at closing. This is the money you can use freely.

What is the HECM for Purchase option?

HECM for Purchase lets you buy a new home using a reverse mortgage. Instead of getting a regular mortgage and making monthly payments, you make a larger down payment and the HECM covers the rest. You never have to make monthly mortgage payments on the new home.

How is the down payment calculated for HECM for Purchase?

The down payment equals the purchase price minus the HECM benefit. The HECM benefit is the Net Principal Limit based on the purchase price. Typically, buyers need to put down roughly 40% to 60% of the purchase price depending on their age and the interest rate.

What is the servicing set-aside fee?

The servicing set-aside is money reserved from your principal limit to cover future loan servicing costs. The lender charges a monthly servicing fee (around $35) and sets aside enough to cover this fee for many years. This reduces the cash available to you at closing.

What home appreciation rate does the projection use?

The year-by-year projection assumes your home grows in value by 3% each year. This is a general estimate. Your actual home appreciation could be higher or lower depending on your local housing market and economic conditions.

Can my loan balance grow larger than my home value?

Yes, over many years the loan balance can exceed your home's value because interest and MIP fees compound. However, HECM loans are non-recourse, which means you or your heirs will never owe more than the home is worth when the loan is repaid.5 The FHA insurance covers any shortfall.

What happens to remaining equity in my home?

Any equity left after the loan is repaid belongs to you or your heirs. For example, if your home sells for $400,000 and your loan balance is $250,000, the remaining $150,000 goes to you or your estate. The projection table shows estimated remaining equity for each year.

Sources

  1. What is a reverse mortgage? Consumer Financial Protection Bureau. Accessed September 10, 2026.
  2. Can anyone take out a reverse mortgage loan? Consumer Financial Protection Bureau. Accessed September 10, 2026.
  3. How much does a reverse mortgage loan cost? Consumer Financial Protection Bureau. Accessed September 10, 2026.
  4. When do I have to pay back a reverse mortgage loan? Consumer Financial Protection Bureau. Accessed September 10, 2026.
  5. 24 CFR Part 206 — Home Equity Conversion Mortgage Insurance. Electronic Code of Federal Regulations (eCFR), U.S. Department of Housing and Urban Development. §§ 206.3, 206.27, 206.33. Accessed September 10, 2026.
  6. Mortgagee Letter 2017-12: Home Equity Conversion Mortgage (HECM) Program: Mortgage Insurance Premium Rates and Principal Limit Factors. U.S. Department of Housing and Urban Development. 2017. Accessed September 10, 2026.
  7. Mortgagee Letter 2025-22: 2026 Nationwide Home Equity Conversion Mortgage (HECM) Limits. U.S. Department of Housing and Urban Development. 2025;HECM Maximum Claim Amount Limits. Accessed September 11, 2026.

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