How Much Can I Get From a Reverse Mortgage?

The Three Types of Reverse Mortgages and What Each Offers

Different products follow different rules, so the first question is which kind of reverse mortgage is involved.

Home Equity Conversion Mortgage (HECM). HUD states that the HECM is the only reverse mortgage insured by the federal government. It is available only through a lender approved by the Federal Housing Administration (FHA). Its calculation is subject to a federal lending limit. That limit caps the home value the lender uses in the calculation. It does not set what the borrower receives.

Proprietary reverse mortgages. Private lenders offer these loans, and FHA does not insure them. They are generally aimed at higher-value homes and may count equity above the HECM limit. Their terms vary by lender.

Single-purpose reverse mortgages. Some state and local agencies and nonprofits offer these loans for one use, such as home repairs or property taxes. They are generally the lowest-cost type, but they are offered in fewer places and the money can be used only for that purpose.

The rest of this page focuses on the HECM, because its federal rules are publicly documented.

How the Federal Lending Limit Shapes What Your Home Counts For

For a HECM, the starting point is the maximum claim amount. It is the value the lender is allowed to use for the home. HUD lists it as the lesser of the appraised value, the HECM FHA mortgage limit, or the sales price when the HECM is used to buy a home.

For most homes, the appraised value is used. If a home is appraised above the federal limit, a HECM calculation does not count the value above that limit. The limit works as a ceiling on the home value used in the math. A proprietary reverse mortgage may use more of that value.

HUD sets the limit and updates it. It announces each year's figure in a mortgagee letter. Mortgagee Letter 2025-22 sets the 2026 limit for case numbers assigned on or after January 1, 2026. HUD's HECM program page is the place to check the current program information.

Age, Interest Rates, and the Principal Limit Factor

The next question is how much of the maximum claim amount can be reached. The answer comes from a principal limit factor, which is a percentage HUD publishes in a table. Older borrowers and lower expected interest rates generally produce a higher factor.

Age comes first. Under 24 C.F.R. § 206.33, "The youngest borrower shall be 62 years of age or older at the time of loan closing." When there are two borrowers, or an Eligible Non-Borrowing Spouse, the calculation uses the youngest person's age. The loan is designed so that the younger spouse can remain in the home under HUD's deferral rules.

Interest rates come next. HUD's lender guide states that the initial principal limit is based on the age of the youngest borrower, the expected average mortgage interest rate, and the maximum claim amount. When expected rates fall, the factor generally rises. When rates rise, the factor generally falls.

HUD revises these tables from time to time, as in Mortgagee Letter 2017-12. The result is the gross principal limit. It is a starting point, and costs and the payment choice come next.

Putting the Steps Together

The pieces fit in a fixed order, and an example in words shows how:

1. Home value to maximum claim amount. A home's appraised value is compared with the federal limit, and the lower figure is used.
2. Maximum claim amount to gross principal limit. That figure is multiplied by the principal limit factor from HUD's table for the youngest borrower's age and the expected rate.
3. Gross principal limit to available funds. Costs paid from the loan are subtracted, and the payment option shapes how the remainder can be drawn.

Two otherwise identical households with homes of the same value could see different results at step 2 if one household's youngest member is older, or if expected rates differ on the day each loan is priced. A lender's disclosures show the actual figures at each step.

How Costs Reduce the Amount Actually Received

This is where an advertised figure and the real one usually part ways. Several costs are typically paid out of the principal limit:

• Upfront mortgage insurance premium. HECMs carry an FHA insurance premium. Among other things, the program allows HUD to provide funds a borrower is owed but has not received because the paying party defaulted. HUD sets the premium, and the lender discloses the amount.
• Origination fee. The lender charges this fee. Federal rules limit it, it may be fully financed with the loan, and the lender discloses it.
• Closing costs. These include items such as the appraisal, title and recording.
• Annual mortgage insurance premium. This charge is added to the loan balance over time.
• Servicing charges. Some loans set aside a servicing fee from the principal limit at closing. The lender's disclosures show whether one applies.

Each charge rolled into the loan adds to the balance. A borrower may pay some costs out of pocket, which leaves more of the principal limit available, or roll them into the loan. Federal law requires full disclosure of all costs, including which charges are required to get the loan and which are not, under 12 U.S.C. § 1715z-20(d)(2)(C). Before closing, the lender must also give a statement of the projected total cost of the loan.

The Five Ways to Receive the Money

How a borrower takes the money affects how much is available at any one time. Under 24 C.F.R. § 206.19, HUD's payment options include:

• Single lump sum. The lender pays one advance at closing. This option is available only with fixed-rate HECMs, and the CFPB notes that the amount may be lower than with other options.
• Line of credit. The borrower draws money when needed, up to the permitted amount. The CFPB explains that the unused portion keeps growing.
• Tenure. The lender makes equal monthly payments for as long as the borrower keeps the reverse mortgage. Payments stop if the loan is paid off in full or comes due.
• Term. The lender makes equal monthly payments for a set number of months the borrower chooses, unless the loan is paid off or comes due earlier.
• Modified term or tenure. This combines monthly payments with a line of credit.

Money drawn early starts adding interest sooner, so the choice also shapes how fast the balance grows and how much equity is left later.

When the Loan Comes Due and What That Means for Your Family

Families often ask what happens at the end. Under 24 C.F.R. § 206.27(c), the loan comes due when a borrower dies and the home is not the principal residence of a surviving borrower, subject to a deferral for an Eligible Non-Borrowing Spouse. It also comes due when the borrowers sell or transfer all title. With HUD's approval, it can come due for other reasons, including moving out, more than 12 consecutive months away because of illness, unpaid property charges, or another unmet obligation. Put simply, a HECM must be repaid when the last surviving borrower or Eligible Non-Borrowing Spouse dies, sells the home, or no longer lives there as a principal residence, and it can come due sooner if the borrower duties described earlier are not met.

Because interest and charges build up, the amount owed at the end is typically larger than the amount received. A HECM is nonrecourse. Under 12 U.S.C. § 1715z-20(d)(7), the homeowner is not liable for any shortfall between the balance and the net sale proceeds. The FHA insurance paid to the lender covers that difference. The home itself remains security for the loan.

Heirs are not required to sell. To keep the home, the CFPB states that they must repay the full balance or 95 percent of the appraised value, whichever is less.

Using a Calculator as a Starting Point

Online calculators, including Golden Roof Equity's reverse mortgage calculator and proceeds estimator, use the same basic inputs, which are home value, age and an assumed interest rate. Any figure a calculator shows is a hypothetical illustration, not a loan offer or an approval. Calculators typically leave out some costs, the household's full finances and current lender terms.

The more reliable educational step is counseling, which a HECM requires before it closes. Under 12 U.S.C. § 1715z-20(f), the counselor must discuss options other than a HECM, the loan's financial implications, and that it may have tax consequences, affect eligibility for federal and state programs, and affect the estate and heirs. The CFPB lists alternatives such as waiting, a home equity loan or line of credit, refinancing, downsizing and lowering expenses. Comparing a reverse mortgage and a HELOC, or other ways to get money out of your house, fits naturally here. To find a counselor, HUD points to its HECM Counselor Roster and to (800) 569-4287.