Reverse Mortgage Calculator

How the Reverse Mortgage Calculator Works

A reverse mortgage lets homeowners convert part of their home equity into cash while they keep living in the house. The calculator on this page models the most common version, the Home Equity Conversion Mortgage (HECM), which is insured by the Federal Housing Administration. You provide a handful of facts, the tool applies the same logic underwriters use, and you see what you could borrow, what it would cost and how much of your equity stays untouched. The free heloc calculator uses the same plain-English approach, so you can compare results side by side.

Four Inputs That Drive Your Loan Estimate

Every result from this tool rests on four inputs. Each one pulls the result in a different direction, which is why changing just one of them can move your answer by tens of thousands of dollars.

• Borrower age: the age of the youngest borrower on title. If you are married, the younger spouse sets the clock, because the loan has to last as long as either of you lives in the house.
• Home value: what an appraiser would say your property could sell for today, up to the federal ceiling.
• Mortgage balance: any debt you still owe on the house. It is paid first, and only the leftover cash is yours to spend.
• Expected rate: the projected borrowing cost on the loan. Lower rates leave more room to borrow.

You do not have to share a name, phone number or email address. Like most good tools of this kind, it needs no personal information, so you can test as many scenarios as you like.

The Principal Limit Factor and Your Expected Rate

The heart of the calculation is the principal limit factor, a percentage published in HUD tables. It rises with the age of the youngest borrower and falls when projected rates climb. Multiply it by your property's appraised worth (capped at the federal limit) and you get your lending ceiling, the most that can ever be advanced against your house.

From that ceiling, the costs of getting the loan and any balance on the house are subtracted. What remains is the money you can actually use:

$$\text{Net proceeds} = (\text{Property value} \times \text{PLF}) - \text{Loan costs} - \text{Mortgage payoff}$$

Here PLF stands for the factor described above, and "loan costs" bundles the upfront premium, the origination charge and third-party charges such as the property survey. Older borrowers see a higher factor because the loan is expected to run fewer years for repayment, which is tied to life expectancy.

After you press the calculate button, a short list of results appears. The total proceeds figure is the full amount a lender could advance against your home. Your available cash is what is left after the loan costs and any payoff, and it is the number that matters when you plan a purchase or a repair. Treat every result as a starting point, because a reverse mortgage lender will confirm the real figure after a property inspection and a review of your finances.

Run the tool more than once. Try a slightly different home value, a lower or higher rate, or the age of the second borrower, and watch how each change moves the answer. Because a reverse mortgage depends so heavily on age, even a two-year difference between spouses can shift your result noticeably, and that is useful to know before you decide who goes on the loan.

Home Equity Conversion Mortgage Basics: Who Can Qualify

Before you run any numbers, it helps to know whether a HECM is even open to you. The program is built for older homeowners who have built up significant ownership in a house they live in, and the rules are strict on purpose, since a loan with no monthly payment needs guardrails. The debt consolidation calculator online uses the same plain-English approach, so you can compare results side by side.

Requirements for a Reverse Mortgage Loan

To qualify, you generally have to meet every one of these conditions:

• You are 62 or older (and so is any co-borrower, unless an eligible spouse is protected on the loan).
• The house is your primary residence, and you either own it outright or hold a low balance.
• You have no delinquent federal debt.
• You complete a counseling session with a HUD-approved counselor before applying.
• You can keep paying property taxes, homeowner's insurance and basic upkeep.
• The property meets FHA standards: a single-family home, a two-to-four unit building where you occupy one unit, an approved condominium or a qualifying manufactured home.

Most lenders also like to see at least half of the house paid off, since there must be enough room to cover the costs and the interest that will accrue.

How much home equity do you need? There is no single magic percentage, but the more of your home you own outright, the more cash you can unlock and the easier it is to qualify. A homeowner with 80 percent equity will usually see a much larger result than one with 30 percent, since any balance against the property must be cleared first. If you are unsure whether you qualify, run your numbers through the calculator and then ask a counselor to confirm. Strong home equity also leaves a cushion for your family, because your home keeps most of its value for your heirs.

Maximum Claim Amount and the FHA Lending Limit

Even a very expensive house can only be counted up to the maximum claim amount, which for 2026 is $1,249,125. That figure is 150 percent of the national conforming loan limit. If your property is worth more, the calculator caps it at that ceiling, and the extra value does not raise your answer. Homeowners above the FHA lending limit may look at private products, covered in a later section.

Reverse Mortgage Closing Costs and Fees

A reverse mortgage is usually more expensive to open than an ordinary home loan, and ignoring that is the most common reason people overestimate what they will receive. The calculator subtracts these charges before it shows you a figure, and understanding each one lets you judge whether the tradeoff suits your retirement plan.

Mortgage Insurance and the Origination Fee

Two charges dominate the bill. The first is the initial mortgage insurance premium, an upfront charge equal to 2 percent of your home's appraised worth (capped at the federal limit). A further 0.5 percent a year, the annual MIP, is added to your balance afterwards. This coverage is what lets the FHA guarantee that you keep receiving payments even if your lender runs into trouble.

The second is the origination fee, which pays the lender for processing the loan. It is calculated as 2 percent of the first $200,000 of value plus 1 percent of anything above, subject to a $2,500 floor and a hard cap of $6,000. The consumer financial protection bureau publishes a plain-language guide to both charges.

Closing Costs You Can Roll Into the Loan

The remaining charges are third-party closing costs, which pay for work done by people other than your lender:

• The home appraisal and any second review
• Title search and title insurance
• Credit checks, surveys and flood certification
• Recording fees and local mortgage taxes
• Servicing charges set by the lender

The good news is that you rarely pay these in cash. Combined, the upfront premium and origination fees often make up most of the bill. Ask each lender for an itemized list of fees. Nearly every lender lets you add them to the balance, which is why the calculator treats them as a deduction from your proceeds instead of a bill due at the table. The tradeoff is that financed costs also earn interest, so the true cost of the loan grows over time.

Reverse Mortgage Worked Example: A 73-Year-Old Homeowner

Numbers make the process concrete. Suppose a single homeowner aged 73 owns a house appraised at $463,500 and carries a $58,200 mortgage balance. The rate assumed in this scenario is 6.375 percent. Entering those four facts into a HECM reverse mortgage calculator produces the following chain of results (all figures are rounded to the nearest dollar).

Net Proceeds Step by Step

At age 73 and a 6.375 percent rate, the factor works out to about 0.4138, so the lender's ceiling, also called total proceeds, is $463,500 multiplied by 0.4138, or $191,796. Loan costs then come off the top, followed by the old mortgage.

In other words, a $191,796 ceiling shrinks to $114,826 of usable cash once the lender, the insurer and the old mortgage have been paid.

What You Can Draw in the First Year

HUD limits what you can take in the first year to the greater of 60 percent of the ceiling or your mandatory obligations plus 10 percent of the ceiling. Here, 60 percent of $191,796 is $115,078, which beats the alternative of $76,970 plus $19,180. Subtracting the $76,970 of mandatory items (the payoff and the closing costs) leaves $38,108 of available cash in year one and $76,719 that waits in reserve.

Remaining Equity After Closing

The lender never advances your whole house. In this scenario, $463,500 minus the $191,796 ceiling leaves remaining equity of $271,704 on day one. Interest will chip away at it over time, which is why a projection matters. If the full first-year amount of $115,078 is drawn at the start and grows at 6.875 percent (the loan rate plus the 0.5 percent annual premium), the balance reaches about $223,745 after ten years. With the house unchanged at $463,500, about $239,755 of equity would remain.

HECM Payout Options: Line of Credit, Lump Sum and Monthly Payments

How you receive the money changes both the size of your payments and how fast the balance grows. A HECM offers several ways to take your loan proceeds, and you can usually switch some of them later.

Line of Credit and Credit Line Growth

A line of credit lets you draw funds only when you need them, and unused funds do not accrue interest. Better still, the available amount grows each year on a variable-rate loan. The growth rate equals the initial interest rate plus the annual mortgage insurance rate, so a 6.375 percent loan produces a 6.875 percent credit line growth rate. In the example above, the $76,719 held in reserve would climb to roughly $149,163 after ten untouched years. That feature makes the line of credit a popular safety net against a market downturn or a surprise medical bill.

Single Disbursement and Lump Sum

A single disbursement pays you one lump sum at closing. It is only available with a fixed-rate loan, and because interest starts on the whole balance immediately, it suits borrowers who have one large need, such as paying off a mortgage or funding a major repair, rather than ongoing income.

Tenure Payment, Term Payment and Fixed Monthly Advances

If you want a steady monthly payment in retirement, the program offers fixed monthly advances in two forms. A tenure payment continues for as long as at least one borrower lives in the house. A term payment runs for a set number of months, and shorter terms mean larger checks. A modified combination blends a line of credit with scheduled advances, while regular periodic payments is the label some lenders use for the same stream of income.

Pricing a Reverse Mortgage Payoff for a 68-Year-Old Homeowner

Marguerite, a retired dental hygienist, wants to stop writing a $1,184 check to her mortgage servicer each month. She is 68, her house is appraised at $578,900, and she still owes $142,600. Before she calls anyone, she opens the HECM calculator and types in exactly those three facts, plus a 6.125 percent rate from a recent quote.

The screen answers in seconds. The ceiling is $225,887, loan costs are $21,078 and her old mortgage takes $142,600, which leaves $62,209 of cash. The number that stops her is the next one: because her payoff is larger than 60 percent of the ceiling ($135,532), HUD's first-year rule lets her draw the payoff, the costs and an extra 10 percent of the ceiling. That works out to $22,589 she can spend in year one, with $39,620 waiting in a credit line.

She then reruns the calculation with the rate raised a full point, since the rate quote could move before closing. Cash after costs falls to $34,422, so the rate matters more than she expected. Her decision is concrete: she will lock the rate before the loan funds, keep the $22,589 for a $19,400 roof replacement, and leave the rest of the line untouched so it can grow. The monthly check disappears, and she now knows the exact trade: $21,078 of costs and a growing balance in return for $1,184 of monthly breathing room.

Interest Rate, Loan Balance and Repayment of a Reverse Mortgage

With no monthly bill, it is easy to forget that the loan is growing in the background. Understanding the mechanics keeps the decision honest.

How Compounding Interest Grows Your Loan Balance

Interest and mortgage insurance are added to the balance each month, so you pay interest on interest. This compounding interest is why the outstanding balance accelerates in later years. Choosing an adjustable-rate loan keeps the starting interest rate lower, but it can change, while a fixed rate gives certainty at a higher starting cost. The calculator's projection tool lets you test both paths and see the effect on your loan balance before you commit.

Think of it as the reverse of saving. In a bank account, interest builds your balance upward; with this kind of borrowing, interest builds the amount you owe. That is why many advisors suggest taking only what you need now and leaving the rest in the credit line, where it grows instead of costing you interest. A reverse mortgage that is used sparingly can leave far more home equity for you and your family than one drawn in full on day one, which matters if you hope to stay in your home for life or leave the home to your children.

Repayment, Heirs and Non-Recourse Protection

Nothing is due until the last borrower sells, moves out for good or dies. At that point the loan is repaid, usually from the home sale. Your heirs can keep the house if they repay the balance or refinance it, and if they would rather sell they keep whatever is left after the lender is paid. Because a HECM is non-recourse, neither you nor your heirs will ever owe more than the house is worth, even if the balance outgrows it. A younger spouse who is not on the loan is a different story, so weigh that choice carefully.

Foreclosure Risk and Ongoing Property Charges

The house serves as collateral for the loan, and you stay responsible for taxes, insurance and maintenance. Falling behind on those obligations can make the loan due and, in the worst case, lead to foreclosure. Build those costs into your budget before you borrow.

Reverse Mortgage Alternatives for Retirement Income

A reverse mortgage is one tool among several, and the right answer depends on your retirement picture, your health and what you want to leave behind.

Jumbo and Proprietary Reverse Mortgage Options

If your property is worth more than the federal ceiling, a jumbo reverse mortgage from a private lender may reach further. A proprietary reverse mortgage can also serve borrowers under 62 or owners of condominiums the FHA has not approved. These loans are not federally insured, so terms vary more from one lender to the next, and it pays to compare quotes. Some borrowers confuse these products with a reverse annuity mortgage, an older arrangement that pays income against the house but works differently.

Social Security, Savings and Other Retirement Income

Before tapping your house, set the cash figure from the HECM calculator beside your other sources of income: Social Security timing, pensions, and withdrawals from savings. Good financial planning often combines them, using the loan to cover healthcare costs or to avoid selling investments after a market drop. Many seniors also use it to clear debt so that cash flow improves. Dividing that figure by the years you expect to need it shows whether it beats what withdrawals from your nest egg alone would provide. Proceeds from this type of loan are generally not taxed, since they count as loan advances, but confirm that with a tax professional.

Getting Pre-Approved and Comparing Lenders

When the estimate looks promising, speak with several lenders and get pre-approved by at least two before you choose. The calculator gives you a solid starting point, but only a counselor or lender can supply a firm quote based on your appraisal and today's rates.

Ask yourself a few honest questions before you go further. Do you plan to stay in your home for many years? Can you afford the taxes and upkeep that come with owning it? Would the cash change your later years in a meaningful way, such as covering a new roof or in-home care? If your available cash would cover that need and you plan to stay, the HECM estimate suggests a reverse mortgage may fit; if you expect to move soon, the upfront costs the tool subtracts make it a poor value. Review the choice with your family and a HUD counselor too, because a reverse mortgage affects everyone who might one day inherit your home.