Reverse Mortgage Calculator

What Is a Reverse Mortgage?

A reverse mortgage is a home loan for homeowners age 62 and older that converts home equity into cash without requiring monthly mortgage payments. The loan balance grows over time as interest accrues, and repayment is due when the last borrower moves, sells, or dies. The most common version in the U.S. is the HECM, insured by the Federal Housing Administration (FHA) with a 2026 lending limit of $1,209,750.

How the Principal Limit Is Calculated

HECM borrowing power is driven by three factors: the age of the youngest borrower, the home value (capped at the FHA limit), and the expected interest rate. FHA publishes principal limit factors (PLF) tables. As a rough guide, at age 62 you can access about 52% of home value, age 70 about 58%, age 80 about 66%, and age 85 about 72%. Higher rates reduce the factor; lower rates raise it. This calculator uses age-based factors to approximate your principal limit.

Fees and Net Proceeds

HECM fees include an origination fee (2% of the first $200K, 1% above, capped at $6,000), an upfront FHA mortgage insurance premium of 2% of the home value, third-party closing costs (title, appraisal, recording) of roughly $2,500, and ongoing MIP of 0.5% per year on the loan balance. These fees reduce the net cash you receive. The tool subtracts estimated fees from your principal limit to show realistic proceeds.

Payout Options

HECM borrowers choose from lump sum (fixed rate), line of credit with a growth feature, term payments for a set period, tenure payments for life, or a combination. A line of credit is often the most efficient because the unused portion grows at the note rate plus 0.5% — effectively earning interest on money you have not yet taken. Most advisors recommend the line-of-credit strategy unless a specific need demands a lump sum.