Reverse Mortgage Calculator
Model a HECM reverse mortgage: enter your home value, age, and how you'd take the money to see your year-by-year loan balance, remaining equity, and the FHA mortgage insurance costs baked into every reverse mortgage.
HECM reverse mortgages require the youngest borrower to be at least 62.
Estimated loan balance
$948,982By age 100
Amount owed at payoff (non-recourse cap)
$948,982Never more than the home's value
Remaining home equity
$194,98217.0% of home value
A very rough, illustrative estimate only — real HECM Principal Limit Factors come from an HUD table keyed to exact age in months and the lender's "expected interest rate," and vary by lender software. Ask a HUD-approved counselor or lender for your actual figure.
Illustrative principal limit
$192,500Age band 70-74
Upfront MIP (2%)
$10,000Financed into the loan
Rough net available
$182,500Before origination fee & other closing costs
| Age | Home value | Loan balance | Equity | Equity % |
|---|---|---|---|---|
| 73 | $515,000 | $118,800 | $396,200 | 76.9% |
| 74 | $530,450 | $128,304 | $402,146 | 75.8% |
| 75 | $546,364 | $138,568 | $407,795 | 74.6% |
| 76 | $562,754 | $149,654 | $413,101 | 73.4% |
| 77 | $579,637 | $161,626 | $418,011 | 72.1% |
What is a reverse mortgage?
A reverse mortgage lets a homeowner age 62 or older borrow against their home equity without selling the home or making monthly loan payments. It's the mirror image of a regular "forward" mortgage: instead of you paying the lender down every month, the lender pays you — as a lump sum, a line of credit you draw on as needed, monthly payments, or some combination — and the loan balance grows instead of shrinks.
Almost every reverse mortgage in the US today is a HECM (Home Equity Conversion Mortgage), the FHA-insured version created by Congress and overseen by the Department of Housing and Urban Development (HUD). FHA insurance is what makes the loan non-recourse — the government insurance fund, not you or your heirs, absorbs any shortfall if the loan balance ever exceeds what the home sells for.
How a reverse mortgage works
Two numbers move in opposite directions every year. The loan balance starts with any upfront costs you finance — including the 2% upfront mortgage insurance premium — plus whatever you draw, and then compounds annually at your loan's interest rate plus a 0.5% annual mortgage insurance premium, both charged on the outstanding balance. Meanwhile your home's value moves on its own, typically appreciating over time. Home equity is simply the gap between the two: home value minus loan balance.
Because nothing is paid down monthly, the balance is always growing — the question is only whether home appreciation keeps pace. If it does, equity holds up reasonably well; if the loan outpaces appreciation (more likely the longer the loan runs, or with a larger initial draw), equity erodes and can reach zero. Even then, the non-recourse guarantee means you'll never owe more than the home is worth. Run your own numbers in the calculator above to see exactly where that line falls for your situation.
HECM eligibility & FHA rules
- Age 62+. The youngest borrower (or eligible non-borrowing spouse) must be at least 62 at closing.
- Primary residence. The home must be where you live most of the year — a single-family home, 2-4 unit property (one unit owner-occupied), HUD-approved condo, or FHA-eligible manufactured home.
- Mandatory counseling. HUD requires independent counseling with a HUD-approved agency before you can apply, plus a financial assessment confirming you can keep up with taxes, insurance, and upkeep.
- FHA insurance cost. A 2% upfront mortgage insurance premium (MIP) is charged on the Maximum Claim Amount, plus a 0.5% annual MIP that accrues on the outstanding balance every year of the loan.
- Loan limit. The FHA-insurable base is capped at the year's HECM Maximum Claim Amount — $1,249,125 for 2026 — even if your home is worth more.
- Non-recourse. You or your estate never owe more than the home's value at payoff, regardless of how large the loan balance has grown.
Reverse mortgage pros and cons
Pros
- No required monthly mortgage payment
- Proceeds are generally not taxable income
- Keep title and stay in the home for life if loan obligations are met
- Non-recourse — never owe more than the home is worth
- Line-of-credit option can grow unused availability over time
Cons
- Higher upfront fees and mortgage insurance than a standard mortgage or HELOC
- Compounding balance steadily reduces equity left for heirs
- Still responsible for property taxes, insurance, and upkeep — missing these can trigger default
- Moving out for 12+ consecutive months can make the loan due
- Fewer product/lender choices than conventional financing
Alternatives to a reverse mortgage
A reverse mortgage is one of several ways to unlock home equity in retirement — worth comparing against the others before committing:
- HELOC (home equity line of credit). Usually lower upfront cost and no mortgage insurance, but requires a monthly payment and typically needs income to qualify — see the HELOC Deduction Calculator.
- Downsizing. Selling and moving to a smaller or less expensive home converts equity to cash immediately, with no compounding loan balance — but comes with moving costs and the emotional cost of leaving a long-time home.
- Cash-out refinance. Replaces your current mortgage with a larger one and takes the difference in cash, but adds a monthly payment — compare with the Refinance Calculator.
- Renting out a room or ADU. Generates ongoing income without borrowing against the home at all, though it comes with landlord responsibilities.
Frequently asked questions
What is a reverse mortgage?
A reverse mortgage is a loan that lets homeowners age 62+ convert part of their home equity into cash — as a lump sum, a line of credit, or monthly payments — without selling the home or taking on a monthly loan payment. Instead of the borrower paying the lender each month like a normal mortgage, interest and fees are added to the loan balance over time, and the loan is repaid (usually from the home's sale) when the last borrower moves out, sells, or passes away. The vast majority of US reverse mortgages are HECMs (Home Equity Conversion Mortgages) — the FHA-insured product created by Congress and regulated by HUD.
How does a reverse mortgage work?
Two things move in opposite directions every year. The loan balance grows: it starts with any upfront costs financed in (including a 2% upfront FHA mortgage insurance premium), plus whatever you draw, and then compounds at your interest rate plus a 0.5% annual mortgage insurance premium — both charged on the current balance, similar to a credit card that's never paid down. Meanwhile your home equity is whatever's left: home value minus that growing loan balance. If your home appreciates faster than the loan balance grows, equity can hold steady or even grow; if the loan balance outpaces home value, equity shrinks toward zero — but a HECM is non-recourse, so you or your heirs never owe more than the home is worth. Enter your numbers in the calculator above to see your own year-by-year projection.
What are the pros and cons of a reverse mortgage?
Pros: no monthly mortgage payment is required, proceeds are generally tax-free (they're loan advances, not income), you keep title and can stay in the home for life as long as you meet loan obligations (taxes, insurance, upkeep), and the non-recourse feature means you can never owe more than the home is worth. Cons: fees and mortgage insurance are higher than a typical mortgage or HELOC, the compounding balance steadily erodes the equity left for heirs, you're still responsible for property taxes, homeowners insurance and maintenance (failing to pay can trigger foreclosure), and moving out for more than 12 consecutive months (including a long-term care stay) can make the loan due. It's a tool best evaluated against your specific plans for the home, not a universal good or bad option.
Who qualifies for a HECM reverse mortgage?
The youngest borrower (or eligible non-borrowing spouse) must be at least 62, the home must be the borrower's primary residence, and it must be a single-family home, 2-4 unit property with one unit owner-occupied, HUD-approved condo, or manufactured home meeting FHA standards. Borrowers must also complete mandatory counseling with a HUD-approved counseling agency before applying, and pass a financial assessment showing they can keep up with property taxes, insurance, and upkeep. The FHA-insurable loan amount is capped at the year's HECM Maximum Claim Amount — $1,249,125 for 2026 — regardless of how much the home is actually worth above that.
What happens to a reverse mortgage when I move or pass away?
The loan becomes due and payable when the last surviving borrower sells the home, permanently moves out (including a stay of more than 12 consecutive months in a care facility), or passes away. At that point the loan is typically repaid by selling the home; any proceeds left after paying off the balance go to the borrower or their heirs. Because HECMs are non-recourse, heirs never have to pay more than the home is worth to satisfy the loan — even if the compounding balance has grown larger — and they can choose to pay off the loan and keep the home instead of selling.
Sources
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