Who qualifies for a reverse mortgage?

The youngest borrower (whether you or your spouse) must be at least 62 years old. You must own the home outright or have a low remaining mortgage balance that can be paid off with proceeds. The home must be your primary residence (not a rental or vacation home). You must be current on property taxes, homeowner's insurance, and HOA dues, and you must complete HUD-approved counseling before closing. There are no income or credit score requirements like a traditional mortgage, but financial assessment is required to confirm you can maintain the property.

How much money can I actually get?

The loan amount depends on three factors: your age (older borrowers get more), your home value (capped at $1,149,825 for 2025 HECM limits), and current interest rates (lower rates = more proceeds). The Principal Limit Factor (PLF) ranges from about 28% at age 62 to 75% for older borrowers. On a $500,000 home at age 72 with current rates, you might qualify for $200,000–$260,000 gross principal limit, minus upfront costs and any existing mortgage payoff.

Do I have to make monthly payments on a reverse mortgage?

No — that's the defining feature. You don't make any principal or interest payments as long as you live in the home as your primary residence. Interest and monthly MIP accrue onto the loan balance, which grows over time. You DO have to continue paying property taxes, homeowner's insurance, HOA dues, and maintain the property. Failure to pay these is the most common cause of reverse mortgage default and foreclosure.

What happens to my heirs when I die?

When the last borrower dies, heirs have 30 days to notify the lender and typically 6–12 months to settle. They have three options: (1) pay off the loan balance and keep the home (often by refinancing into a traditional mortgage), (2) sell the home and keep any remaining equity after payoff, (3) give the home to the lender (deed in lieu). The reverse mortgage is non-recourse: if the loan balance exceeds the home value, heirs owe the lesser of the two, and FHA mortgage insurance covers the lender's shortfall.

Are reverse mortgages a bad idea?

They have a reputation for being predatory, but modern HECMs (since 2014 reforms) have strong consumer protections. They make sense for: house-rich/cash-poor retirees who want to age in place, those without heirs who care about leaving the house, or as a hedge against longevity risk. They're a bad idea for: someone planning to move in the next 3–5 years (high upfront costs don't amortize), those with heirs who want to inherit the house, or anyone looking for a short-term cash solution. Always compare against a HELOC or downsizing before committing.

Reverse Mortgage Calculator | HECM Payout & Remaining Equity

The reverse mortgage: unlocking home equity without selling

A reverse mortgage — specifically the HUD-insured Home Equity Conversion Mortgage (HECM), which represents 95% of the market — lets homeowners aged 62+ tap their home equity without selling or making monthly loan payments. Interest accrues onto the balance and the loan is only repaid when the last borrower dies, moves out permanently, or sells the home.

This calculator estimates how much you qualify for based on your age, home value, and current rates. It also projects the loan balance and remaining equity for your heirs 10–20 years into the future, so you can see the real trade-off between accessing cash today and leaving equity behind.

How HECM math actually works

The starting amount is called the Principal Limit, calculated as Maximum Claim Amount × Principal Limit Factor (PLF). The MCA is the lesser of your home value or the FHA lending limit ($1,149,825 in 2025). The PLF depends on the age of the youngest borrower and the expected interest rate.

Younger borrowers get less because the loan has longer to compound. At age 62, the PLF is about 28% (depending on rates). At 75, around 48%. At 85, up to 62%. At 90+, the PLF caps around 75%. Lower expected rates produce higher PLFs because the loan balance grows slower.

On a $500,000 home at age 72 with 7.5% expected rate, the PLF is roughly 46%, giving a principal limit of $230,000. Subtract upfront costs (about $15,000) and any mortgage payoff, and that's your net available cash or line of credit.

Disbursement options

Three ways to take the money:

Lump sum. Receive everything at closing as a fixed-rate loan. Interest starts compounding on the full amount immediately. Useful if you need a large one-time sum (medical bills, paying off traditional mortgage, major renovation). Usually the worst choice because the interest compounds faster than needed.

Term or tenure payments.Monthly checks for a set number of years (term) or for as long as you live in the home (tenure). Tenure is a type of longevity insurance — you can't outlive the payments as long as you stay in the home.

Line of credit.Access funds as needed, and the unused line grows every year at the expected note rate plus 0.5% MIP. This is often the smartest option because unused equity compounds in your favor rather than compounding against you. If you never draw it, you've paid closing costs for nothing but it doesn't cost you ongoing interest.

The costs: not cheap

Reverse mortgages are notorious for high upfront costs:

Upfront MIP (mortgage insurance premium): 2% of the maximum claim amount. On a $500,000 home, that's $10,000.
Annual MIP: 0.5% of the loan balance, added monthly.
Origination fee: 2% of the first $200,000 of home value plus 1% of the rest, capped at $6,000.
Third-party closing costs: $2,000–$3,500 for appraisal, title, recording, and counseling.
Interest rate: 1–1.5% higher than a comparable traditional mortgage, because the lender bears longevity and home-value risk.

Total upfront costs on a typical $500,000 home: $15,000–$20,000. These can be rolled into the loan balance so no cash comes out of pocket, but they count against your available proceeds.

The growing balance problem

The most unsettling aspect of reverse mortgages is watching the balance grow. On a $230,000 initial loan at 7.5%, the balance doubles in about 9 years. By year 20, it's quadrupled. If the home only appreciates 3% per year, the gap between loan balance and home value eventually closes — meaning zero equity for heirs.

This is the fundamental trade-off. The lender isn't being predatory — they're lending money at interest for an uncertain term (you might live 5 more years or 30). The compounding reflects the real cost of that capital. If you live to 100 and your home doesn't appreciate, the lender could lose money. FHA insurance covers their shortfall, which is why the MIP costs exist.

Non-recourse protection

One of the best features: HECMs are non-recourse loans. Your heirs can never owe more than the home is worth. If the loan balance grows to $400,000 but the home only sells for $350,000, heirs owe $350,000, not $400,000. The FHA insurance covers the $50,000 shortfall for the lender.

This also means heirs can walk away by handing back the keys (deed in lieu of foreclosure) with no further liability. Or they can buy the house by paying the lesser of the loan balance or 95% of appraised value, if the loan balance is higher.

When a reverse mortgage makes sense

House-rich, cash-poor retirees.You've paid off your home, have modest Social Security and savings, but want to age in place and supplement income. A reverse mortgage line of credit is excellent longevity insurance.

You don't have heirs who want the house.If you plan to leave the home to a charity or sell it, there's less downside to depleting equity.

As a buffer against sequence-of-returns risk. A growing line of credit on a home can be tapped during stock market drawdowns instead of selling depreciated assets. This is a sophisticated retirement strategy that top financial planners increasingly endorse.

To refinance out of a traditional mortgage.If you're 72 with a $180,000 mortgage at 7%, your monthly payment is $1,200+. A HECM can pay off that mortgage and eliminate the monthly payment, freeing cash flow for other uses. You still owe property taxes and insurance, but not P&I.

When a reverse mortgage is a bad idea

You plan to move in 3–5 years.The $15,000+ in upfront costs don't amortize over a short hold. Just take a HELOC or sell.

Your heirs want to inherit the home. A reverse mortgage almost always means less equity at death. If leaving the house to children is a high priority, consider other options like downsizing, renting, or a traditional HELOC.

You can't afford property taxes and insurance. These continue to be your responsibility. If you can't pay them, the lender can foreclose — so a reverse mortgage won't save you from that risk.

You're doing it at a brokers' pressure. The reverse mortgage industry has a history of aggressive high-pressure sales tactics. HUD now requires independent counseling before closing specifically to combat this. Never sign same-day. Always compare to alternatives.

Alternatives to consider first

HELOC. If you still have income, a HELOC is usually cheaper — no upfront MIP, lower rates, and you can pay down the balance. See our HELOC calculator.

Cash-out refinance. If you have income and credit, a cash-out refi keeps you on a predictable amortization schedule. See our cash-out refinance calculator.

Downsize. Sell the current home, buy something smaller, and invest the difference. No monthly payment stress, more liquid, and often lower total housing costs.

Home equity investment (HEI). Newer products from Unlock, Hometap, and Point let you sell a share of future appreciation for cash today. No monthly payment, no interest. Complex terms — read carefully.

Related tools

Compare to a HELOC in our HELOC calculator. Look at traditional cash-out refi in our cash-out refinance calculator. See current equity in our home equity calculator.

Reverse mortgage calculator