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Reverse Mortgage Calculator (HECM)

Estimate HECM proceeds, Principal Limit Factors, and equity erosion for seniors aged 62+.

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About

A Reverse Mortgage (HECM) allows homeowners aged 62 or older to convert part of their home equity into cash. Unlike a traditional mortgage, there are no monthly payments; the loan is repaid when the borrower leaves the home. This tool is critical for retirement planning as it strictly adheres to FHA regulations, including the Principal Limit Factor (PLF) which determines borrowing power based on age and interest rates. It also accounts for the Maximum Claim Amount (MCA), capped at $1,149,825 for 2024.

We include a safety visualization of Equity Erosion. While accessing cash is beneficial, accrued interest reduces the estate value left to heirs. This calculator projects that long-term cost, helping families make informed decisions about legacy and liquidity.

HECM retirement equity seniors FHA

Formulas

The borrowing limit is determined by the Principal Limit Factor (PLF), which is derived from HUD tables based on Age and Expected Interest Rate.

1. Maximum Claim Amount (MCA):

MCA = min(Home Value, 1,149,825)

2. Principal Limit (Gross Proceeds):

PL = MCA × PLF(Age, Rate)

3. Net Proceeds (Cash Available):

Net = PL - Payoff_Existing_Debt - Closing_Costs

Reference Data

Age of Youngest BorrowerInterest Rate (Floor)Approx. Principal Limit Factor (PLF)
625.00%0.34
655.00%0.37
705.00%0.42
755.00%0.47
805.00%0.54
855.00%0.61
90+5.00%0.68

Frequently Asked Questions

The PLF is a percentage set by the FHA that determines how much of your home's value you can borrow. It increases with age (older borrowers get more) and decreases with higher interest rates.
No. You retain the title to your home. The reverse mortgage is just a lien. You must continue to pay property taxes, insurance, and maintenance to stay in good standing.
HECMs are "non-recourse" loans. This means you or your heirs will never owe more than the home's market value at the time of sale, even if the loan balance is higher. The FHA insurance fund covers the difference.
The FHA limits the loan size they will insure. For 2024, this limit is $1,149,825. Even if your home is worth $5 million, the calculator will use the cap to determine your available funds.