Reverse mortgage loan calculator
People want a number before they pick up the phone, and the impulse makes sense, so I keep a calculator on this page. Read the notes under it anyway. The figure will only be as good as your guess about the house, and owners guess wrong in both directions, me included back in 1985.
The figures you will enter
- Birth dates. Every borrower counts, and so will a spouse under 62 who plans to remain in the home.
- Home value. Your honest estimate of what the house would sell for today.
- Loan balances. The current mortgage plus any HELOC or other lien recorded against the property.
- ZIP code. Nothing exotic here, I confirm the county and pull its tax schedule.
How lenders set your principal limit
HUD publishes a single factor table for the program. Lenders multiply the right cell by your home value, and the product is your principal limit, the gross amount before payoffs and fees. Three details pick the cell:
- The youngest age on the file. Older borrowers receive a higher factor, since FHA built the table around life expectancy.
- The expected rate. Lenders compute it from the 10-year Treasury index plus a margin, and a lower rate raises it.
- Home value, capped. The 2022 ceiling is $970,800, and anything above it counts for nothing in the table.
A 70-year-old in a $700,000 house, free and clear, came out near $345,000 the last time I priced one at a 4 percent expected rate. Younger borrowers qualify for less, and a higher rate cuts the figure too.
Costs and rules that reduce the cash
A principal limit never equals spendable cash; these come out of it first:
- Lien payoffs. Your current mortgage and any HELOC will be paid in full at closing.
- The FHA premium. The upfront mortgage insurance equals 2 percent of appraised value, up to the ceiling.
- Closing costs. Most borrowers finance the origination, title, escrow, and appraisal charges within the loan.
- A LESA, when required. Lenders set aside money for future property charges if the financial assessment finds weak credit or thin income.
One more rule applies after those four. FHA will release only six tenths of the limit during year one, unless your payoffs exceed that share. The FAQ page covers the exception.
Limits of an online estimate
Appraisals decide value, and a $50,000 miss there changes the limit by more than $20,000. Rates move weekly with the Treasury index. Your factor locks only when FHA assigns a case number after counseling. Condo approval and the financial assessment can each change the outcome, and no web form checks either one.
Why I quote twice
Clients near 62 often ask whether waiting two years will raise the figure. Age will lift the factor a little. Rates and home values move more, in either direction, and no formula predicts them. I will prepare one estimate at today’s inputs and a second at your next birthday. The spread between them usually answers the timing question better than a guess would.
For a quote with your name on it, call me at (310) 753-1924. I will price it against live rates the same day.
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