Reverse Mortgage Calculator
Loans & MortgagesTurn home equity into cash in retirement.
Your reverse mortgage
Borrower must be at least 62.
Enter your home's value to estimate reverse mortgage proceeds.
Advanced — costs, set-asides & assumptions
Enter your home's value to estimate reverse mortgage proceeds.
Know what this estimate is based on
- Jurisdiction
- General model; U.S.-specific rules are identified on the relevant tool
- Scope and limitations
- Educational estimate only. A lender may use different compounding, day-count, eligibility, tax, insurance, escrow, fee, or rounding rules.
- Source links checked
- Jul 30, 2026
Built and regression-tested by Smart Tools Lab. It has not been individually reviewed by a licensed financial, tax, or legal professional.
How to use
- 01
Enter the youngest borrower's age, your home's value and any mortgage still owed — these set the principal limit, the most a reverse mortgage can ever lend you.
- 02
Pick how you'd take the money — a lump sum, a growing line of credit, or monthly payments for life (tenure) or a fixed term — and open Advanced to tune the rate, costs and set-asides.
- 03
Read your net available proceeds, then scroll to the loan-balance and equity projections to see how the debt rises and what equity is left for your heirs.
Formula
A reverse mortgage lets a homeowner aged 62+ convert equity to cash with no monthly payments; the balance instead rises over time and is repaid when the last borrower leaves the home. This tool estimates what you can actually draw, then projects the rising balance. Step 1 — Maximum claim amount. Your home value is capped at the HECM lending limit ($1,209,750): MCA = min(value, limit). A $500,000 home is under the cap, so the MCA is $500,000. Step 2 — Principal limit. The lender advances a fraction of the MCA called the principal limit factor (PLF), which rises with the youngest borrower's age and falls as the expected rate rises. Here the youngest borrower is 68 and the expected rate 7%, giving an estimated PLF of 35.6%, so the principal limit = $500,000 × 35.6% = $178,000. (The PLF here is an estimate; real factors come from published HUD tables.) Step 3 — Mandatory obligations. Before you see a cent the limit must clear any existing mortgage ($120,000) and the upfront costs — a capped origination fee ($6,000), the 2% upfront mortgage-insurance premium on the MCA ($10,000), and third-party fees (appraisal, title, recording, counseling ≈ $1,875). That is $17,875 of closing costs and $137,875 of mandatory obligations in total. Step 4 — Net available proceeds. Subtract any set-asides (none by default) and the obligations from the principal limit: $178,000 − $137,875 = $40,125. That $40,125 is the spendable pool — far less than the $178,000 limit, because the old mortgage and costs come off the top. Step 5 — How you take it. The same $40,125 becomes a $40,125 lump sum, a credit line that grows to about $123,162 over 15 years if left untouched, roughly $276/month for life (tenure), or about $476/month for 10 years (term). Step 6 — The rising balance. With no payments, interest and insurance compound onto the balance. Drawn as a lump sum at 7%, the balance grows from $137,875 to about $546,362 in 15 years, while a home appreciating 3% reaches about $778,984 — leaving roughly $232,621 of equity for heirs. Because the loan is non-recourse, heirs never owe more than the home is worth, even if the balance overtakes the value.
Example
Margaret is 70 and her husband David is 68; their home is worth $500,000 and they still owe $120,000 on it. They want cash for retirement without taking on a monthly payment, so they price a reverse mortgage. The factor is set by the youngest borrower, David at 68 — not Margaret — so the estimated principal limit factor is 35.6%, giving a principal limit of $500,000 × 35.6% = $178,000. That is the ceiling, not the cash. First the $120,000 mortgage has to be cleared, because a reverse mortgage must be the only loan on the home. Then $17,875 of upfront costs come off: a $6,000 origination fee (capped), the 2% upfront insurance premium of $10,000, and about $1,875 in appraisal, title, recording and counseling fees. Together that is $137,875 of mandatory obligations. What is left — $178,000 − $137,875 = $40,125 — is their net available proceeds. They could take it as a $40,125 lump sum, or keep it as a line of credit that grows to about $123,162 over 15 years, or convert it to roughly $276 a month for life. They choose the lump sum to renovate. Fifteen years on, with no payments made, the balance has compounded from $137,875 to about $546,362. But the home, appreciating 3% a year, is now worth about $778,984 — so roughly $232,621 of equity remains for their heirs, who can sell, repay the balance, and keep the difference. Had the home stagnated instead of appreciating, the balance would eventually have overtaken its value; the non-recourse rule means the estate would still owe only the sale price, never the shortfall.
Definitions
- Principal limit factor (PLF)
- The fraction of the maximum claim amount a reverse mortgage will lend. It rises with the youngest borrower's age and falls as the expected interest rate rises. This tool estimates it; real factors come from HUD tables.
- Maximum claim amount (MCA)
- Your home's value capped at the HECM national lending limit ($1,209,750). The principal limit and the upfront insurance premium are both calculated from the MCA, not the raw home value.
- Principal limit
- MCA × PLF — the most the loan can ever advance. Everything else (mortgage payoff, costs, set-asides) is subtracted from this figure to reach the cash you receive.
- Mandatory obligations
- Amounts that must be settled from the principal limit before any proceeds reach you — chiefly the existing mortgage payoff plus the upfront closing costs.
- Mortgage insurance premium (MIP)
- FHA insurance on a HECM: an upfront premium of 2% of the MCA at closing, plus an ongoing 0.5% a year added to the balance. It funds the non-recourse guarantee.
- Set-aside / LESA
- Money reserved from the principal limit to cover future servicing fees or, in a Life Expectancy Set-Aside, future property taxes and insurance — reducing the cash you can draw now.
- Net available proceeds
- The spendable pool: principal limit minus set-asides minus mandatory obligations. The headline result, and usually far smaller than the principal limit.
- Tenure vs term payment
- Two monthly-payment options: tenure pays a level amount for as long as you live in the home (priced to age 100); term pays a larger amount for a fixed number of years.
- Growing line of credit
- An unused reverse-mortgage credit line grows over time at the same rate the balance would accrue — so waiting to draw can increase the amount available.
- Non-recourse
- A HECM is non-recourse: when the loan is repaid, neither you nor your heirs ever owe more than the home's value, even if the balance has grown past it.
Good to know
A loan that runs in reverse
Every ordinary mortgage works the same way: you borrow a lump sum and chip it down with monthly payments, so your debt falls and your equity climbs month after month. A reverse mortgage turns that on its head. It is built for older homeowners — 62 or above — who are rich in home equity but short on spendable cash, and it lets them draw against the house while making no monthly principal-and-interest payment at all. The loan is settled in a single event far in the future: when the last borrower sells, moves out permanently, or passes away. Until then the lender simply lets interest and insurance pile onto the balance. That inversion is the whole idea — your debt rises and your equity falls over time, the mirror image of a normal loan. The most common form is the federally insured Home Equity Conversion Mortgage (HECM), and that is what this calculator models. The single most important thing to understand before going further is the gap between two numbers: the principal limit the lender is willing to extend, and the far smaller pool of cash you actually receive after an existing mortgage and the upfront costs are cleared. Much of what gives reverse mortgages a complicated reputation lives in that gap, so the rest of this guide walks through it piece by piece.
Why the youngest borrower's age sets the ceiling
A reverse mortgage does not lend the full value of your home. It lends a fraction of it called the principal limit factor (PLF), and two things move that factor. The first is the age of the youngest borrower — not the oldest, and not the average. Lenders use the youngest because the loan can run until that person leaves the home, and a younger borrower means a longer expected life for the loan and therefore more interest accruing before repayment, so the factor is smaller. The second is the expected interest rate: a higher rate means the balance compounds faster, so the lender starts you lower. In the default example the youngest borrower is 68 and the expected rate 7%, which this tool estimates as a 35.6% factor. On a $500,000 home that is a principal limit of $178,000. Push the youngest age up and the factor — and the cash — rise with it; that is exactly what the 'proceeds by age' table illustrates, and why waiting a few years can be a legitimate strategy. One trap deserves a flag: if one spouse is under 62, they cannot be a borrower. Modern rules let them stay in the home as a protected non-borrowing spouse, but the factor is then based on their younger age, shrinking the proceeds, and the arrangement carries real risk if the older borrower dies first. (The factor here is a transparent estimate; an actual lender quotes from published HUD tables.)
From the principal limit to the cash in your hand
The principal limit is a ceiling, not a cheque. Three things stand between it and the money you can spend. First, any existing mortgage must be paid off, because a reverse mortgage has to sit in first position as the only loan on the home — in the default case that is $120,000 gone immediately. Second come the upfront costs: a capped origination fee (the HECM schedule is 2% of the first $200,000 of claim amount plus 1% above, floored at $2,500 and capped at $6,000), the upfront mortgage-insurance premium of 2% of the maximum claim amount (here $10,000), and third-party fees for the appraisal, title, recording and the mandatory counseling session — roughly $17,875 of closing costs all told. Third are any set-asides: money carved out of the limit to cover future loan-servicing fees, or a Life Expectancy Set-Aside (LESA) to prepay property taxes and insurance if the lender's financial assessment requires it. After all of that, the default $178,000 limit becomes just $40,125 of net available proceeds. That is the number that matters, and seeing how small it can be — relative to both the limit and the home's value — is the most important output of this calculator. If your existing mortgage and costs together exceed the limit, there are no proceeds at all and the loan cannot go ahead unless you bring cash to closing.
Four ways to take the money
The same pool of net proceeds can reach you in very different shapes, and the right one depends on why you are borrowing. A lump sum hands you everything at closing — useful for a one-time need like clearing the old mortgage or funding a renovation, but it starts the full balance compounding from day one and, on a fixed-rate HECM, is the only option. A line of credit is the most flexible and often the most powerful: you draw only what you need, only when you need it, and the unused portion grows over time at the same rate the balance would have accrued. In the default case a $40,125 line left untouched grows to about $123,162 over fifteen years — a standby reserve that quietly expands. Tenure converts the proceeds into a level monthly payment for as long as you live in the home, priced as if the loan runs to age 100 (about $276 a month here); it behaves like a private pension you cannot outlive. Term pays a larger amount — roughly $476 a month here — but only for a fixed number of years you choose. This calculator computes all four from the same net-proceeds figure and lets you switch which one drives the balance projection, so you can see the cost as well as the benefit of each.
Negative amortization, equity erosion and the non-recourse floor
Because you make no payments, every month's interest and the ongoing 0.5%-a-year insurance premium are added to what you owe rather than paid off — a process called negative amortization. The balance therefore compounds upward and the equity behind it erodes. In the default projection a $137,875 starting balance grows to about $546,362 over fifteen years. Whether your heirs still inherit anything is a race between that rising balance and the home's value. A home appreciating 3% a year reaches about $778,984 in the same span, so roughly $232,621 of equity remains — the loan never catches the house. Flatten the appreciation or stretch the years and the lines can cross; the calculator flags the 'crossover' year when the balance overtakes the value. This is where the federal insurance you paid for earns its keep: a HECM is non-recourse, meaning that when the loan is repaid neither you nor your heirs ever owe more than the home is worth. If the balance has grown past the value, the estate settles for the sale price and the insurance fund absorbs the shortfall — your other assets are never at risk. The year-by-year table shows remaining equity (which can go negative on paper) alongside heirs' equity (floored at zero), so the protection is explicit.
The obligations that can still cost you the home, and when it fits
A reverse mortgage removes the loan payment, not the responsibilities of ownership. You must keep property taxes and homeowner's insurance paid, maintain the home, and continue to live in it as your primary residence; fall behind on any of these and the loan can default and lead to foreclosure even though nothing was due on the loan itself. If the lender's financial assessment doubts you can cover the taxes and insurance, it may require a LESA that reserves those funds from your proceeds — protective, but it shrinks the cash you receive, which is why this tool lets you model one. Given all this, who is a reverse mortgage actually for? It tends to fit an older owner who intends to stay put for many years and wants either a flexible standby credit line, a dependable lifetime income, or a way to erase an existing mortgage payment. It fits poorly for a short stay: the upfront insurance and origination costs are front-loaded, so leaving within a few years means paying a great deal for very little time. If your need is short-term or you might move soon, weigh the alternatives — a HELOC or home-equity loan if you can still service a payment, or simply downsizing to unlock equity outright. Use the saved-scenario comparison here to test waiting a few years, a different payout, or lower costs before you commit.
Frequently asked questions
Why is my net proceeds figure so much smaller than the principal limit?
Because the principal limit is a ceiling, not cash. With the defaults the limit is $178,000, but the existing $120,000 mortgage must be cleared first (a reverse mortgage has to be the only loan on the home) and $17,875 of upfront costs come off the top, leaving $40,125. The bigger your existing mortgage and the higher the closing costs, the less of the limit reaches you — and if the mortgage alone exceeds the limit, the deal can't proceed without you bringing cash.
How does age change how much I can get?
The principal limit factor is set by the youngest borrower, and it rises with age because a shorter expected loan life means less interest accrues before repayment. The 'proceeds by age' table makes this concrete: an older youngest borrower unlocks a higher factor and more cash from the same home. If one spouse is under 62 they become a non-borrowing spouse, which lowers the factor and adds risk if the older borrower dies first.
Lump sum, line of credit, or monthly payments — which should I take?
It depends on the need. A lump sum suits a one-off cost like clearing a mortgage or a renovation, but it starts the balance compounding immediately on the full amount. A line of credit is the most flexible: you draw only what you need and the unused portion grows over time. Tenure gives a dependable monthly income for life; term pays more each month but stops after the set period. This calculator shows all four side by side for the same net proceeds.
Do I ever make a payment, and what makes the balance grow?
No monthly principal-and-interest payment is required — that is the defining feature. Instead, each month the note interest and the 0.5% ongoing insurance premium are added to the balance, so it compounds upward. In the default projection a $137,875 starting balance grows to about $546,362 over 15 years. You must still pay property taxes, homeowner's insurance and upkeep, and live in the home as your primary residence.
What will be left for my heirs?
Whatever the home is worth at repayment minus the loan balance. In the default case the balance reaches about $546,362 in 15 years while the home grows to about $778,984, leaving roughly $232,621 for heirs. Because no payments are made, equity erodes the longer the loan runs and faster if the home doesn't appreciate. The protection is non-recourse: if the balance ever overtakes the home's value, heirs settle for the sale price and never owe the difference.
Can I lose the home even without a loan payment?
Yes — by failing the ongoing obligations. You must keep the property taxes and homeowner's insurance current, maintain the home, and keep living in it as your main residence. Falling behind can trigger default and foreclosure even though no loan payment is due. If a lender's financial assessment finds a risk here, it may require a Life Expectancy Set-Aside (LESA) that reserves money from your proceeds to pay those charges — reducing the cash you receive but protecting against this exact outcome.