Reverse Mortgage Calculator

Reverse mortgage payout estimation calculates how much a homeowner aged 62 or older can receive from a Home Equity Conversion Mortgage (HECM), the FHA-insured form of reverse mortgage, based on home value, age, and current interest rates.

Key formula, the Principal Limit: Principal Limit = Home Value × Principal Limit Factor (PLF)

Where:

• Home Value = the lesser of the appraised value or the FHA lending limit ($1,249,125 in 2026)
• PLF = a factor determined by the youngest borrower’s age and the Expected Interest Rate (EIR)

How the PLF works: Older borrowers receive higher PLF percentages, because they have a shorter life expectancy, so the loan balance is less likely to exceed home value. Higher interest rates produce lower PLF values.

Approximate PLF by age (at 6% EIR):

Those figures come out of the calculator, so entering any age above with a 6% rate returns the matching row. Real HUD tables are not a straight line and are republished when the rules change, so treat this as a planning estimate and take the lender’s own figure as the real one.

Above 6% the factor falls by roughly 2 points per percentage point of rate, and below 6% it rises by the same. That is the mechanism behind “higher rates mean less money”: the lender is projecting how fast the balance will compound before the loan comes due.

Worked example: Homeowner age 74, home value $420,000, existing mortgage $80,000, expected rate 6%.

• PLF at 74 = 0.40 + 12 × 0.011429 = 53.7%
• Gross principal limit = $420,000 × 0.5371 = $225,600
• Less closing costs at 3% = $12,600
• Less the up-front mortgage insurance premium at 2% = $8,400
• Less the existing mortgage payoff = $80,000
• Net proceeds available: $124,600

The existing mortgage is the line people forget. A reverse mortgage has to clear any loan already on the house before you see a penny, so a homeowner with a large remaining balance can find the whole principal limit is spoken for.

This can be taken as a lump sum, monthly payments, a line of credit, or a combination.

Important facts:

• No monthly payments required; the loan is repaid when the borrower moves, sells, or dies
• Interest compounds on the outstanding balance, so the loan balance grows over time
• The home must remain your primary residence
• Mandatory HUD counseling is required before application
• Non-recourse loan: heirs never owe more than the home’s sale value