Where do these numbers come from?
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How the amount is worked out
- Maximum claim amount: the lower of the appraised value and the 2026 HECM limit of $1,249,125.
- Principal limit: maximum claim amount × HUD’s principal limit factor for the youngest borrower’s age and the expected rate (in 1/8-point steps, with a 3% floor).
- Mandatory obligations: 2% upfront MIP, origination fee, other closing costs and any mortgage or lien payoff.
- Net available: principal limit minus mandatory obligations.
Worked example
Age 70, $400,000 home, 6% expected rate: factor 0.415 × $400,000 = $166,000. Subtract $8,000 MIP, $6,000 origination and $3,000 other costs = $149,000. In the first 12 months you can take up to $82,600, the 60% limit less those costs.
Net proceeds on a $400,000 home, no mortgage
| Age | 5% expected rate | 6% expected rate | 7% expected rate |
|---|---|---|---|
| 62 | $150,000 | $128,800 | $110,800 |
| 65 | $158,000 | $137,200 | $119,200 |
| 70 | $172,000 | $152,000 | $134,000 |
| 75 | $182,800 | $163,200 | $146,000 |
| 80 | $199,600 | $181,200 | $164,400 |
| 85 | $222,400 | $205,600 | $190,400 |
After 2% MIP and the maximum origination fee; other closing costs not included. Expected rates are examples to show the range.
What the expected rate is
For an adjustable HECM it is the lender’s margin plus a 10-year index rate; for a fixed-rate HECM it is the note rate. A higher expected rate means a lower factor and less money, which is why a 1-point change moves the result by thousands.
Costs that keep running
Annual MIP of 0.5% of the balance and interest are added to the loan, so the balance grows over time. You still pay property taxes, insurance and upkeep; falling behind can trigger the loan becoming due.
An estimate from HUD’s published factors. A lender’s quote uses your exact expected rate, appraisal, closing costs and any set-asides, so it will differ. HUD-approved counseling is required before you apply.
Sources and assumptions
- HUD Mortgagee Letter 2025-22 (2026 HECM maximum claim amount $1,249,125)
- HUD Mortgagee Letter 2017-12 (2% initial MIP of the maximum claim amount, 0.5% annual MIP, principal limit factors from October 2, 2017)
- HUD principal limit factor tables (General Table, ages 62–99, expected rates 3%–18.875%)
- HUD Mortgagee Letter 2013-27 (first-year limit: greater of 60% of the principal limit or mandatory obligations plus 10%)
- HUD HECM rule (Federal Register, 2016) (origination fee: greater of $2,500 or 2% of the first $200,000 plus 1% above, capped at $6,000)
- CFPB: reverse mortgages
Related
- 2026 HECM limit
- Reverse mortgage age requirement
- Principal limit factor table
- Home equity loan calculator
Frequently asked questions
How much can I get from a reverse mortgage?
It depends on the youngest borrower’s age, the home value up to $1,249,125 in 2026, and the expected rate. At 70 on a $400,000 home with a 6% expected rate, about $149,000 after upfront costs.
Do you make monthly payments on a reverse mortgage?
No principal and interest payments are required while you live in the home and pay taxes, insurance and upkeep. Interest and MIP are added to the balance.
Why can I only take part of it in the first year?
HUD limits first-year draws to 60% of the principal limit, or mandatory obligations plus 10% if those are higher.