Reverse Mortgage Calculator (HECM)

With no monthly payments, interest and the ongoing mortgage insurance premium are added to the loan balance each month. That balance then earns interest itself.

A balance at 6% roughly doubles in twelve years and roughly quadruples in twenty-four. A borrower who takes a reverse mortgage at 70 and lives to 90 will typically owe several times what they drew.

Meanwhile the home may appreciate. Whether equity remains at the end depends on the race between the compounding balance and the property value, and over a long enough period the balance usually wins.

For the borrower this may be entirely acceptable — that is what the money was for. The point is that it should be a decision rather than a discovery.

For heirs the position is clear but often unexpected: they can repay the loan and keep the house, sell it and keep any surplus, or hand it back. They have generally 30 days to indicate intent and up to a year with extensions to complete a sale.

The non-recourse protection matters here. If the balance exceeds the home's value, FHA insurance covers the shortfall — heirs owe nothing beyond the property, and they can buy it for 95% of appraised value if they want to keep it.

Three things set the principal limit, and only one of them is the value of your house.

Age is the largest factor. The programme is actuarial: an older borrower has a shorter expected loan life, so a higher proportion of value can be advanced. A 62-year-old might access around 30% of value where an 85-year-old accesses over 60%.

The expected interest rate is the second. Higher rates mean the balance compounds faster, so the lender advances less to begin with. This is why rising rates reduced reverse mortgage proceeds sharply, quite apart from any change in house prices.

Home value is capped at the FHA lending limit — $1,249,125 for 2026. Value above that simply does not count, which is why owners of more expensive homes sometimes use proprietary "jumbo" reverse mortgages instead. Those are not FHA-insured and lack the non-recourse guarantee.

And for a couple, it is the age of the youngest borrower that governs. A 75-year-old with a 63-year-old spouse gets a limit based on 63.

That growing line of credit is why some financial planners recommend establishing a HECM early as a standby resource rather than as a last resort. Because the line grows at the loan rate, someone who opens it at 62 and draws at 80 has substantially more available than the original limit — and the growth is contractual, not dependent on the property appreciating.

It is also the strongest argument against the common framing of reverse mortgages as a desperation measure. Used as planned liquidity, the arithmetic is very different from using it after other options are exhausted.

Lump sum —

the whole available amount at once, fixed rate only. Interest starts compounding on all of it immediately, which makes it the most expensive option unless you genuinely need the full amount.

Tenure payments —

equal monthly payments for as long as you live in the home. Genuine longevity protection — the payments continue even if the balance exceeds the value.

Term payments —

equal monthly payments for a fixed number of years. Larger than tenure payments, and they stop.

Line of credit —

draw as needed and pay interest only on what you have drawn.

Growing credit line —

the feature most worth understanding — an unused HECM line of credit grows at the loan rate. Opening one early and leaving it untouched creates a reserve that increases every year regardless of house prices.

It works best for someone who wants to stay in their home indefinitely, has substantial equity and limited income, and has no strong wish to leave the house to heirs.

It works badly for someone likely to move within a few years, since the upfront costs are substantial and are spread over however long the loan runs. Moving after three years makes those fees extraordinarily expensive per year of use.

It also works badly where a spouse is not on the loan. Post-2015 protections generally let an eligible non-borrowing spouse remain in the home, but the rules are specific and the failures have been severe. Both spouses on the loan is the safe arrangement.

The alternatives deserve a genuine look first. Downsizing releases equity without any loan and without ongoing obligations, though it means moving. A home equity loan or HELOC costs far less upfront but requires monthly payments, which is precisely what the borrower usually cannot manage. Some states offer property tax deferral for older homeowners, which addresses the specific problem more cheaply.

HUD requires independent counselling before a HECM can proceed, and that requirement exists because the product has been mis-sold. Treat the session as useful rather than as a formality — it is the one point in the process where someone with no commission is explaining the mechanism.