HECM Reverse Mortgage Proceeds Calculator

Estimate how much cash a HECM reverse mortgage could put in your hands after it pays off your current mortgage and the upfront costs: maximum claim amount, principal limit, 2% upfront MIP, origination fee, the first-year disbursement cap, payout options, and loan balance and home equity at 5, 10 and 20 years.

Last updatedHow we build & check our tools
Results will appear here once you enter your values.

How a HECM turns home value into cash, step by step

A Home Equity Conversion Mortgage (HECM) is the FHA-insured reverse mortgage for homeowners 62 and older. Unlike a conventional home equity borrowing estimate, the amount is set by age and a federal formula, and no monthly payment is required. This calculator follows HUD's sequence:

  • Maximum claim amount. The lesser of your appraised value and the FHA HECM limit ($1,249,125 for 2026). A $2 million home is treated as a $1,249,125 home.
  • Initial principal limit. The maximum claim amount times the principal limit factor for the youngest borrower's age and the expected rate.
  • Mandatory obligations. Your existing mortgage payoff, the 2% upfront mortgage insurance premium, the origination fee and closing costs are paid first.
  • First-year cap. You can draw the greater of 60% of the principal limit or your obligations plus 10% of the principal limit in year one.
  • Net proceeds. The capped amount minus the mandatory obligations is the cash you actually receive at closing.

For the default inputs (a $450,000 home, a $100,000 mortgage, age 70, 6% expected rate), HUD's factor is 0.415, so the principal limit is $186,750. Mandatory obligations are $118,500, which is more than 60% of the principal limit, so the first-year cap is $118,500 plus 10% of the principal limit, or $137,175. Net cash at closing is about $18,700, with another $49,600 or so available as a line of credit after the first year on an adjustable-rate HECM.

What moves the amount: age, rate, value and your current mortgage

The principal limit factor is the biggest lever. HUD built the table (Mortgagee Letter 2017-12) so that the lender expects the loan balance to stay below the home value over a borrower's likely lifetime. That produces four predictable patterns:

  • Older means more. A borrower in their 80s can usually take a much larger share of the maximum claim amount than one at 62, because the loan is expected to be shorter.
  • Higher rates mean less. Interest compounds faster, so each extra point of expected rate shrinks the factor and the cash.
  • Value beyond the limit does not help. Above $1,249,125 each extra dollar of value adds nothing to the principal limit.
  • A big mortgage eats the proceeds. Every dollar of existing mortgage is deducted before you see cash. Owners with a paid-off home get the most; owners with a balance near the principal limit may not qualify in practice.

If you are comparing this with refinancing, the mortgage refinance calculator shows a conventional replacement loan with a payment, and the home equity loan calculator prices a fixed second loan. A HECM instead replaces your payment with a growing balance.

The costs and the growing balance

A HECM has no required payment, but it is not free. Each cost is added to the balance and then earns interest:

  • Upfront MIP: 2% of the maximum claim amount. On a $450,000 home, $9,000.
  • Annual MIP: 0.5% of the balance each year, on top of the interest rate. The calculator grows the balance at the expected rate plus 0.5%, compounded monthly.
  • Origination fee: the greater of $2,500 or 2% of the first $200,000 of the maximum claim amount plus 1% of the remainder, capped at $6,000.
  • Third-party costs: appraisal, title, recording and the required counseling session.

Because the loan compounds, a balance that starts around $137,200 at a 6% rate becomes roughly 1.9 times larger after 10 years, and the table shows equity left at 5, 10 and 20 years against your appreciation assumption. You still owe property taxes and insurance, so check your yearly bill with the property tax calculator before deciding how much you can sustain.

Lump sum, line of credit or monthly payments

How you take the money changes how the balance grows:

  • Lump sum. Fixed-rate HECMs pay a single advance, limited by the first-year cap. The whole amount starts accruing interest immediately, and this is the scenario used in the equity table.
  • Line of credit. An undrawn line of an adjustable-rate HECM grows at the same rate as the loan, which can raise your future access. You pay interest only on what you draw.
  • Tenure payment. A level monthly amount as long as you live in the home. HUD sizes it as a level payment that uses what is left after obligations through the youngest borrower's age 100, at the expected rate plus the 0.5% annual MIP; the calculator does the same.
  • Term payment. A larger monthly amount for a fixed period, shown here for 10 years.

Before applying, HUD requires counseling from an approved agency, and lenders run a financial assessment of your ability to keep up taxes and insurance. If you are weighing a purchase instead, compare closing costs with the closing costs calculator, and for FHA purchases see the FHA loan calculator. If you only want to lower an existing payment, the mortgage recast calculator may fit better.

Frequently Asked Questions

Common questions about the HECM Reverse Mortgage Proceeds Calculator

The limit is the maximum claim amount times a principal limit factor. The maximum claim amount is the lesser of your appraised home value and the FHA HECM limit, which is $1,249,125 for 2026. The principal limit factor comes from HUD's table and depends on the youngest borrower's age and the expected interest rate: older borrowers and lower rates mean a higher factor. HUD's published factor at a 6% expected rate is 0.357 at age 62, 0.416 at 72 and 0.511 at 82, and exactly 0.415 at age 70, so a 70-year-old at 6% with a $450,000 home has a principal limit of $186,750. Expected rates below 3% are treated as 3%. Your existing mortgage and the upfront costs come out of that number first, and what remains is yours to take.

Sources & References

Mortgagee Letter 2013-27 and 24 CFR Part 206 (HECM rules)

HECM program rules for mandatory obligations, the first-year disbursement limit and the origination fee.
- First 12 months: the greater of 60% of the initial principal limit or mandatory obligations plus 10% of it.
- Origination fee: greater of $2,500 or 2% of the first $200,000 of the maximum claim amount plus 1% above, capped at $6,000 (24 CFR 206.31).
→Source: U.S. Department of Housing and Urban Development(2013)

Mortgagee Letter 2017-12: HECM principal limit factors

Revised HECM mortgage insurance premiums and principal limit factor tables.
- Factors depend on the youngest borrower's age (62 to 99 in the general table) and the expected interest rate, with a 3% expected-rate floor. The factors used here come from HUD's published PLF spreadsheet at hud.gov/stat/sfh/hecm.
- Upfront MIP 2% of the maximum claim amount and annual MIP 0.5% of the balance, for case numbers from October 2, 2017.
→Source: U.S. Department of Housing and Urban Development(2017)

2026 FHA loan limits (Mortgagee Letter 2025-22)

Nationwide limits for case numbers assigned on or after January 1, 2026.
- The HECM maximum claim amount limit equals the national ceiling of $1,249,125.
→Source: U.S. Department of Housing and Urban Development(2025)

Explore More Tools

Explore these related tools for your next step.

real-estate

Mortgage Document Type Router

Paste a mortgage packet's document list and an AI model in your browser files each as income, assets, property and more. Free, private, no signup.

Try it now
real-estate

Mortgage Refinance Calculator

Calculate your potential savings and new monthly payments when refinancing.

Try it now
real-estate

Real Estate Commission Calculator - Agent Fees & Net Proceeds

Calculate real estate agent commissions, buyer and listing agent splits, and your net proceeds from a home sale, with percentage or flat-fee options.

Try it now
real-estate

Gravel Calculator

Work out how many cubic yards and tons of gravel, crushed stone or river rock you need for a driveway, path or bed, with extra for compaction.

Try it now
real-estate

Lease Clause Plain English Summarizer

Paste a lease clause and an AI model in your browser restates it in plain English and lists what it leaves unsaid. Not legal advice. Free, private.

Try it now
real-estate

Listing Description Quality Checker

Paste a listing draft and an AI model in your browser flags filler, missing facts and fair-housing wording risks. Private. Not legal advice.

Try it now