Reverse Mortgage Calculator

How a reverse mortgage (HECM) works

A Home Equity Conversion Mortgage is an FHA-insured loan for homeowners 62 and older. Instead of you paying the lender each month, the lender pays you — as a lump sum, monthly tenure payments, a line of credit, or a mix. Interest and mortgage insurance accrue on what you borrow, so the balance grows over time while equity shrinks. The loan comes due when the last borrower dies, sells, or moves out for 12+ months. It is non-recourse: you (or your heirs) never owe more than the home's value.

What decides how much you can get?

• Age — older borrowers qualify for a larger share of the home's value.
• Home value — capped at the FHA lending limit ($1,209,750 for 2025).
• Interest rates — higher expected rates mean smaller principal limits.
• Existing debts — any current mortgage must be paid off first from the proceeds.

On a $450,000 home at age 70 with a $60,000 mortgage to clear, a typical estimate lands around $120,000–$140,000 of net proceeds after upfront costs — far less than the home's value, which surprises many people.

Costs and cautions, in plain English

• Upfront costs are steep: an initial mortgage insurance premium of 2% of the home's value, origination up to $6,000, plus closing costs.
• You must keep paying property taxes, insurance and maintenance — failure here is the top cause of reverse-mortgage default.
• Heirs can keep the home by repaying the lesser of the balance or 95% of appraised value.
• HUD-approved counseling is mandatory before applying — a protection, not a formality. Any lender who pressures you to skip education is one to avoid.

Alternatives worth comparing: a HELOC, downsizing, or a home-equity loan. If a spouse or family member suggests a reverse mortgage, run this estimate together and read the counseling materials before signing anything.