How Much Can I Get With A Reverse Mortgage?

How much money can I get with a reverse mortgage?

Answer:

This depends on the type of loan, the lender you choose, and the payment option that you select.

Most reverse mortgages today are Home Equity Conversion Mortgages (HECMs). The Federal Housing Administration (FHA), a part of the Department of Housing and Urban Development (HUD), insures HECMs. With a HECM loan, you can receive your money in one of three ways: as a line of credit, in monthly installments, or a lump sum. You can also get a combination of monthly installments and a line of credit.

Note: This webpage has information about HECMs, which are the most common type of reverse mortgage.

For a HECM reverse mortgage your lender will calculate how much you are authorized to borrow overall based on your age, the interest rate, and the lesser of the appraised value of your home or the maximum claim amount. This number is known as your initial principal limit. If you are borrowing with another person or have a non-borrowing spouse, the principal limit is based on the age of the youngest co-borrower or eligible non-borrowing spouse.

Generally, you can take out up to 60 percent of your principal limit in the first year. However, if the amount you owe on an existing mortgage (or other required payments) is more than 60 percent of your principal limit, you can take out enough to pay off your mortgage (and any other required payments, including upfront loan fees) plus additional cash of up to 10 percent of your principal limit. We refer to these amounts as your first-year draw limit.