Reverse Mortgage Calculator: Estimate How Much You Can Borrow | MoneyGeek

Reverse Mortgage Calculator Learn How Much Equity You Can Unlock from Your Home

How much can you borrow with a reverse mortgage? That depends on your age, home value, the number of years you plan to occupy the property, current interest rates, and your loan costs.

That's a lot to consider, and the relationship between these multiple factors is complicated. We've simplified the process with MoneyGeek's Reverse Mortgage Calculator. With just a few inputs, learn how much you can borrow under several different plans. Your results will change if you have a mortgage against your home. Any existing loan or loans must be completely paid off from the reverse mortgage proceeds.

Payout Option At Closing 1 YR After Closing
Under the current rules, the amount you can take out in the first year is capped.
Lump Sum at Fixed Rate
Lump Sum at Variable Rate
Line of Credit
Monthly Payment for Life
Monthly Payment For Years

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Input What To Input
Home Value Input your estimated property value. You can estimate your home's value with an online valuation tool, or ask a real estate agent.
Years You Expect to Occupy the Home Your expected occupancy affects your maximum monthly payment. A shorter terms gets you a higher payment. If you plan to stay for life, monthly payments will be based on your age and life expectancy.
Expected Interested Rate Lower rates means you can borrow more, and higher rates reduce your loan amount. If you don't have specific rate information, skip this input and accept the calculator's default rate.
Estimated Closing Costs HECM costs include upfront mortgage insurance, origination charges and third party fees. If you don't know your closing costs, skip this and accept the calculator's default amount.
Mortgage Insurance Rate Currently, the premium is 1.25 percent on the loan balance for HECM programs; private programs may have different premiums.
Age of the Youngest (or Only) Borrower For HECM loans, the youngest borrower must be age 62 or older.
Age of Non-borrowing Spouse Spouses less than age 62 cannot be HECM borrowers, but if they live in the home, their ages affect the maximum loan amount.

If the user inputs an amount exceeding $625,500, this pops up:

"HECM loan amounts are based on a maximum property value of $625,500, even if your home is worth more. Some private providers lend on higher amounts, but their guidelines are not standard, and your results may not be accurate. If you want a HECM reverse mortgage, please change the property value input to $625,500."

output What the Outputs Mean to You
Lump Sum at Fixed Rate If you want a fixed interest rate, this is your only available option. You must take a one-time payment at closing, with no additional disbursements.
Lump Sum at Variable Rate The variable rate lump sum payout allows you to take a lump sum at closing, and you can withdraw additional funds after 12 months.
Line of Credit The HECM credit line offers maximum flexibility and lower costs - you pay interest and annual mortgage insurance only on the amount you use. Unused lines of credit grow over time, so the actual maximum loan amount can be higher than indicated here.
Monthly Payments for Life This payment is determined by the life expectancy of the youngest borrower as determined by U.S. Decennial Life Tables published by the US Center for Disease Control. However, if you exceed your life expectancy, you continue to receive monthly payments.
Monthly Payments for Your Expected Years in the Home This option based your payment on a specific term. The shorter the term, the higher the monthly payments.

When Does a Reverse Mortgage Make Sense?

Example Where a Line of Credit Reverse Mortgage is the Right Choice
Homeowner's Story Tom, 70, and Barbara, 68, enjoy a comfortable lifestyle and have substantial retirement savings. However, they'd like to travel more and spend more without worrying about outliving their funds. They own their home free and clear, and it's currently worth $700,000.
Homeowner's Reverse Mortgage Decision They choose a HECM line of credit, which requires no annual mortgage insurance as long as it goes unused. The line can grow over time, ready to provide cash if they deplete their retirement savings. This loan provides peace of mind for the couple, allowing them to enjoy their retirement and worry less about overspending.
Home Value $700,000, but HECM max is $625,500*
Expected Occupancy Life
Expected Rate 5%
Line of Credit: Year 1 $203,413
Line of Credit After Year 1 $135,608
Estimated Line of Credit After 5 Years $435,086 **

* Any property value greater than $625,500 is calculated at the HECM maximum value.

** If unused, HECM credit lines grow at the loan's variable interest rate.

Now let's look at an example where the reverse mortgage choice is not so clear.

Example Where the Reverse Mortgage Decision is Complex
Homeowner's Story Eleanor, a 75-year-old widow, is under financial pressure, because she still has an $80,000 mortgage on her $300,000 home. The property also needs $10,000 of repairs, which she can't afford. She lives very simply but would love to take a trip to visit some grandchildren she's never seen.
Homeowner's Reverse Mortgage Decision A HECM frees Eleanor from mortgage payments, which should stretch her limited income further and improve her quality of life. Several payment options can accomplish her goals:
  • She can take a lump sum payout at a fixed rate, which zeros her mortgage and leaves her funds for home repairs and travel.
  • She can borrow a lump sum at a variable rate, which pays off her mortgage and covers repairs and her vacation. After 12 months, she can tap the remaining funds if other expenses or travel opportunities come up.
  • She can get a line of credit and use the initial disbursement for her mortgage, repairs and trip, and tap the remaining unused line after 12 months. Unused, the line of credit will grow over time.
Home Value $300,000*
Expected Occupancy Life
Expected Rate 5%
Mortgage Balance $80,000
Other Immediate Needs (roof) $15,000
Fixed-rate Lump Sum $104,520
Variable-rate Lump Sum $106,920
Variable-rate After Year 1 $71,280
Line of Credit: Year 1 $104,520
Line of Credit After Year 1 $71,280
Estimated Credit After 5 Years $91,478**

* Elimore's property may be worth $300,000, but it's subject to a $80,000 loan.

** If unused, HECM credit lines grow at the loan's variable interest rate.

Now let's look at a situation where the homeowners are house-rich and cash-poor.

Example Where the Reverse Mortgage Decision Is Based on Remaining Time in Home
Homeowner's Story Matt and Cindy are house-rich and cash-poor. Their home, which they own free and clear, is worth $400,000. Their Social Security income is only about $3,000 a month, and some extra income would really improve their lifestyle. They're 73 and 70 and expect to live in their home 10 more years.
Homeowner's Reverse Mortgage Decision Matt and Cindy have two monthly payment options - "tenure" payments for life or "term" payments for a specific time period - in their case, the ten years in which they expect to occupy the home. In most cases, term payments are significantly higher than tenure payments, because the lender does not know how long you'll be in the house, and must therefore be conservative with your loan amount. Based on their inputs, Matt and Cindy can choose:
  • $1,474 a month for life
  • $2,587 a month for ten years (120 payments)
Home Value $400,000
Expected Occupancy 10 years
Expected Rate 5%
Monthly Payment for Life $1,474
Monthly Payment for 10 years $2,587

Note that the "expected rate" is used just to calculate your loan amount or monthly payment. If you have a variable rate, it can change over time. This won't affect your payout, but it will impact your loan balance when monthly interest is added on, and your remaining proceeds when the home is eventually sold and the HECM repaid.