Estimate HECM reverse mortgage payouts for homeowners 62+ — lump sum, line of credit or monthly
$—
Available After Payoff & Fees
$—
Principal Limit
$—
Or Monthly for Life (Tenure)
Line
Amount
Loan balance (grows — no payments due) Current home value (assumed flat)
Unlike a normal loan, nothing is paid down here — accrued interest and MIP compound onto the balance every period. HECMs are non-recourse: even if the balance eventually exceeds the home's value, FHA insurance covers the gap for your heirs.
A reverse mortgage — formally a Home Equity Conversion Mortgage (HECM) — lets homeowners 62 and older convert home equity into cash with no monthly repayment: the loan comes due when the last borrower leaves the home. It's a legitimate tool with a hard-earned bad reputation, and both facts matter. This calculator estimates what your age, home value and rates would actually produce, itemizes the substantial fees, and explains the parts the TV commercials skip.
How the Payout Is Determined
Three inputs set your principal limit: the youngest borrower's age (older = more), the expected interest rate (lower = more), and the home value up to the FHA cap ($1,209,750 in 2025). The percentage — the principal limit factor — runs from roughly 35% at 62 with high rates to 65%+ at advanced ages with low rates. From that limit, subtract the mandatory payoff of any existing mortgage, 2% upfront FHA insurance, origination and closing costs — what remains is yours.
The Three Ways to Take the Money
Option
How it works
Best for
Line of credit
Draw as needed; the unused portion grows over time at the loan rate
Most flexible; the standby-reserve strategy planners favor
Tenure (monthly for life)
Fixed monthly payments as long as you occupy the home
Income supplementation
Lump sum
Fixed-rate, one draw (capped at 60% of limit in year one)
Paying off an existing mortgage — and little else
What It Costs (This Is the Part to Read Twice)
Upfront: 2% FHA insurance on the claim amount, origination up to $6,000, plus normal closing costs — commonly $15,000–$25,000, usually financed out of the proceeds.
Ongoing: interest plus 0.5%/yr FHA insurance accrue onto the balance — the debt compounds upward while a normal mortgage compounds down.
Still yours to pay: property taxes, insurance and upkeep — failure to pay these is the leading cause of reverse-mortgage foreclosure.
What Happens to the House (the Heirs Question)
When the last borrower dies or moves out (12+ months in care counts), the loan is due. Heirs choose: repay the balance and keep the home, sell and keep any excess, or walk away. Crucially, HECMs are non-recourse — the debt can never exceed the home's value at sale; FHA insurance absorbs any shortfall. A spouse who isn't on the loan has protections as an "eligible non-borrowing spouse" but cannot draw remaining funds — a reason couples should both be on the loan when possible.
Legitimate Uses vs Red Flags
Sound: eliminating an existing mortgage payment to fix retirement cash flow; a standby line of credit against long-term-care shocks; bridging early retirement years to delay Social Security (see the Social Security Estimator for what delaying earns).
Red flags: anyone urging you to invest the proceeds (annuity salesmen circle these loans), taking a full lump sum without a plan, or borrowing at 62 what you'll need at 85.
How to Use the Calculator
Enter the youngest borrower's age, home value, expected rate, and any current mortgage balance.
Read the waterfall: principal limit, payoff and fees, net proceeds — and the tenure alternative.
If the numbers interest you, the mandatory HUD counseling session (~$125) is the right next step — it exists to protect you and it works.
Frequently Asked Questions
Do I give up ownership of my home?
No — you keep title, exactly like a regular mortgage. The lender holds a lien. You must live there as your primary residence and keep taxes, insurance and maintenance current.
Can I owe more than the house is worth?
No — HECMs are non-recourse by federal design. At sale, the lender collects the lesser of the balance or the home's value; FHA insurance (that 2% + 0.5%/yr you pay) covers any gap. Heirs are never personally liable.
Why do payouts differ so much by age?
Actuarial math: the loan accrues until the borrower leaves, so a 62-year-old's loan is expected to compound for decades longer than an 82-year-old's. Older borrowers can safely be advanced more.
What's the growing line of credit everyone mentions?
The unused credit line grows at the loan's rate plus 0.5% — not interest earned, but expanding borrowing capacity that can't be frozen. Opened early and left untouched, it becomes a large hedge; this is the strategy academic retirement researchers actually endorse.
Can my spouse stay if I die first?
A co-borrowing spouse: yes, everything continues. A non-borrowing spouse has occupancy protections if properly documented but loses access to undrawn funds. Put both spouses on the loan when both qualify.
Are reverse mortgage proceeds taxable?
No — they're loan advances, not income. They also don't affect Social Security or Medicare (though they can affect Medicaid's asset tests if proceeds accumulate in accounts).
Is my information private?
Yes — all estimates run locally in your browser.
A reverse mortgage is neither the scam its reputation suggests nor the free money its commercials imply — it's an expensive, useful, last-major-asset tool. Run the numbers here, take the counseling seriously, and involve family early: the heirs conversation is easier before the loan than after.