Key takeaways
- Proceeds = home value (up to the HUD limit) × principal limit factor − existing mortgage − costs.
- The PLF rises with the borrower's age and falls as rates rise.
- Borrowers must be 62+; any existing mortgage is paid off first.
- This is a simplified estimate — HUD tables and a lender quote govern the real figure.
What is a reverse mortgage?
A reverse mortgage (HECM) lets homeowners 62 and older convert home equity into cash with no monthly mortgage payment. How much you can access is set by a principal limit factor (PLF) from HUD tables.
Worked example
Using the defaults — a $500,000 home, youngest borrower age 70, an $80,000 existing mortgage, and a 7% expected rate:
- Estimated principal limit factor: ≈ 40.8%
- Principal limit: $500,000 × 40.8% = $204,000
- Less existing mortgage −$80,000, less est. costs −$10,000
- Net proceeds available: ≈ $114,000
How age affects what you can borrow
| Youngest borrower age | Approx. principal limit factor* |
|---|---|
| 62 | ~36% |
| 70 | ~41% |
| 75 | ~44% |
| 80+ | ~47%+ |
*Illustrative, at roughly a 7% expected rate — actual factors come from official HUD HECM tables and move with rates. A HUD-approved counselor can run your exact numbers.
Frequently asked questions
How much can I get?
It depends on age, home value (up to the HUD limit), rates, and any existing mortgage that's paid off first. Older borrowers and lower rates unlock more.
Is this an exact quote?
No — it's a simplified estimate. Actual proceeds use official HUD principal-limit tables and a lender's quote.
Who qualifies?
For a HECM, the youngest borrower must be 62+, the home a qualifying primary residence, with taxes, insurance, and upkeep maintained.
Do I still own my home?
Yes. You keep title and must maintain the home, taxes, and insurance; the loan is repaid when you sell, move out, or pass away.
Do I have to pay off my current mortgage?
Yes — it's paid off first from the proceeds, since the reverse mortgage must be in first lien position.
Are there other costs?
Yes — mortgage insurance, origination, and closing costs apply and aren't fully modeled here. A counselor will detail them.