Estimate Your Principal Limit and Net Cash Proceeds
Your HECM Estimates
Principal Limit (Total Loan Capacity):$0.00
Required Lien Payoff:$0.00
Estimated Closing Costs (approx. 4%):$0.00
Net Cash Available:$0.00
*These are estimates only. HECM limits are subject to HUD Maximum Claim Amounts and current Principal Limit Factors (PLF).
Understanding the HECM Reverse Mortgage
A Home Equity Conversion Mortgage (HECM) is the most common type of reverse mortgage. It is insured by the Federal Housing Administration (FHA) and allows homeowners aged 62 or older to convert a portion of their home equity into cash without having to sell the home or make monthly mortgage payments.
How the HECM Calculator Works
The amount of money you can receive from a HECM, known as the Principal Limit, depends on three primary factors:
Age: The older the youngest borrower (or non-borrowing spouse), the higher the Principal Limit Factor (PLF).
Home Value: This is based on the appraised value or the HUD maximum claim limit ($1,149,825 in 2024), whichever is lower.
Interest Rates: Lower expected interest rates generally result in higher Principal Limits.
Calculation Methodology
Our calculator uses a proprietary mathematical model that approximates the current HUD PLF tables. It calculates the total borrowing capacity (Principal Limit) and then subtracts your existing mortgage balance—which must be paid off at closing—and estimated closing costs to provide a net cash figure.
Realistic Example
Imagine a 72-year-old borrower with a home valued at $500,000 and an existing mortgage of $50,000. At an expected interest rate of 6.5%, the PLF might be approximately 45%.
Principal Limit: $500,000 × 0.45 = $225,000
Lien Payoff: -$50,000
Closing Costs (approx.): -$20,000
Result: $155,000 in net available cash proceeds.
Key Requirements
To qualify for a HECM, you must occupy the property as your primary residence and continue to pay property taxes, homeowners insurance, and maintain the property in good condition. You must also complete a session with a HUD-approved reverse mortgage counselor before proceeding.
function calculateHECM() {
var homeValue = parseFloat(document.getElementById('homeValue').value);
var age = parseInt(document.getElementById('borrowerAge').value);
var rate = parseFloat(document.getElementById('expectedRate').value);
var balance = parseFloat(document.getElementById('existingBalance').value) || 0;
if (isNaN(homeValue) || isNaN(age) || isNaN(rate)) {
alert("Please enter valid numbers for home value, age, and interest rate.");
return;
}
if (age < 62) {
alert("Borrower must be at least 62 years of age for a HECM.");
return;
}
// HUD Cap for 2024
var maxClaimAmount = Math.min(homeValue, 1149825);
// Simplified PLF Approximation Logic
// This mimics the general curve of HUD tables (Higher age/lower rate = higher PLF)
// Base PLF at age 62 and 6% rate is approx 0.35
var basePlf = 0.40;
var ageAdjustment = (age – 62) * 0.008;
var rateAdjustment = (6.0 – rate) * 0.035;
var plf = basePlf + ageAdjustment + rateAdjustment;
// Constrain PLF between 0.1 and 0.75 for safety/realism
if (plf 0.75) plf = 0.75;
var principalLimit = maxClaimAmount * plf;
var closingCosts = homeValue * 0.04; // Standard 4% estimate
var netCash = principalLimit – balance – closingCosts;
if (netCash < 0) netCash = 0;
// Update Displays
document.getElementById('principalLimitDisplay').innerText = "$" + principalLimit.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('payoffDisplay').innerText = "$" + balance.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('costsDisplay').innerText = "$" + closingCosts.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('netCashDisplay').innerText = "$" + netCash.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('results-area').style.display = 'block';
// Smooth scroll to results
document.getElementById('results-area').scrollIntoView({ behavior: 'smooth', block: 'nearest' });
}