Tenure (Monthly for life)
Term (Monthly for a fixed period)
Lump Sum
Line of Credit
Flexible Draw
Estimated Maximum Payout:
$0.00
(This is an estimate. Actual amounts may vary.)
Understanding Reverse Mortgage Payouts
A reverse mortgage allows homeowners, typically aged 62 and older, to convert a portion of their home equity into cash without having to sell their home or make monthly mortgage payments. The loan is repaid when the last borrower sells the home, moves out permanently, or passes away. The amount you can borrow depends on several factors, including your age, the current interest rate, the home's value, and the type of reverse mortgage you choose.
Key Factors Affecting Payout:
Home Equity: The more equity you have in your home, the more you can potentially borrow. Equity is calculated as the home's current appraised value minus any outstanding mortgage balance.
Age of the Youngest Borrower: Generally, the older the borrower, the larger the potential payout. This is because the loan is expected to be repaid sooner.
Interest Rate: Higher interest rates can reduce the amount available, as more of the loan's value will be allocated to interest over time.
Reverse Mortgage Type:
HECMs (Home Equity Conversion Mortgages): These are FHA-insured reverse mortgages and are the most common type. They have specific lending limits and payout options. The maximum amount you can borrow is capped by HECM lending limits, which are adjusted annually.
Proprietary Jumbo Reverse Mortgages: These are private loans designed for homeowners with higher home values that exceed HECM limits. They often have different eligibility requirements and payout structures.
Payout Option: The way you receive the money significantly impacts the total available.
Lump Sum: Receive all available funds at closing. This typically results in a lower initial draw amount compared to other options due to immediate interest accrual.
Line of Credit: Draw funds as needed, only paying interest on the amount drawn. This offers flexibility and potentially a growing credit line over time.
Monthly Payouts (Tenure/Term): Receive fixed monthly payments. "Tenure" pays for as long as you live in the home, while "Term" pays for a set number of years. The monthly amount will vary based on the chosen option and its duration.
Flexible Draw: A combination, allowing for an initial lump sum and a line of credit.
How the Calculator Works (Simplified):
This calculator provides an *estimate* of the maximum amount you might be eligible to borrow. For HECM loans, the calculation is based on the "Principal Limit Factor" (PLF), which is determined by the age of the youngest borrower, the expected interest rate, and the specific HECM formula. The Principal Limit is calculated as:
Principal Limit = Home Value x Principal Limit Factor (PLF)
For Proprietary loans, the calculation is similar but uses different proprietary formulas and may have higher loan limits. The loan payout option selected also influences the initial disbursement and the total amount available over time.
Disclaimer: This calculator is for educational and estimation purposes only. It does not provide financial advice. Loan terms, eligibility, and actual payout amounts can vary significantly based on lender policies, current market conditions, and a full underwriting process. Consult with a qualified reverse mortgage professional and financial advisor before making any decisions.
function calculateReverseMortgage() {
var homeValue = parseFloat(document.getElementById("homeValue").value);
var borrowerAge = parseInt(document.getElementById("borrowerAge").value);
var loanType = document.getElementById("loanType").value;
var interestRate = parseFloat(document.getElementById("interestRate").value) / 100; // Convert to decimal
var loanTerm = document.getElementById("loanTerm").value;
var termPeriod = parseInt(document.getElementById("termPeriod").value);
var resultValueElement = document.getElementById("result-value");
var resultElement = document.getElementById("result");
// Clear previous results
resultValueElement.innerText = "$0.00";
resultElement.style.display = "none";
// — Input Validation —
if (isNaN(homeValue) || homeValue <= 0) {
alert("Please enter a valid current home value.");
return;
}
if (isNaN(borrowerAge) || borrowerAge < 62) {
alert("Borrower age must be 62 or older.");
return;
}
if (isNaN(interestRate) || interestRate < 0) {
alert("Please enter a valid interest rate.");
return;
}
if (loanTerm === "term" && (isNaN(termPeriod) || termPeriod = 62 && borrowerAge 70 && borrowerAge 80) {
plf = 0.65; // Older borrowers, higher PLF
} else {
plf = 0.40; // Default for ages slightly below 62 (though validation prevents this)
}
// Adjust PLF for interest rate – higher rates usually mean lower PLF
plf -= (interestRate * 0.5); // Simple adjustment
// Adjust PLF for loan type (very rough estimate)
if (loanType === "proprietary") {
plf *= 1.2; // Proprietary may allow higher limits for high-value homes
}
// Ensure PLF doesn't go below a reasonable minimum or above a max
plf = Math.max(0.30, Math.min(plf, 0.80)); // Clamp PLF
estimatedPrincipalLimit = homeValue * plf;
// Adjust for payout option (simplified)
var finalPayoutEstimate;
var feePercentage = 0.02; // Placeholder for estimated upfront fees (e.g., MIP for HECM, origination fees)
switch (loanTerm) {
case "lumpSum":
// Lump sum has higher upfront costs and interest accrual
finalPayoutEstimate = (estimatedPrincipalLimit * (1 – feePercentage)) * 0.80; // Reduced for immediate interest
break;
case "lineOfCredit":
// Line of credit has lower initial payout but growing potential
finalPayoutEstimate = (estimatedPrincipalLimit * (1 – feePercentage)) * 0.95; // Higher initial availability than lump sum
break;
case "tenure":
// Monthly for life – depends heavily on actuarial calculations
var monthlyPayment = (estimatedPrincipalLimit * 0.7) / 12; // Rough estimate
finalPayoutEstimate = monthlyPayment; // Displaying monthly payment
break;
case "term":
// Monthly for a fixed period
var termMonths = termPeriod || 120; // Default to 10 years if not set
var monthlyPayment = (estimatedPrincipalLimit * 0.7) / termMonths; // Rough estimate
finalPayoutEstimate = monthlyPayment; // Displaying monthly payment
break;
case "flexible":
// Combination
finalPayoutEstimate = (estimatedPrincipalLimit * (1 – feePercentage)) * 0.90; // Somewhere between lump and LOC
break;
default:
finalPayoutEstimate = estimatedPrincipalLimit * (1 – feePercentage);
}
// Format the result
var formattedResult;
if (loanTerm === "tenure" || loanTerm === "term") {
formattedResult = "$" + finalPayoutEstimate.toFixed(2) + " per month";
} else {
formattedResult = "$" + finalPayoutEstimate.toFixed(2);
}
resultValueElement.innerText = formattedResult;
resultElement.style.display = "block";
}
// Show/hide term period input based on loan payout option
document.getElementById("loanTerm").addEventListener("change", function() {
var termPeriodGroup = document.getElementById("termPeriodGroup");
if (this.value === "term") {
termPeriodGroup.style.display = "block";
} else {
termPeriodGroup.style.display = "none";
}
});