Home Equity Conversion Mortgage (HECM)
Proprietary Jumbo
Single Family Home
Condominium
Townhouse
Other (may affect eligibility/limits)
Home Purchase
Refinance Existing Mortgage
Line of Credit
Term Payments
Lump Sum
Your potential reverse mortgage loan amount is: —
Understanding Reverse Mortgages and How This Calculator Works
A reverse mortgage is a special type of home loan that allows homeowners, typically 62 years or older, to access the equity they've built up in their homes. Unlike a traditional mortgage where you make monthly payments to the lender, with a reverse mortgage, the lender makes payments to you. These payments, along with accrued interest and fees, are repaid when the homeowner sells the home, moves out permanently, or passes away.
Types of Reverse Mortgages:
Home Equity Conversion Mortgage (HECM): This is the most common type, insured by the Federal Housing Administration (FHA). HECMs have limits on the amount you can borrow and require counseling from an FHA-approved agency.
Proprietary Jumbo Reverse Mortgages: These are private loans offered by lenders. They are not FHA-insured and may offer higher loan amounts than HECMs, suitable for more expensive homes.
Key Factors Influencing Your Loan Amount:
The maximum amount you can borrow through a reverse mortgage isn't just based on your home's value. It's determined by a complex formula that considers several factors:
Age of the Youngest Borrower: The older the borrower, the more equity they can access. This is because the loan is expected to be repaid sooner.
Appraised Value of the Home: The loan amount is capped by either the home's appraised value or a lending limit set by the FHA (for HECMs) or the private lender.
Current Interest Rates: Higher interest rates generally mean a lower maximum loan amount, as more interest will accrue over time.
Loan Type and Product Features: Different reverse mortgage products (e.g., HECM vs. Jumbo) have different lending limits and fee structures.
Property Type: The type of property can affect eligibility and loan limits.
How the Calculator Works:
This calculator provides an estimation of the potential loan amount. It uses a simplified model based on common reverse mortgage formulas, particularly those for HECM loans, which often consider the "Maximum Claim Amount" (MCA). The MCA is typically the lesser of the home's appraised value or the FHA lending limit for the area.
A key component is the "Financial Assessment" which, for HECM loans, considers your ability to pay property charges. However, this calculator focuses on the borrowing capacity based on the factors above.
The basic formula for estimating a reverse mortgage loan amount often relates to the following:
The Accrual Rate Factor is a complex table provided by HUD (for HECMs) that varies based on the age of the youngest borrower and the expected interest rate. This calculator uses a simplified approximation of this factor for illustrative purposes.
Disclaimer: This calculator is for informational purposes only and should not be considered financial advice. The actual loan amount you may qualify for will depend on a full underwriting process, your specific financial situation, the lender's policies, and a professional appraisal of your home. We recommend consulting with a qualified reverse mortgage professional and a HUD-approved counselor to discuss your options.
function calculateReverseMortgage() {
var homeValue = parseFloat(document.getElementById("homeValue").value);
var borrowerAge1 = parseInt(document.getElementById("borrowerAge1").value);
var interestRate = parseFloat(document.getElementById("interestRate").value) / 100; // Convert to decimal
var loanType = document.getElementById("loanType").value;
var propertyType = document.getElementById("propertyType").value;
var loanPurpose = document.getElementById("loanPurpose").value;
var resultElement = document.getElementById("result");
var resultSpan = resultElement.querySelector("span");
// — Input Validation —
if (isNaN(homeValue) || homeValue <= 0) {
resultSpan.textContent = "Please enter a valid home value.";
return;
}
if (isNaN(borrowerAge1) || borrowerAge1 < 62) {
resultSpan.textContent = "Youngest borrower must be at least 62.";
return;
}
if (isNaN(interestRate) || interestRate = 62 && borrowerAge1 100) {
ageFactor = 1.5; // Cap for very old ages for this simplified model
}
// Adjust factor for interest rate (higher rate usually means lower factor)
var rateAdjustment = 1.0;
if (interestRate > 0.05) { // If interest rate > 5%
rateAdjustment = 1.0 – (interestRate – 0.05) * 2; // Reduce factor more significantly
} else if (interestRate < 0.03) { // If interest rate < 3%
rateAdjustment = 1.0 + (0.03 – interestRate) * 1; // Slightly increase factor
}
// Ensure rateAdjustment doesn't make the factor negative or excessively large
rateAdjustment = Math.max(0.5, Math.min(1.5, rateAdjustment));
var calculatedFactor = ageFactor * rateAdjustment;
calculatedFactor = Math.max(0.4, Math.min(1.6, calculatedFactor)); // Keep factor within a reasonable range
// — Maximum Claim Amount (MCA) —
// For HECM, it's the lesser of home value or FHA limit. For this calc, we'll use home value as a proxy.
var maximumClaimAmount = homeValue;
var hcmLimit = 1149825; // Example FHA HECM limit for 2024 (this varies by year and location)
if (loanType === "hecm") {
// Use the lower of the home value or the FHA limit as the MCA
maximumClaimAmount = Math.min(homeValue, hcmLimit);
} else if (loanType === "proprietary") {
// Proprietary loans might have higher limits, so we'll primarily use home value as the cap
maximumClaimAmount = homeValue; // Proprietary might go higher, but calculator uses home value as reference
}
// — Calculate Potential Loan Amount —
// This is a simplification: Potential Loan Amount = MCA * Calculated Factor * Remaining Equity Factor
// We're simplifying by assuming a certain percentage of MCA based on the factor.
// A more accurate model would consider initial loan balances (if refinancing), closing costs, etc.
var potentialLoanAmount = maximumClaimAmount * calculatedFactor;
// Additional adjustments based on loan purpose or type could be added here.
// For simplicity, we're focusing on the borrowing base.
// Round to nearest dollar and format as currency
var formattedLoanAmount = potentialLoanAmount.toFixed(2);
// Display the result
resultSpan.textContent = "$" + formattedLoanAmount.replace(/\B(?=(\d{3})+(?!\d))/g, ",");
}