Reverse Mortgage Calculator

 A reverse mortgage is a type of home loan that allows homeowners who are 62 years of age or older to convert a portion of the equity in their home into cash. This can provide a source of income for retirees or those who are looking to supplement their existing income.

One of the key benefits of a reverse mortgage is that the borrower is not required to make monthly mortgage payments. Instead, the loan is repaid when the borrower sells the home, moves out, or passes away. This can provide a sense of financial security for those who may be living on a fixed income.

*A reverse mortgage is a loan that must be repaid. Borrowers must continue to pay property taxes, homeowners’ insurance, and maintain the home. Failure to meet these obligations could result in foreclosure. This is not a government benefit program. Loan terms and conditions apply. 

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Reverse mortgage loans typically must be repaid either when you move out of the home or when you die 

The borrower makes no payments on the loan while living in the house, but the loan balance becomes due and payable when the borrower either sells the home, no longer occupies it as their primary residence, or upon the death of the last surviving borrower 

A Reverse mortgage offers potential benefits to retirement-age households seeking to strengthen their retirement security. Most notably, reverse mortgages can allow households to smooth out their consumption over their lifetimes, so they can enjoy their wealth in retirement rather than holding a large nest egg at death. 

They allow households a chance to access housing equity without paying the high cost of selling a home 

You and your Spouse (if married) must:

• Be 62 years of age or older
• Own the property outright or paid-down a considerable amount (more than 50%)
• Occupy the property as your principal residence
• Not be delinquent on any federal debt
• Have financial resources to continue to make timely payments of ongoing property charges such as property taxes, insurance, and Homeowner Association fees, etc.
• Participate in a consumer information session given by a HUD-approved HECM counselor

Since there are no restrictions on how the proceeds can be used, many reverse mortgage borrowers use HECM to:

• Purchase a new home
• Pay medical bills
• Move closer to family members
• Travel
• Supplement retirement income
• Divorce Buyout (We know How)

HECM products offer many different advantages for seniors today.

Generally, you don’t have to pay back the money for as long as you live in your home.

Depending on the plan, your reverse mortgage becomes due with interest when the last surviving borrower:

• Moves
• Sells the home
• Reaches the end of a pre-selected loan period
• Fails to pay taxes
• Fails to maintain insurance
• Fails to make needed repairs, or 
• Passes away. 

You, your spouse, or your estate would repay the loan. Sometimes that means selling the home to get money to repay the loan. In certain situations, a non-borrowing spouse may be able to remain in the home.

If the loan balance is more than the home is worth, the estate or heirs may sell the property for at least 95 percent of the current appraised value, and the lender will accept the net proceeds 

as the satisfaction of the loan.   

If the estate or heirs prefer to keep the home instead of selling it, the HECM loan balance must be paid in full 

Learn more, If you have inherited property secured by a HECM 

NO!   Reverse mortgage payments aren't taxable. Reverse mortgage payments are loan proceeds, not income. The lender pays you, the borrower, loan proceeds while you continue to live in your home. 

 Home equity refers to the value of the homeowner's interest in their home. In order to calculate home equity, we subtract any liens on the property from the current market value.

The amount of equity that can be pulled from a reverse mortgage depends on several factors such as the value of the home, the age of the borrower, and the current interest rates. Typically, the older the borrower is, the higher the percentage of the home's value they can access. The value of the home also plays a role in determining the amount of equity that can be pulled, as the lender will only lend up to a certain percentage of the home's value.

In general, borrowers can typically access between 40% and 65% of the home's value through a reverse mortgage. However, it's worth noting that this percentage can change depending on the lender and the specific loan product.

It's important to keep in mind that the equity that is pulled from a reverse mortgage will accrue interest over time, which can decrease the overall equity of the home. Therefore, it's essential to carefully consider the long-term implications of a reverse mortgage before making a decision.

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 The reverse mortgage should not be regarded as a niche product in theory. Older households are generally rich in-home equity, but poor in financial assets, suggesting that accessing housing wealth could materially improve their quality of life. 

According to economic theory, households should accumulate wealth during their working years, then spend it down in retirement. A reverse mortgage is the only plausible way to access home equity without having to make regular payments while continuing to live there. 

Yet reverse mortgages haven't caught on yet-with less than 1% of eligible homeowners taking out a reverse mortgage. 

However, the percentage of households that would benefit from a reverse mortgage is a cause of debate: Some studies argue that just 10% of seniors would benefit, while others put this same number as high as 80%. 

 Read more from the Brooking Study yourself.  

Reverse mortgages can provide a supplemental stream of income for couples and divorced individuals in retirement.  

 Reverse mortgages can transform illiquid wealth into income for the many elderly households who lack financial assets but that have considerable value in the equity in their homes 

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Did you know you can use a reverse mortgage to buy a new home? The FHA Home Equity Conversion Mortgage (HECM) for Purchase program allows home buyers age 62 and older to purchase a primary residence with a large down payment and no required monthly mortgage payments.

This option is popular for retirees who want to downsize, move closer to family, relocate to a more affordable area, or purchase a home that better fits their retirement lifestyle.

With a HECM for Purchase, you contribute a portion of the home's purchase price as your down payment, and the reverse mortgage finances the rest. Instead of making monthly principal and interest payments, you remain responsible for:

• Property taxes 
• Homeowners insurance 
• HOA dues (if applicable) 
• Home maintenance 

As long as you live in the home as your primary residence and continue meeting loan obligations, no monthly mortgage payment is required.

• No required monthly mortgage payments 
• Preserve retirement savings and investments 
• Increase monthly cash flow 
• Purchase a more suitable home for aging in place 
• Reduce housing expenses 
• Free up cash for healthcare, travel, and other retirement goals 

To be eligible for a reverse mortgage purchase loan, you generally must:

• Be at least 62 years old 
• Occupy the property as your primary residence 
• Provide a sufficient down payment (typically 45% to 70% depending on age and interest rates) 
• Complete HUD-approved counseling 
• Meet financial assessment requirements 

The required down payment depends on:

• Your age (or the age of the youngest borrower) 
• Current interest rates 
• The purchase price of the home 
• FHA lending limits 

In general, older borrowers may qualify with a lower down payment because they receive a higher principal limit factor.

Many seniors use a reverse mortgage to:

• Downsize from a larger home 
• Move to a one-story home 
• Purchase a home near children or grandchildren 
• Relocate to another state 
• Buy into a 55+ community 
• Purchase a more accessible home for retirement 

A 70-year-old borrower wants to purchase a $400,000 home. Instead of paying cash or taking out a traditional mortgage with monthly payments, they may be able to use a reverse mortgage and contribute approximately 50% to 60% of the purchase price as a down payment, with the reverse mortgage financing the remainder.

Use our reverse mortgage calculator to estimate:

• How much you may qualify for 
• Your estimated down payment 
• Available proceeds 
• Whether a reverse mortgage can help you buy your next home 

Our calculator does not require any personal information, so you can explore your options privately and instantly.