Reverse Mortgage Calculator
Estimate how much cash you can access through an HECM reverse mortgage based on age, home value, and current rates. For homeowners 62 and older.
⚠️ This is an estimate. Actual amounts depend on HUD loan limits, current interest rates, your specific situation, and HECM counseling outcomes. Always consult a HUD-approved HECM counselor before applying.
Reviewed & updated for 2026 by Rakesh Choudhary, PhD · How we calculate
How much can you borrow by age?
| Age | % of home value | On $400K home | On $700K home |
|---|---|---|---|
| 62 | ~50% | $200,000 | $350,000 |
| 65 | ~55% | $220,000 | $385,000 |
| 70 | ~60% | $240,000 | $420,000 |
| 75 | ~67% | $268,000 | $469,000 |
| 80 | ~73% | $292,000 | $511,000 |
| 85+ | ~78% | $312,000 | $546,000 |
Approximations at 7.5% interest. Higher rates reduce these amounts. HUD HECM limits apply (max $1,249,125 in 2026).
How reverse mortgage interest grows over time
Unlike a forward mortgage where the balance shrinks each month, a reverse mortgage balance grows every month. Interest accrues on both the principal you've drawn and on the prior interest — compound growth in reverse. This is the single most misunderstood aspect of a HECM.
A $200,000 lump sum at age 70 with a 7.5% rate grows to approximately:
| Year | Loan balance | % of original draw |
|---|---|---|
| Year 1 | $215,000 | 108% |
| Year 5 | $287,000 | 144% |
| Year 10 | $412,000 | 206% |
| Year 15 | $592,000 | 296% |
| Year 20 | $850,000 | 425% |
By year 20, the balance has more than quadrupled. If the home appreciates at 3% per year, a $500,000 home becomes $903,000 — barely enough to cover the loan balance and leave little for heirs. This is by design: the HECM program is built so the lender can recover principal plus accrued interest from the eventual sale, while the homeowner enjoys cash flow today.
Choosing between the four payout options
HECM borrowers must pick how to receive the money. The choice has substantial financial consequences, so it's worth understanding each:
- Lump sum. All available cash today, fixed-rate. Best for borrowers who need a large sum (paying off existing mortgage, covering medical bills). Worst for cash flow planning because interest accrues on the full amount from day one.
- Tenure. Equal monthly payments for as long as you live in the home. Best as a Social Security supplement for healthy borrowers who plan to age in place. Provides predictability but can't be increased later.
- Term. Equal monthly payments for a fixed number of years (usually 5-25). Higher monthly amounts than tenure but stops at the end of the term. Useful for bridging to a specific retirement milestone like Social Security at 70.
- Line of credit. Borrow as needed, when needed. Unused credit grows at the loan's interest rate — a unique HECM feature that doesn't exist with regular HELOCs. Most financial planners recommend this option because it maximizes flexibility and the growing credit line effectively hedges against future interest rate increases.
You can also combine options — for instance, take a small lump sum to pay off an existing mortgage and put the rest in a line of credit. Borrowers can switch between options once during the loan with a refinance.
Reverse mortgage risks the brochure doesn't emphasize
HECMs are heavily regulated and broadly safer than they were in the 2000s, but they still carry real risks that borrowers and adult children should know about before signing:
- Property tax and insurance default. If you stop paying these — even for one cycle — the lender can foreclose on the home. This is the single most common reverse mortgage default and frequently catches widowed spouses by surprise.
- Long-term care relocation. If you leave the home for more than 12 consecutive months (typically because of assisted living or nursing care), the loan becomes due. The home must be sold to repay the balance, often during a time of family stress.
- Non-borrowing spouse problems. If only one spouse is on the HECM (usually because the other is under 62 at origination), the non-borrowing spouse can stay in the home after the borrower's death but cannot draw additional loan proceeds. This has caused major hardship for surviving spouses.
- Heirs face tight timelines. When the borrower dies, heirs have 30 days to decide what to do and 6 months (extendable to 12) to sell, refinance, or pay off. Probate delays can complicate this.
- Closing costs are high. 5-7% of the loan amount in upfront fees means a $300,000 reverse mortgage costs $15,000-$21,000 to originate. This is paid from the loan, so it reduces the cash available immediately.
HUD requires every applicant to complete counseling with an approved HECM counselor before applying. The session takes 60-90 minutes, costs $125-$200, and walks through these risks in detail. Adult children should attend the session with the borrower whenever possible.
FAQs
What is a reverse mortgage?
A reverse mortgage (officially HECM, Home Equity Conversion Mortgage) lets homeowners 62+ borrow against home equity without monthly mortgage payments. The loan balance grows over time and is repaid when you sell, move out, or pass away. The home itself is the collateral, and you keep the title and live there.
How much can I get from a reverse mortgage?
Depends on three factors: (1) Borrower's age (older = more), (2) Home value (more value = more loan), (3) Current interest rates (lower rates = more loan). Typical: 50-65% of home value at age 65, 60-75% at age 75. The 2026 HECM lending limit is $1,249,125 (federal max).
Do I have to pay back a reverse mortgage?
Not while you live in the home. The loan is repaid when: (1) You sell the home, (2) You move out permanently (over 12 months), (3) You pass away (heirs have 6-12 months to sell/refinance/pay), (4) You fail to pay property tax, insurance, or maintain the home. The home secures the loan.
Will my children inherit anything?
Yes, but only the equity remaining after the reverse mortgage is paid off. If your home value at sale exceeds the loan balance + interest accrued, the difference goes to heirs. If the loan balance exceeds the home's value, heirs owe nothing extra (HECM is non-recourse), but they also inherit nothing from the home.
Is a reverse mortgage a good idea?
Sometimes. Good for: retirees with significant home equity, low cash flow, no plans to leave home, willing to give up legacy in home. Bad for: those who plan to move within 5 years, want to leave the home to heirs, can solve cash flow via HELOC or downsizing. Reverse mortgages have high fees (5-7% of loan amount upfront) and accrue interest faster than people expect.
What's the difference between lump sum, monthly, and line of credit?
Three payout options. Lump sum: take all available cash at once (uses up the borrowing power immediately). Tenure: monthly payments for as long as you live in the home. Term: monthly payments for fixed years. Line of credit: borrow as needed, like a HELOC, with growing unused credit limit (LOC option often best for flexibility).
What are reverse mortgage fees?
Upfront costs: 2% mortgage insurance premium (MIP) on loan amount, lender origination fee (capped at $6,000), counseling fee ($125-$200), appraisal ($500-$700), title fees ($1,000-$3,000). Total upfront: typically 5-7% of loan amount. Ongoing: 0.5% annual MIP on loan balance + accrued interest.