Updated June 17, 2026
How much you can borrow with a HECM reverse mortgage is set by a formula that considers the age of the youngest borrower, the appraised home value (up to the 2024 federal limit of $1,149,825), and current interest rates. Most borrowers can access roughly 40 to 60 percent of their home equity, not the full value.
The Principal Limit: The Key Number
The amount available to you is called the "principal limit." HUD calculates it using a factor table that rises with age and falls as interest rates rise. The U.S. Department of Housing and Urban Development maintains and periodically updates that formula. Full program details are on the HUD HECM program page.
Factors That Determine Your Borrowing Limit
1. Age of the Youngest Borrower or Non-Borrowing Spouse
Age is the largest single driver. The older you are, the higher the principal limit factor HUD assigns. A borrower who is 75 typically qualifies for a larger share of home equity than a borrower who is 62. If there is a non-borrowing spouse, the calculation uses that spouse's age even if they are not on the loan, which protects them from displacement if the borrower passes away first.
2. Appraised Home Value (Up to the Federal Lending Limit)
An FHA-approved appraiser determines your home's value. HUD caps the value used in the calculation at the HECM lending limit, which is $1,149,825 for 2024. If your home is worth $1,500,000, the formula uses $1,149,825. Homes worth less than the limit use their actual appraised value.
3. Current Interest Rates (Expected Rate)
HUD uses an "expected rate," roughly the 10-year LIBOR swap rate plus the lender's margin. When rates are high, the principal limit factor falls and you qualify for a smaller share of your equity. When rates are low, the factor rises. The rate environment has a real effect on the final number.
4. Existing Liens and Mandatory Obligations
Any existing mortgage, home equity loan, or other liens must be paid off at closing from reverse mortgage proceeds. What you actually receive is the amount left after satisfying those obligations. Use our home equity calculator to estimate your net proceeds after existing liens.
Illustrative Borrowing Scenarios
| Age | Home Value | Approx. Principal Limit Factor | Estimated Principal Limit |
|---|---|---|---|
| 62 | $400,000 | ~40% | ~$160,000 |
| 70 | $400,000 | ~47% | ~$188,000 |
| 75 | $400,000 | ~52% | ~$208,000 |
| 80 | $400,000 | ~57% | ~$228,000 |
Note: These figures are approximate and for illustration only. Actual principal limit factors change with interest rates and are published by HUD. Get a formal loan estimate from a licensed lender for your specific situation.
The 60% First-Year Rule
Even if your principal limit is $200,000, federal rules restrict most borrowers to accessing only 60% of that amount in the first 12 months. The exception applies if mandatory obligations (such as an existing mortgage payoff) exceed 60%, in which case you can draw enough to cover those plus an additional 10%. The rule exists to prevent borrowers from drawing down equity too quickly early in the loan.
How Payout Is Affected by Fees
Upfront costs reduce what you actually receive. A typical HECM closing involves:
- Upfront mortgage insurance premium: 2% of appraised value (up to the lending limit)
- Origination fee: the greater of $2,500 or 2% of the first $200,000 of home value, plus 1% above that, capped at $6,000
- Third-party closing costs: appraisal, title, attorney fees, typically $2,000 to $4,000
- Ongoing annual MIP: 0.5% of the outstanding loan balance each year
On a $400,000 home, upfront MIP and the origination fee alone can total $12,000 or more, deducted from proceeds or financed into the loan balance.
Proprietary Reverse Mortgages for Higher-Value Homes
If your home is worth well above the HECM lending limit, some private lenders offer jumbo or proprietary reverse mortgages not backed by FHA. These can allow access to equity above the federal cap but carry different terms, are not federally insured, and require careful comparison shopping.
Required Counseling Before You Can Apply
Federal law requires independent counseling with a HUD-approved housing counselor before any HECM application. The counselor will review your specific numbers and help you understand what you can realistically expect to borrow. The Consumer Financial Protection Bureau's reverse mortgage resource page explains this requirement in plain terms.
Getting an Accurate Estimate
Principal limit factors shift with interest rates, so the best estimate comes from a licensed lender running current numbers through HUD's official software. Compare quotes from multiple lenders, since origination fees and margins vary.