Calculate Your Reverse Mortgage
See how much home equity you could access with a reverse mortgage. Compare payout options and understand true costs.
Your Information
Home Details
Enter $0 if your home is paid off
Loan Options
Available Proceeds
Payout Options
One-time payment at closing
Draw as needed, grows over time
Payments for as long as you live in home
Fixed payments for set period
Closing Costs (Estimated)
Line of Credit Growth
| Year | Available Credit | Growth |
|---|---|---|
| 0 | $142,600 | - |
| 1 | $151,869 | +$9,269 |
| 2 | $161,740 | +$19,140 |
| 3 | $172,254 | +$29,654 |
| 4 | $183,450 | +$40,850 |
| 5 | $195,374 | +$52,774 |
| 6 | $208,074 | +$65,474 |
| 7 | $221,598 | +$78,998 |
| 8 | $236,002 | +$93,402 |
| 9 | $251,343 | +$108,743 |
| 10 | $267,680 | +$125,080 |
Unused credit line grows at interest rate + 0.5% MIP
Important Risks to Consider
Compound Interest
Interest compounds on your loan balance monthly. A $142,600 loan at 6.0% could grow to $377,153 in just 10 years.
Reduced Inheritance
Your heirs will need to repay the full loan balance or sell the home. The longer you live, the more equity is consumed by interest.
Fees Are High
Closing costs of $18,000 are significant. These costs are typically rolled into your loan, adding to the balance.
Property Tax & Insurance Required
You must continue paying property taxes, homeowners insurance, and maintain the home. Failure to do so can trigger loan default.
Must Remain Primary Residence
If you move out for more than 12 months (including nursing home care), the loan becomes due immediately.
Affects Benefits
Reverse mortgage proceeds could affect eligibility for Medicaid, SSI, and other needs-based programs. Consult a benefits specialist.
20-Year Equity Projection
| Year | Loan Balance | Home Value | Remaining Equity |
|---|---|---|---|
| 0 | $210,600 | $450,000 | $239,400 |
| 2 | $236,630 | $477,405 | $240,775 |
| 4 | $265,878 | $506,479 | $240,601 |
| 6 | $298,740 | $537,324 | $238,583 |
| 8 | $335,664 | $570,047 | $234,382 |
| 10 | $377,153 | $604,762 | $227,610 |
| 12 | $423,769 | $641,592 | $217,824 |
| 14 | $476,146 | $680,665 | $204,519 |
| 16 | $534,998 | $722,118 | $187,120 |
| 18 | $601,124 | $766,095 | $164,971 |
| 20 | $675,423 | $812,750 | $137,327 |
* Assumes 3% annual home appreciation. Actual results will vary.
Preserve Home Equity with Better Planning
Reverse mortgages can be useful in emergencies, but compound interest rapidly erodes your home equity - the wealth you spent decades building.
A Gold IRA allows you to diversify retirement savings into physical precious metals that historically hold value against inflation - without risking your home.
Before tapping home equity, explore how a Gold IRA can provide retirement security while preserving your home for your family.
Understanding Reverse Mortgages
What is a Reverse Mortgage?
A reverse mortgage is a loan that allows homeowners 62+ to convert home equity into cash without selling their home or making monthly payments. Instead, the loan balance grows over time and is repaid when the borrower sells, moves out, or passes away.
The most common type is the Home Equity Conversion Mortgage (HECM), which is insured by the Federal Housing Administration (FHA). Proprietary reverse mortgages are also available for high-value homes exceeding HECM limits.
Key Requirements
- - Must be 62 years of age or older
- - Must own home outright or have significant equity
- - Home must be your primary residence
- - Must complete HUD-approved counseling
- - Must continue paying property taxes and insurance
- - Home must meet FHA property standards
When to Consider Alternatives
Reverse mortgages can be appropriate for seniors who need cash flow and plan to age in place, but they are expensive and reduce the inheritance you can leave. Consider alternatives first:
- - Home Equity Line of Credit (HELOC) - lower fees, more flexibility
- - Downsizing to a smaller home
- - Renting out part of your home
- - Retirement account withdrawals with proper tax planning
- - Life insurance cash value
What You Need to Know About Reverse Mortgages
Age Requirement
You must be at least 62 years old. The older you are, the higher your Principal Limit Factor and the more you can borrow.
No Monthly Payments
Unlike traditional mortgages, you don't make monthly payments. The loan is repaid when you sell, move out, or pass away.
Non-Recourse Loan
You (or your heirs) will never owe more than the home is worth when sold, even if the loan balance exceeds home value.
Counseling Required
HUD requires all borrowers to complete reverse mortgage counseling before applying to ensure you understand the risks.
How the Principal Limit Factor Works
The Reverse Mortgage Formula
Available Proceeds = (Home Value x PLF) - Mortgage Balance - Closing Costs
PLF (Principal Limit Factor): A percentage based on your age and expected interest rate. Older borrowers get higher PLFs.
Home Value: Appraised value or HECM limit ($1,149,825 for 2024), whichever is less.
Existing Mortgage: Must be paid off from proceeds, reducing available cash.
Example:
Age 75, $450,000 home, $50,000 mortgage, 6% rate: $450,000 x 52.7% - $50,000 - $17,000 = $170,150 available
Reverse Mortgage Payout Options Compared
| Option | Best For | Pros | Cons |
|---|---|---|---|
| Lump Sum | Large immediate expense | Full amount upfront, fixed rate available | Interest accrues on full balance immediately |
| Line of Credit | Emergency fund, flexibility | Unused portion grows, draw as needed | Variable rate only |
| Tenure (Lifetime) | Long-term income supplement | Guaranteed monthly income for life | Lower payments than term option |
| Term | Bridge to other income | Higher monthly payments | Payments end after term |
Reverse Mortgage FAQs
How much can I get from a reverse mortgage?▼
The amount depends on your age, home value, current mortgage balance, and interest rates. Generally, older borrowers with more equity can access 50-70% of their home value. Our calculator above gives you a personalized estimate.
Do I have to pay back a reverse mortgage?▼
Not while you live in the home. The loan becomes due when you sell, move out for more than 12 months, or pass away. Your heirs can pay off the loan and keep the home, or sell it and keep any equity above the loan balance.
Can my heirs inherit the house?▼
Yes. Your heirs can keep the home by repaying the loan (often through refinancing). If the loan balance exceeds the home value, they only need to pay 95% of the appraised value - or they can walk away with no debt.
What are the biggest risks of a reverse mortgage?▼
Key risks include: compound interest rapidly growing your loan balance, reduced inheritance for heirs, losing the home if you fail to pay property taxes/insurance, and becoming 'house rich, cash poor' if you need to move.
Is a reverse mortgage a good idea?▼
It depends on your situation. Reverse mortgages can help seniors who are house-rich but cash-poor, but the high costs and compound interest make them expensive. Consider alternatives like HELOCs, downsizing, or retirement account strategies first.
Important Disclaimer
This calculator provides estimates only. Actual reverse mortgage proceeds, rates, and fees will vary based on your specific situation, lender, and market conditions. This is not financial advice. Reverse mortgages are complex products with significant risks - consult a HUD-approved reverse mortgage counselor before applying.
Before You Tap Your Home, Consider This
Reverse mortgages are expensive and eat into your kids' inheritance. A Gold IRA can provide retirement income while keeping your home intact for your family.