HECM Calculator 2026
Calculate your tax-free loan proceeds based on 2026 FHA Limits ($1,249,125).
The HECM Reverse Mortgage Guide
Your home is likely the largest asset in your financial portfolio, yet for many retirees, that wealth is “locked up” in drywall and land. This HECM (Home Equity Conversion Mortgage) calculator is designed to show you exactly how much of that equity you can access without selling your home or taking on a new monthly bill.
How the Calculator Determines Your Offer
1. Age of the Youngest Borrower The Department of Housing and Urban Development (HUD) uses actuarial tables to determine risk. Simply put: the older you are, the more money you can borrow. A 62-year-old will qualify for significantly less principal than an 85-year-old because the loan term is statistically expected to be longer for the younger borrower.
2. Current Interest Rates This is the factor most people overlook. There is an inverse relationship between rates and your borrowing power.
- Lower Rates: You can borrow more money.
- Higher Rates: The amount you can borrow (your Principal Limit) decreases. The “Expected Rate” input in the calculator helps you see how market volatility might affect your closing numbers.
3. The Lesser of Home Value vs. Lending Limit As of 2026, the FHA has set the maximum claim amount (lending limit) at $1,249,125.
- If your home is worth $500,000, the calculation is based on $500,000.
- If your home is worth $2,000,000, the calculation is capped at the $1.249 million limit. This is why high-value homes may sometimes benefit from “Jumbo” proprietary reverse mortgages instead of the standard HECM.
Eligibility Checklist
Before you apply, ensure you meet the standard FHA requirements. This program is insured by the federal government, so the rules are strict but designed to protect you.
- Age: At least one homeowner must be 62 or older. (If a spouse is under 62, they can be an “Eligible Non-Borrowing Spouse,” but this affects the calculation).
- Residency: The home must be your primary residence. Vacation homes and investment properties do not qualify.
- Equity: You must have significant equity. If you still have an existing mortgage, the HECM proceeds must be used to pay that off first.
- Property Type: Single-family homes, 2-4 unit properties (as long as you live in one unit), and HUD-approved condos are eligible.
Analyzing the Payment Options
The calculator shows a “Net Cash” figure, but you don’t have to take it all at once. In fact, how you take the money is often more important than how much you get.
1. Tenure (Monthly Income)
This turns your home equity into a paycheck. You receive a guaranteed monthly payment for as long as you live in the home, even if the payments eventually exceed the value of the house. This is ideal for supplementing Social Security.
2. Line of Credit (The Growth Strategy)
This is a unique feature of the HECM. If you choose the Line of Credit option, any unused funds sit in your account and grow at the same rate as your interest rate plus the MIP. This means your borrowing power actually increases over time, acting as a hedge against inflation or a safety net for future medical expenses.
3. Lump Sum
You take the cash upfront. Note that HUD restricts you from accessing 100% of your available funds in the first 12 months (usually capped at 60%) to prevent borrowers from spending all their equity too quickly, unless the funds are needed to pay off a large existing mortgage.
The Costs Involved
You will notice a line item in the calculator results for “Est. Closing Costs.” It is important to understand that reverse mortgages are not cheap to set up. The costs generally include:
- MIP (Mortgage Insurance Premium): An upfront fee (2% of home value) paid to the FHA. This insurance guarantees that you will never owe more than the home is worth (Non-Recourse protection) and guarantees you get your payments even if the lender goes bust.
- Origination Fee: The lender’s fee for processing the loan, which is regulated by law.
- Third-Party Fees: Standard real estate costs like appraisal, title insurance, and recording fees.
Note: Most of these costs can be rolled into the loan, meaning you don’t have to pay them out of pocket.
The “Non-Recourse” Safety Net
One of the biggest fears regarding reverse mortgages is passing debt to heirs. It is crucial to understand that a HECM is a Non-Recourse Loan.
When the last borrower passes away or moves out, the loan becomes due. The estate typically sells the home to repay the loan.
- Scenario A: The home sells for more than the loan balance. The remaining equity goes to your heirs.
- Scenario B: The home sells for less than the loan balance (due to a market crash). The FHA insurance covers the difference. Your heirs explicitly do not have to pay the difference. They can simply sign the deed over to the lender and walk away without personal liability.
FAQs
Q1. Do I lose ownership of my home?
A: No. You remain on the title. The bank places a lien on the property, just like a regular mortgage. You are still responsible for property taxes, homeowners insurance, and basic maintenance.
Q2. How does this impact my Social Security or Medicare?
A: Reverse mortgage proceeds are considered loan advances, not income. Therefore, they generally do not affect Social Security or Medicare benefits. However, they can impact Medicaid (needs-based) eligibility if you hold the cash in a savings account too long.
Q3. Can I sell the home later?
A: Yes. You can sell the home at any time. You will simply pay off the reverse mortgage balance from the sale proceeds and keep the remaining equity.
Sources: Fairway Independent Mortgage Corporation, All Reverse Mortgage, Inc. (Reverse.mortgage), LendingTree, Mutual of Omaha Mortgage, MLS Reverse Mortgage, Finance of America Reverse (FAR), Longbridge Financial, South River Mortgage, ForMyReverse, MortgageCalculator.org.
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Disclaimer: This calculator provides an estimate based on 2026 lending limits and standard actuarial formulas. It does not constitute a formal loan offer. Actual availability and closing costs depend on your specific lender, credit assessment, and the daily interest rate environment.