Reverse Mortgage Calculator

About this calculator

A reverse mortgage — most commonly a Home Equity Conversion Mortgage (HECM), the FHA-insured version regulated by HUD — lets homeowners aged 62 and older convert part of their home equity into cash without selling the home or making monthly mortgage payments. Instead, the loan balance grows over time and is repaid, typically from the home's sale, when the borrower sells, moves out permanently, or passes away.

The amount available is called the principal limit, calculated by multiplying the home's appraised value (up to the FHA lending limit) by a principal limit factor (PLF) — a percentage set by HUD tables based mainly on the youngest borrower's age and the expected interest rate. Older borrowers and lower expected rates both produce a higher PLF, meaning more available equity.

Retirees use reverse mortgages to supplement retirement income, cover healthcare costs, or eliminate an existing mortgage payment, and financial planners use this kind of calculation to model how much cash a client could realistically access after paying off any existing mortgage balance and fees, whether taken as a lump sum, line of credit, or monthly payments.