Reverse Mortgage (HECM) Calculator

Estimate reverse mortgage proceeds and the loan balance growth over time.

About Reverse Mortgage (HECM) Calculator

The loan balance compounds while the home appreciates more slowly, so equity is consumed over time. Because these loans are non-recourse, the borrower never owes more than the home's value even if the balance exceeds it. Upfront costs are substantial, which makes reverse mortgages expensive for short tenures and better suited to those intending to remain in the home long term.

Formula

Reverse Mortgage (HECM)

Principal limit = home value × a factor rising with age and falling with interest rate

principal limit: The maximum that can be borrowed, based on age, rate and home value
non-recourse: The borrower never owes more than the home is worth at repayment

Worked example

With the default values below, Reverse Mortgage (HECM) Calculator returns Net Proceeds Available of $69,600.00. Change any input above and every figure here is recalculated in your browser.

Inputs used

Home valueminimum 0: 450,000
Youngest borrower ageaccepts 62–95 years: 70 years
Existing mortgage balanceminimum 0: 60,000
Expected interest rateaccepts 0–20 %: 7 %
Upfront costsaccepts 0–15 %: 4 %
Years to projectaccepts 1–40 years: 15 years

Results

Net Proceeds Available: $69,600.00
Principal Limit: $147,600.00
Loan Balance After the Period: $407,233.06
Projected Home Value: $701,085.34
Equity Remaining After the Period: $293,852.28

Step by step

1Values used
2Reverse Mortgage (HECM)
3Net Proceeds Available= 69,600.00
4Principal Limit= 147,600.00
5Loan Balance After the Period= 407,233.06
6Projected Home Value= 701,085.34
7Equity Remaining After the Period= 293,852.28

Assumptions and limits

The result is derived only from the 6 inputs listed above. Anything not among them is not part of the calculation.
In particular, this calculator does not take inflation, tax or compounding frequency into account.
Figures are rounded for display to 2 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.
This is a general illustration, not financial, tax or legal advice. Rules, thresholds and rates vary by jurisdiction and change frequently, and individual circumstances materially affect outcomes. Consult a qualified adviser before making any decision based on these figures.
This is an estimate for general information and not professional financial, tax or legal advice. See the full disclaimer for the limits that apply to this kind of calculator.

How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.

This is a general illustration, not financial, tax or legal advice. Rules, thresholds and rates vary by jurisdiction and change frequently, and individual circumstances materially affect outcomes. Consult a qualified adviser before making any decision based on these figures.

Frequently Asked Questions

How is Reverse Mortgage (HECM) calculated?

Principal limit = home value × a factor rising with age and falling with interest rate The loan balance compounds while the home appreciates more slowly, so equity is consumed over time. Because these loans are non-recourse, the borrower never owes more than the home's value even if the balance exceeds it.

Why does Reverse Mortgage (HECM) matter?

Upfront costs are substantial, which makes reverse mortgages expensive for short tenures and better suited to those intending to remain in the home long term.

What values do I need to enter?

This calculator takes 6 inputs: Home value, Youngest borrower age, Existing mortgage balance, Expected interest rate, Upfront costs, Years to project. The pre-filled defaults are a realistic starting point — replace them with figures from your own environment for a result you can act on.