What is a HECM loan limit?

The HECM loan limit refers to the maximum home value that can be used to calculate the proceeds you may receive from a Home Equity Conversion Mortgage (HECM). The Federal Housing Administration (FHA) sets an annual limit, which is currently $1,209,750.

How does the HECM loan limit affect my reverse mortgage?

The loan limit is the highest home value that can be considered for calculating your HECM loan proceeds. If your home’s appraised value exceeds this limit, only the amount up to the limit will be used in the calculation.

What factors determine how much I can borrow with a HECM?

Several factors influence your loan proceeds:

• Appraised home value: Limited to the FHA loan cap of $1,209,750.
• Age of the youngest borrower: Older borrowers typically qualify for higher proceeds.
• Current interest rates: Lower rates result in higher proceeds.
• Existing mortgage balance: Any remaining mortgage balance will reduce your available proceeds.

Can I qualify if my home is worth more than the HECM loan limit?

Yes, you can still qualify, but the loan proceeds will be based on the maximum limit of $1,209,750, not the full appraised value. For homes with significantly higher values, proprietary reverse mortgages may be a better option.

How do I calculate my HECM loan limit?

To calculate your HECM loan limit:

1. Start with your home’s appraised value (up to $1,209,750).
2. Apply the Principal Limit Factor (PLF), which is based on your age and current interest rates.
3. Subtract any outstanding mortgage balance and associated costs.

You don’t have to do the math yourself—use our calculator above for a quick, personalized estimate.

What is the Principal Limit Factor (PLF)?

The Principal Limit Factor is a percentage applied to your home’s value to determine how much you can borrow. It is based on:

• The youngest borrower’s age.
• Current interest rates.

As you age, your PLF increases, allowing you to borrow more. However, higher interest rates can reduce the PLF, resulting in lower loan proceeds.

What if my home’s value changes after I get a HECM?

If your home’s value increases significantly, you can explore refinancing your HECM to access additional equity.

Are there any fees associated with a HECM loan limit?

There are no fees specifically for determining your HECM loan limit, but the reverse mortgage itself may include:

• Origination fees.
• FHA mortgage insurance premiums (MIP).
• Closing costs.

These fees are typically included in the loan balance and are only due when the loan is repaid.

How is the HECM loan limit different from the proprietary loan limit?

The HECM loan limit is set by the FHA and applies to all federally insured reverse mortgages. Proprietary reverse mortgages, offered by private lenders, often have higher loan limits, making them a better choice for high-value homes.

For example, our exclusive HomeForLife program could be an ideal choice if your home is worth more than the lending limit.

Discover More About HomeForLife →

How can South River Mortgage help?

At South River Mortgage, we help you understand your HECM loan limit and explore all your reverse mortgage options. Use our HECM Loan Limit Calculator to estimate how much equity you can access, and contact us to speak with one of our experts today.