Even with all of the advantages that come with the FHA Home Equity Conversion Mortgage (HECM) program, there are limits on these and other FHA loans. The limits on the amount you can get for a loan varies from state to state. The limits on HECM reverse mortgage loans also depend on a number of other factors, which include:
- Present interest rates
- The present FHA mortgage limit or the sale price of the property, whichever is greater
- The age of the borrower who is youngest
- The mortgage insurance premium initially
- The property type
But the basic rule of HECM reverse loan limits is the older you are, the higher the value of your home. In addition, if the interest rate on the loan is low, you will typically be qualified to borrow more.
Want to learn more about HECM Reverse Mortgages? Fill out our quick 1-minute form to have a Mortgage Advisor contact you.
The Basics of HECM Reverse Loan Limits
Older adult homeowners, age 62 or older, whose current mortgages are either paid off or significantly paid down and who currently live at the property, may be eligible for the HECM program. Through a reverse mortgage, program participants are able to get money from the equity in their house as a lump sum payment, a monthly payment, a line of credit, or some combination of these options.
There are limits to the amount you can qualify for on these loans as set by the FHA and based on the limits that Fannie Mae and Freddie Mac placed on conventional home loans, the age of the borrower, and the type of property involved. The limits on these reverse mortgage loans currently sit at $625,500—or 150% of the limit for Freddie Mac loans.
As with any FHA loan, the amount that the lender is willing to lend to you in a reverse mortgage is also based on the area of the country where the property is located. In general, although it will depend on the FHA-approved loan limit in your area and the national limit, reverse mortgage loan amounts tend to be less than the value of the property.
How can you expect to pay for the costs of an HECM reverse mortgage loan? It will depend on the reverse mortgage program you use—whether fixed-rate or variable-rate—and the interest rate you get on the loan. In addition, costs on reverse mortgages are known to shift and grow over time.
Is an HECM Reverse Mortgage Loan Right For You?
It’s no wonder that HECM reverse mortgage loans are becoming popular with seniors, especially those who have equity in their homes but are short on cash for retirement. Our experienced team of reverse mortgage loan specialists can answer whatever questions you have about the different reverse mortgage programs and which lender will be the best fit for your situation.
Want to see if you qualify for an HECM Reverse Mortgage? Fill out our quick 1-minute form to have a Mortgage Advisor contact you.