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Walk-through

How to Use This Calculator

5 steps

1

Choose a case year and closing ages

Select the case year. Enter HUD closing ages for the youngest borrower and eligible spouse. Use the less-than-183-day birthday rule.

2

Separate the factor from the borrowing rate

Use a published HUD factor or an explicit illustration. Separate the expected lookup rate from the note rate.

3

Enter costs, liens and required reserves

Enter financed fees, eligible liens and reserves. Cash-paid fees stay separate. Unknown reserves pause projections.

4

Inspect timed draws and remaining equity

Review actual draws, debt and credit at the same dates. A missing lender tenure quote remains uncalculated.

5

Review before saving or sharing

Review assumptions before saving or sharing financial inputs. Compare alternatives with a HUD-approved counselor and lender.

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Reference

Formula & Methodology

3 formulas

Principal limit and proceeds

MCA = min(Appraised Value, Case-Year Cap); IPL = MCA × PLF; Available = IPL + Contributed Cash − Financed Fees − Lien Payoff − Set-Asides

The cap is not the loan amount. Official factors depend on the controlling eligible age and rounded expected rate. The 2026 cap is $1,249,125. Unknown reserves prevent a confirmed net figure; a negative subtotal is a funding gap, not negative cash available.

First-year cash limit

IDL = min(max(60% × IPL, Mandatory Obligations + Elected Additional Amount), IPL − Net LESA − Servicing Set-Aside)

The additional election is up to 10% of IPL when mandatory obligations exceed 50% of IPL. Cash capacity is the IDL less the modeled mandatory obligations, bounded by net proceeds. The lender determines eligible obligations, timing, lien seasoning and the closing election. A fixed-rate single disbursement has no later borrower draw capacity.

Monthly debt and credit

Debt_end = Debt_open + Draws + Interest + MIP; Credit_end = (Credit_open − Cash Draw) × Monthly Growth Factor

The educational model places cash and entered reserve draws at the beginning of each month, rounds interest and MIP separately to cents, and uses note rate plus 0.5% annual MIP divided by 12 for standard credit growth. An entered effective annual growth rate instead uses its twelfth root. Capacity is not cash or investment income. Daily lender accrual is not reproduced.

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High YMYL

Trust, Methodology & Sources

Reviewed by Calculover Editorial Review · Updated 2026-05-15 · 4 sources

Editorial accountability

Author: Quinn Sumner - Editor

Owner: Quinn Sumner - Editorial owner

Reviewer: Calculover Editorial Review - Source and limitation review

Last reviewed: 2026-05-15

Last verified: 2026-05-15

Data effective: 2026-01-01

Methodology

Exact HUD FY2018 factors effective October 2, 2017; younger eligible HUD closing age; expected-rate lookup rounded to 0.125 percentage point; case-year caps for 2024–2026. Financed-fee, lien and reserve ledger, first-year election and dated educational monthly draw model. Educational monthly model: beginning-of-month draws; separate cent-rounded interest and MIP; entered reserves only. Daily accrual, automatic reserve growth, future lender fees, mortality and full lender underwriting are not modeled. Source checks are technical verification and do not imply a new professional endorsement.

Assumption: Entered whole ages follow HUD’s rule: round up only if the next birthday is less than 183 days after closing; no date of birth is collected.

Assumption: Eligible liens and lender-determined reserves must be entered. The additional election and first-year disbursement treatment are assumptions requiring lender confirmation.

Assumption: Upfront MIP is 2% of MCA; annual MIP is 0.5% of outstanding debt. Origination uses either the FHA maximum allowance or an entered lower fee.

Assumption: Entered effective annual credit growth is distinct from note-plus-MIP monthly growth. Finite payments are educational, and tenure requires an entered lender quote.

Assumption: A lender determines lien seasoning and required reserves; entered reserves are not actuarially calculated.

Limitations & guidance

Eligibility, ownership, principal residence, spouse status, property charges, financial assessment and due-and-payable conditions require lender and HUD-approved counseling review.

Educational monthly model: beginning-of-month draws; separate cent-rounded interest and MIP; entered reserves only. Daily accrual, automatic reserve growth, future lender fees, mortality and full lender underwriting are not modeled.

A finite payment illustration is not a lifetime tenure quote. Only an entered lender quote is projected as tenure, over the selected horizon.

A loan balance can exceed home value. Non-recourse rules concern settlement and liability, not a cap on the mathematical balance. This model does not determine heir or spouse rights.

Traditional HECM only: HECM refinancing MIP credits, HECM for Purchase, proprietary reverse mortgages, complete servicing, taxation and benefits interactions are outside this model.

Displayed equity excludes sale costs and other estate obligations.

The combination payment is a finite expected-rate-only illustration; tenure requires an actual lender quote.

Professional guidance: Educational estimates, not financial, tax, legal, housing or lender advice. Obtain HUD-approved counseling and an FHA-approved lender’s current calculations before making a decision.

Primary sources

HUD HECM case-year caps and exact principal limit factor workbook - U.S. Department of Housing and Urban Development

HUD ML 2025-22 — 2026 HECM maximum claim amount - U.S. Department of Housing and Urban Development

HUD Handbook 4000.1 — August 12, 2026, Section II.B - U.S. Department of Housing and Urban Development

FHA Connection HECM Calculator lookup instructions - U.S. Department of Housing and Urban Development

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Glossary

Key Terms Explained

7 terms

Maximum claim amount (MCA) Appraised value bounded by the selected case-year cap. The factor applies to this amount, not automatically to the whole home value.

Principal limit factor (PLF) HUD multiplier selected by controlling eligible age and rounded expected rate. An illustrative factor is not a lender quote.

Mandatory obligations Eligible financed costs, lien payoffs and first-year reserve amounts used to calculate the initial disbursement limit.

Life expectancy set-aside (LESA) Funds reserved for property charges. Enter first-year amounts separately from net LESA beyond year one; avoid double counting.

Unused borrowing capacity Capacity to borrow later, not cash already received. Borrower draws reduce credit and increase debt.

Tenure quote Lender-calculated monthly payment under tenure contract conditions. A finite annuity is not a lifetime payment quote.

Non-recourse Rules about settlement and liability; they do not cap the calculated loan balance or determine an heir’s options.

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Scenarios

Real-World Examples

3 worked examples

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Capped-value illustration

A 2026 cap check using an expressly illustrative factor

Result

$460,171.00 before draw limits

Appraised value — USD 2000000 Case assignment year 2026 Illustrative factor 0.396 Upfront MIP — financed 24982.5 Origination fee — maximum assumption 6000 Other costs — financed 3500 Lien payoff 0 Set-asides — all entered 0 Cash contribution 0

Illustrative factor 0.396 gives principal $494,653.50. Costs $34,482.50 leave $460,171.00 before draw limits. This checks the cap and ledger, not an official factor.

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Payoff and reserve ledger

Separate available proceeds from closing debt and timing

Result

$75,000.00 before draw limits

Appraised value — USD 500000 Case assignment year 2026 Illustrative factor 0.4 Upfront MIP — financed 10000 Origination fee — entered 0 Other costs — financed 5000 Lien payoff 100000 Net LESA 10000 Other reserves 0 Cash contribution 0 Additional election — percent of principal 10

Principal $200,000 − fees $15,000 − payoff $100,000 − net LESA $10,000 = $75,000. The stated election gives a modeled $20,000 first-year cash ceiling.

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Undrawn-credit illustration

Effective annual growth is capacity, not earnings

Result

$107,000.00 capacity; $0.00 debt

Appraised value — USD 250000 Case assignment year 2026 Illustrative factor 0.4 Upfront MIP — cash paid outside the loan 5000 Other fees 0 Liens and reserves 0 Opening cash credit capacity 100000 Cash draws 0 Entered effective annual credit growth — percent 7 Projection — years 1

After cash-paid fees, credit $100,000 grows to $107,000 at an entered 7% effective annual rate. No draws means $0 debt; capacity is not earnings.

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Reference

Cite This Calculator

APA & MLA

Use either format to cite this calculator in a paper, report, or resource list.

APA

MLA

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Deep Dive

Read proceeds, debt and capacity as separate quantities

4 chapters · 3 min read

A traditional FHA HECM can provide access to home equity, but principal limit, cash received, reserved funds, unused credit and loan balance are different quantities. This calculator keeps them separate so a larger projected credit line is not mistaken for income or wealth.

Start with the versioned proceeds ledger

The selected case-assignment year controls the cap. The official factor comes from the published HUD workbook and rounded expected rate, using the controlling eligible age. Financed costs, eligible liens and entered reserves reduce proceeds. Cash-paid fees are still household costs, and contributed cash is not free loan proceeds.

Compare draws over the same dates

Compare actual cash received, debt and unused capacity at the same projection horizon. A cash amount today, a sum of monthly payments and a future credit limit are not interchangeable “total values.” First-year restrictions may leave part of a requested draw unfunded. A fixed-rate single-disbursement plan has no later borrower credit line.

Keep property costs and uncertainty visible

Taxes, insurance, maintenance and HOA charges can continue even without a monthly mortgage payment. The home-value path and future note rates are assumptions. Entered reserves are not automatically spent or grown by this model. Add reserve-draw events when appropriate and review lender schedules; the simplified projection does not reproduce all servicing rules.

Use counseling and lender documents

HUD-approved counseling and lender underwriting address eligibility, financial assessment, title, occupancy, property condition, spouse status, lien treatment and repayment conditions. This calculator does not replace them. Compare retaining a mortgage, other home-equity products and moving costs before relying on a reverse mortgage. Historical editorial attribution dates are retained; the current source check is technical verification.

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Questions

Frequently Asked Questions

8 questions

Does this result mean I qualify?+

No. Age and equity do not establish eligibility. A lender reviews ownership, occupancy, spouse status, property condition, liens and financial assessment. HUD-approved counseling is required.

Why is the expected rate different from the note rate?+

The expected rate selects the factor. The note rate applies to debt and standard credit growth. Future note rates are assumptions. For fixed-rate HECMs, expected and note rates must agree.

Can I take all net proceeds in the first year?+

Not necessarily. Mandatory obligations and the closing election affect the first-year limit. A fixed-rate single disbursement does not preserve unused proceeds as a later line of credit.

Does a line of credit earn money?+

No. Credit growth increases borrowing capacity, not cash or earnings. Financed fees and lien payoff are already debt and can accrue interest and MIP even without additional cash draws.

Why is a tenure payment sometimes not calculated?+

This model requires an entered lender tenure quote. A finite payment illustration is not a lifetime quote. The selected projection horizon does not predict lifespan or loan maturity.

What if required reserves are unknown?+

Clear the required-reserves checkbox. Proceeds become a provisional upper bound and projections pause. An entered zero is an assumption to confirm with the lender.

Can the loan balance exceed the home value?+

Yes. Non-recourse rules address settlement and liability, not a cap on the loan balance. This model does not establish an heir’s settlement amount or a spouse’s deferral rights.

Are my inputs automatically shared?+

Ordinary edits do not save financial inputs to the URL or device. Storage is optional. Sharing financial inputs requires a separate choice; copies and exports contain sensitive assumptions.

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How to Use This Calculator

Choose a case year and closing ages

Separate the factor from the borrowing rate

Enter costs, liens and required reserves

Inspect timed draws and remaining equity

Review before saving or sharing

Formula & Methodology

Trust, Methodology & Sources

Key Terms Explained

Real-World Examples

Capped-value illustration

Payoff and reserve ledger

Undrawn-credit illustration

Cite This Calculator

Read proceeds, debt and capacity as separate quantities

Start with the versioned proceeds ledger

Compare draws over the same dates

Keep property costs and uncertainty visible

Use counseling and lender documents

Frequently Asked Questions

Get a branded PDF of your results

Where the proceeds go

Choose a borrowing plan

Debt, property equity & available credit

Loan balance, home value & equity

Unused borrowing capacity

Compare the same closing assumptions

Age sensitivity · same closing date

Expected-rate sensitivity

How to Use This Calculator

Choose a case year and closing ages

Separate the factor from the borrowing rate

Enter costs, liens and required reserves

Inspect timed draws and remaining equity

Review before saving or sharing

Formula & Methodology

Trust, Methodology & Sources

Key Terms Explained

Real-World Examples

Cite This Calculator

Read proceeds, debt and capacity as separate quantities

Start with the versioned proceeds ledger

Compare draws over the same dates

Keep property costs and uncertainty visible

Use counseling and lender documents

Frequently Asked Questions

Get a branded PDF of your results

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