Reverse Mortgage (HECM)
How much can you tap from your home in retirement?
Net available
$206,636
Total funds you can access from a HECM after paying off any existing mortgage and the upfront costs ($21,500 of FHA MIP, origination, and closing). How you take the money is up to you — see the four payout options below.
HECM principal limit
$228,136
38.0% PLF at age 70, rate 6.5%
Less: existing mortgage
$0
paid off at closing
Less: upfront costs
$21,500
MIP $12,000 + $9,500
Net available to you
$206,636
after paying off existing + costs
Lump sum at closing: $136,882 in year 1 (capped at 60% of principal limit by HECM rules), then $69,755 accessible in year 2+. Best if: you have a specific large need (pay off mortgage, home modifications). Downside: stops growing — money sitting in your bank earns ~0%.
How HECMs work — and the catches
What it is: a Home Equity Conversion Mortgage (HECM) is the FHA-insured reverse mortgage. You borrow against home equity; you don’t make monthly payments; the loan balance GROWS over time as interest accrues; the loan is repaid when you sell, move out permanently, or pass away.
You still own the home. Title stays in your name. You’re still responsible for property taxes, homeowners insurance, and home maintenance. Failure to pay these can trigger default.
Non-recourse: when the loan is repaid (typically by selling the home after you pass away), the FHA guarantees you or your heirs will never owe more than the home’s value, even if the loan balance has exceeded it.
The upfront cost: 2% FHA MIP + origination + closing typically runs 5-7% of home value. That’s a lot. Often makes sense only if you’re confident you’ll stay in the home 5+ years (otherwise the upfront cost dominates).
Counseling required: HUD requires you to complete a HECM counseling session before applying ($125-200, sometimes free). Counselor walks through alternatives.
Heirs: when you pass, heirs have ~6-12 months to either pay off the loan (typically by selling the home) or refinance into their own mortgage. They keep anything beyond the loan balance.
Numbers shown are estimates. Actual HECM Principal Limit Factors come from FHA-published tables and depend on your exact age (to the month), the precise expected rate, and current FHA limits. Always get an official quote from a HUD-approved HECM counselor before deciding. Consider proprietary "jumbo" reverse mortgages if your home value exceeds the FHA cap (~$1.21M in 2026).