The reverse mortgage program is getting popular with seniors and one of the questions that is often asked is: “how much can I borrow with the FHA reverse mortgage program?”
The amount of money you can get from a Reverse Mortgage on your home depends on the following things:
- The type of HECM loan – Standard or Saver.
- The age of the youngest homeowner (borrower).
- The appraised value of the home.
- The current interest rate.
- The established (FHA) lending limit.
- Based on the HUD formula, the older you are, the more your home is worth, and the lower the interest rate, the more you may be able to borrow up to the established national loan limit.
You can schedule the way you receive your reverse mortgage loan proceeds based on the type of reverse mortgage loan you choose and your needs.
With a variable rate loan you may choose from the following options:
- A tenure payment plan provides equal monthly payments as long as one of the borrowers lives in the property and occupies it as a primary residence.
- With a term payment plan, equity monthly payments are made for a fixed number of months.
- If the borrower opts for a Line of Credit, the loan proceeds may be accessed according to their wish till the entire line of credit has been exhausted.
- A modified tenure payment plan involves the combination of a line credit and scheduled monthly payments, provided that one of the borrower occupies the property.
- Similarly, a modified term payment plan involves a credit line and monthly payments for a fixed period of time.
With a fixed rate, a Lump-Sum (only) distribution is required.
The commonly used “loan to value” ratio calculation done on regular mortgages does not come into play here. Why? Because the money you receive is based on a forecasted estimate which takes into consideration your age at the time of the initial loan funding, and how long (actuarially) you may be expected to live. Obviously, that is just an estimate for calculation purposes only. But, that helps establish the loan amount.
Reverse Mortgage Loan Calculators
You may have seen, or actually used, a “Reverse Mortgage Loan Calculator” on other Reverse Mortgage web sites. While these give you a number, the likelihood of that number being accurate is slim to none. Reverse Mortgages, as an FHA product, undergo tweaks and changes all the time. Most changes are minor; but, some changes can be major. Local cost and expense, plus state requirements are also not usually taken into consideration by most Reverse Mortgage Calculators. Therefore, the cumulative result may be significantly off. You get a number. But, it is most likely not the right number.
The bottom line is that only the up-to-date tools used by qualified, registered Reverse Mortgage Consultants working for FHA certified reverse mortgage lenders, may give you an accurate reverse mortgage quote on your home.Click to See the Latest Mortgage Rates»