How Much Can You Get?

According to FHA rules, which govern HECM reverse mortgages, the amount you can borrow is dependent on a published schedule, which specifies wavering amounts based upon on one’s age, value of the home, and current interest rates. An HECM reverse mortgage usually allows you to take out a greater loan advance than other types of reverse mortgages. Generally, the older you are, the more money you can get from the loan. If there are two borrowers, the age of the youngest borrower is used for calculation purposes.

Typically, value limits vary according to the individual county in which you live. These limits specify a maximum of $160,176 in non-metropolitan areas, and $290,319 in urban areas. These limits can change annually. Your lender will have a chart that shows how much you can borrow. The amount will not be the full value of your home, since interest and fees must be calculated into the amount. The amount you receive will be based on an algorithm that takes all of the above factors into account.

One of the biggest factors that determine how much you can borrow is your age. Although the minimum age is 62-years-old, homeowners in their sixties will be able to get substantially less than a borrower who is 75-years-old.

Starting in 2005, loan limits will rise for both the HECM and the Fannie Mae Home Keeper loan. Fannie Mae will raise its limit from $333,700, to $359,650; with a 50 percent higher limit in Alaska, Hawaii, and the U.S. Virgin Islands. HECM limits will also rise. Although the HECM limit varies geographically, the highest limits, which applies in major metropolitan areas, will increase to $312,896, from the 2004 limit of $290,319. The lowest limits, applying to rural areas, will rise from $160,176 to $172,632.

Other plans that are not government-sponsored, such as the Financial Freedom Plan, may have significantly higher thresholds.