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Reverse Mortgage Calculator

Estimate your available reverse mortgage principal, lump sum after payoff, and possible monthly payout.

How it is calculated

You enter the home value, the balance of any existing mortgage, the principal limit factor as a percentage (above 0, up to 100) and a payout period in years. The tool computes available principal = home value × PLF ÷ 100, then lump sum = max(0, available principal − mortgage balance), because an existing mortgage is paid off first. The monthly figure is the lump sum spread evenly: monthly payout = lump sum ÷ (years × 12). The factor itself is not looked up for you; you must type the figure that applies to the borrower's age and rate. The tool does not cap the home value at a lending limit, deduct fees or insurance, or add interest, so the monthly figure is a plain division, not a loan schedule.

Worked example

Home value 400,000, existing mortgage 50,000, factor 50%, payout over 15 years. Available principal: 400,000 × 50 ÷ 100 = $200,000.00. After paying off the mortgage: 200,000 − 50,000 = $150,000.00 lump sum. Months: 15 × 12 = 180. Monthly payout: 150,000 ÷ 180 = $833.33. If the mortgage were 250,000 instead, the lump sum would be $0.00, since the balance is bigger than the available principal.

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Common mistakes

  • Entering the factor as a decimal (0.5) instead of a percentage (50), which gives a tiny available amount.
  • Guessing the factor. It depends on the borrower's age and expected rate, so use the figure from the lender's quote or the official table, not a round number.
  • Forgetting the existing mortgage balance: it is paid off first, so a large balance can reduce the lump sum to zero.
  • Treating the monthly payout as the lender's real offer. Here it is only the lump sum divided by months, with no interest, fees or insurance.
  • Expecting a zero or negative payout period to work; years must be above zero.

About this calculator

A reverse mortgage — most commonly a Home Equity Conversion Mortgage (HECM), the FHA-insured version regulated by HUD — lets homeowners aged 62 and older convert part of their home equity into cash without selling the home or making monthly mortgage payments. Instead, the loan balance grows over time and is repaid, typically from the home's sale, when the borrower sells, moves out permanently, or passes away.

The amount available is called the principal limit, calculated by multiplying the home's value by a principal limit factor (PLF) — a percentage set by HUD tables based mainly on the youngest borrower's age and the expected interest rate. Older borrowers and lower expected rates both produce a higher PLF, meaning more available equity. In this calculator you enter the home value and the PLF yourself; no FHA lending limit is applied to the home value.

Retirees use reverse mortgages to supplement retirement income, cover healthcare costs, or eliminate an existing mortgage payment, and financial planners use this kind of calculation to model how much cash a client could access after paying off any existing mortgage balance. The calculator shows the principal limit, the lump sum left after that balance, and that lump sum spread evenly over the number of years you enter as a monthly payout; it does not include fees or interest.

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