Reverse Mortgage Calculator
Inputs
What Is a Reverse Mortgage Calculator?
A reverse mortgage calculator is a tool that helps homeowners figure out how much money they might be able to borrow using a reverse mortgage. A reverse mortgage is a special type of loan that lets you turn some of your home’s value into cash. You do not have to sell your home or make monthly payments. Instead, the loan is paid back later, usually when you move out or the home is sold. The calculator asks for a few details like your home’s value, your current mortgage balance, and interest rates. It then gives you an estimate of how much money you could get.
This calculator makes it easier to understand your options before talking to a lender. It shows you the total amount you may qualify for, how much cash you can actually use after paying off any mortgage you already have, and how your loan and home value might change over time. You can also see how your home’s value could grow in the future. This tool is a great way to explore whether a reverse mortgage might work for you.
How to Calculate Reverse Mortgage?
Calculating a reverse mortgage involves several steps, but don’t worry, we’ve made it easy for you. Here’s how you can calculate reverse mortgage.
- Home Value & Lending Limit
First, the calculator checks your home’s current value. There’s a national lending limit (called the HECM limit) set by the government, and the calculator will use the lower of your home’s value or that limit. - Principal Limit Factor (PLF)
Based on your age (or the age of the youngest borrower), a factor is applied that determines how much of your home’s value can be borrowed. Older borrowers usually qualify for higher amounts. - Principal Limit & Net Proceeds
The principal limit is the total amount you may be able to borrow. From this, the calculator subtracts any existing mortgage balance to figure out your net proceeds—that’s the money you can actually access. - Loan Growth Over Time
You’ll also see a year-by-year projection of how the loan balance might grow based on interest and how your home’s value might increase based on appreciation.
By entering your details and hitting “Calculate,” the tool quickly estimates all of this for you, showing you both the upfront amounts and a future projection.
Terms Used in This Calculator
To make sense of the results, here’s a quick explanation of the key terms used in this reverse mortgage calculator:
- Initial Loan Balance: The starting loan balance when the reverse mortgage begins.
- Home Value ($): The estimated current market value of your home.
- Mortgage Balance ($): The amount you still owe on your existing mortgage.
- Age of Youngest Borrower: Reverse mortgage rules are based on the age of the youngest borrower in the household—older borrowers usually qualify for more.
- Expected Interest Rate (%): The assumed interest rate on your reverse mortgage. This impacts how fast your loan balance grows over time.
- Home Appreciation (%): An estimate of how much your home’s value might increase each year.
- Projection (Years): How many years into the future you want to see the loan and home value projection.
- Principal Limit: The maximum amount you may be able to borrow based on age and home value.
- Net Proceeds: The amount of money available to you after paying off any existing mortgage.