How Does the Loan Amount Work for Reverse Mortgages?

The amount you can borrow with a reverse mortgage — known as the “principal limit” — isn’t a one-size-fits-all number. Instead, it’s calculated based on a combination of personal factors and market conditions. The goal is to make sure the loan stays safe and manageable over time while allowing you to tap into a portion of your home’s equity.

Here are the main things that determine how much you may qualify to receive:

1. Your age (or the age of the youngest borrower on the loan)
   1. The older you are, the more you can typically borrow. This is because reverse mortgages are designed with longevity in mind — the longer the lender expects the loan to stay open, the more conservative the available funds. If you’re applying with a spouse or partner, the calculation is based on the age of the youngest borrower.
2. The current appraised value of your home
   1. Since a reverse mortgage is based on your home’s equity, the market value of your property plays a big role. A licensed appraiser will evaluate your home during the application process to determine its worth. The higher your home’s value — up to FHA’s lending limit — the more equity you potentially have access to.
3. Current interest rates at the time of application
   1. Believe it or not, interest rates impact how much you can borrow. Lower interest rates generally allow you to borrow more, because the cost of the loan over time is expected to be lower. When rates are higher, the available loan amount may be reduced to keep the program financially stable. This is why timing can sometimes influence how much you’re eligible for.
4. Any existing mortgage balance or liens on your home
   1. If you still owe money on your current mortgage or have any liens on the property, those will need to be paid off first using the proceeds from the reverse mortgage. Only the remaining balance — after paying off those obligations — is available to you. This is actually one of the most common uses of a reverse mortgage: eliminating an existing mortgage so that you no longer have to make monthly payments.

Learn more about eligibility requirements for a reverse mortgage, situations where a reverse mortgage is best used, and common myths around reverse mortgage that we debunk with facts