How the Principal Limit Factor actually works
PLF is the % of your home value you can borrow. HUD recalculates the table based on the 10-year CMT + lender margin (the 'expected rate'). At age 62 and a 7.25% expected rate, PLF is ~40%. At age 80 same rate, it's ~52%. If rates drop to 5%, PLF at age 72 jumps from ~46% to ~55%. That's why timing matters — falling rates increase how much you can pull.
- • Older borrower = higher PLF (lender models shorter loan life).
- • Lower expected rate = higher PLF (loan accrues slower).
- • Above the 2026 lending limit ($1,209,750), the extra equity contributes zero — consider a proprietary 'jumbo' reverse instead.
The 4 ways to take the money (and which heirs hate least)
Borrowers can elect lump sum, monthly tenure (life annuity), monthly term (fixed years), line of credit, or a hybrid. The HUD LOC growth feature is the most underrated: the unused line grows at the expected rate + 0.5% MIP — so deferring access actually creates more borrowing power. Lump sum is the worst option for most retirees: you're paying MIP on cash sitting in checking.
Costs that get hidden in the brochure
On a $480K home, expect roughly $14K–$18K in upfront fees: 2% MIP ($9,600), origination (~$5,000), counseling ($125), appraisal ($600), title (~$1,500), recording. Plus ongoing 0.5% annual MIP that accrues. A HECM is rarely 'cheap' liquidity — make sure the alternative (HELOC, downsize, family loan) doesn't work first.
Related guides
Long-form playbooks on the same topic, written by the RevenueLab editorial team.
FAQ
How much can I get from a reverse mortgage?
Net cash typically lands between 25–55% of home value (capped at $1,209,750 in 2026), after subtracting any existing mortgage and ~4–6% in upfront costs. The exact number depends on your age and current expected interest rates. Run your numbers above for an estimate.
Do I still own my home with a reverse mortgage?
Yes — title stays in your name. The lender places a lien for the loan balance, which is repaid when the last borrower moves out, sells, or passes away. You must keep paying property tax, insurance, and HOA, and maintain the home, or the loan can be called due.
What happens to my heirs?
Heirs have 12 months to settle: pay off the loan balance (often by selling the home), pay 95% of appraised value if they want to keep the home, or sign a deed-in-lieu and walk away. HECM is non-recourse — heirs are never personally liable beyond home value.
What's the difference between a HECM and a 'reverse mortgage'?
Nearly all reverse mortgages in the US are HECMs (Home Equity Conversion Mortgages) — the federally-insured product. 'Proprietary reverse mortgages' (jumbo) exist for homes above the HECM limit. Avoid any reverse mortgage that isn't HECM or a major-bank proprietary product.
Is a reverse mortgage a bad idea?
Not inherently — but it's the wrong tool if you can pay your bills without it, plan to move within 5 years, or want to leave the home to heirs debt-free. It's the right tool for cash-poor / house-rich retirees who want to age in place with stable income.
How this calculator is built
Independently maintained
Written by Sam Doshi and the RevenueLab editorial team. We don't sell the data feeds this tool is built on.
Sourced from primary data
Benchmarks come from public AdSense / Stripe / IRS disclosures and reader-submitted data — never third-party "$X per view" claims. Full methodology.
Last reviewed
June 2026. We re-check every figure on the platform on a rolling quarterly cycle.
Editorial standards
See our editorial policy and disclaimer. Results are estimates, not advice.