≈ $0 down
Estimated total
$4,930/mo
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By Alex Diaz · How we calculate this
A Home Equity Conversion Mortgage, the FHA-insured reverse mortgage most homeowners end up with, lets anyone 62 or older turn home equity into cash without a required monthly payment. That doesn't make it free money: interest and fees accrue against the balance the entire time it's outstanding. This calculator works out the payout you could receive and weighs the ongoing obligations, property taxes, insurance, and upkeep, against your income and existing debt to show the real risk of the arrangement.
These key factors affect reverse mortgage affordability
The loan lets you access equity without monthly payments, but it isn't free
You can take the proceeds as a lump sum, a line of credit, ongoing monthly payments, or some blend of those. An upfront mortgage insurance premium applies too, and FHA charges more of it, 2% of the home's value versus a much smaller 0.5%, if you draw more than 60% of your available proceeds within the first year. Either way, interest and fees keep accruing against the balance, steadily shrinking the equity cushion left in the home the longer the loan runs.
Property taxes, insurance, and upkeep remain the homeowner's responsibility
No monthly mortgage payment doesn't mean no housing costs. Falling behind on property taxes, homeowner's insurance, or required upkeep is one of the more common ways a reverse mortgage actually goes into default, since the lender can call the loan due once those obligations lapse, a risk that's easy to underestimate when the loan gets pitched as eliminating housing costs altogether.
The interest rate and time horizon drive how fast equity is used up
Interest compounds against a growing balance with nothing paid down along the way, so a higher rate or a longer stay in the home eats into equity meaningfully faster than a lower rate over a shorter horizon. The loan typically becomes due when the last remaining borrower dies, sells the home, or moves out, including into a nursing facility, for more than 12 consecutive months, so it's worth thinking through what happens at that point as much as the payout itself.
The payout amount depends on age, home value, and current rates
Older borrowers and higher-value homes typically qualify for larger payouts, subject to the FHA's nationwide HECM lending limit, and a higher assumed interest rate draws down that available amount faster than a lower one over a longer horizon. If a spouse isn't named as a co-borrower, it's worth asking specifically about non-borrowing spouse protections: HUD rules let a qualifying non-borrowing spouse remain in the home after the borrower dies or moves to care, though the exact terms are worth confirming with a HUD counselor before signing anything.
How to use your results
- Treat the payout as supplemental cash flow, not free money, since interest and fees accrue over time
- Budget for ongoing property tax, insurance, and maintenance since those stay your responsibility
- Check how the loan balance is projected to grow over your expected time in the home
- Get the required HUD-approved counseling session before proceeding with a HECM
Ways to make a reverse mortgage more affordable
- Compare a lump-sum payout against a line of credit or tenure monthly payments, total costs differ
- Shop multiple lenders since origination fees, servicing fees, and rates vary
- Consider borrowing a smaller amount to preserve more home equity for later
- Ask about a HECM for Purchase if downsizing rather than borrowing against a current home
- Complete the required HUD counseling to fully understand fees and alternatives before signing
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