1. What is the Reverse Mortgage Calculator?

The Reverse Mortgage Calculator estimates the principal limit available to homeowners aged 62 and older based on their home value and the principal limit factor. This calculation helps determine how much equity can be converted into loan proceeds through a reverse mortgage.

2. How Does the Calculator Work?

The calculator uses the reverse mortgage formula:

Where:

• \( PL \) — Principal limit (dollars)
• \( V \) — Home value (dollars)
• \( PLF \) — Principal limit factor (unitless)

Explanation: The formula caps the maximum home value at $1,209,750 (2025 limit) and multiplies by the principal limit factor, which varies based on the borrower's age and current interest rates.

3. Importance of Principal Limit Calculation

Details: Calculating the principal limit is essential for seniors considering a reverse mortgage to understand how much money they can access from their home equity while maintaining home ownership.

4. Using the Calculator

Tips: Enter your home value in dollars and the principal limit factor (typically between 0.4-0.6 based on age and interest rates). Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is the maximum home value used in calculations?
A: For 2025, the maximum value considered is $1,209,750, even if the home is worth more.

Q2: How is the principal limit factor determined?
A: The PLF is based on the age of the youngest borrower and current interest rates. Older borrowers and lower rates result in higher PLFs.

Q3: Can I get more than the principal limit?
A: No, the principal limit represents the maximum amount available through a reverse mortgage over the loan term.

Q4: Are there costs associated with reverse mortgages?
A: Yes, reverse mortgages typically include origination fees, mortgage insurance premiums, and other closing costs.

Q5: When does a reverse mortgage need to be repaid?
A: The loan becomes due when the last borrower permanently leaves the home, sells the property, or passes away.