The funds available from a reverse mortgage are dependent on three major factors …
- age of the youngest borrower
- value of your home
- program selected (HECM – Fixed, Variable)
The value of your home is limited to the HECM loan limit of $726,525. So, if your home is worth $2 million … The maximum claim value that is used to determine which you can get through a HECM reverse mortgage is limited to the appraised value of your home or a maximum of $726,525.
Value over $800,000? You may want to explore jumbo options available but they are non-standard reverse mortgages and are a separate discussion.
From the maximum claim value a reserve must be set aside for the interest and monthly mortgage insurance charges that are added to your loan balance over time. The amount of the reserve (Principal Limit) is determined by FHA/HUD tables based on your age and the actual (fixed rate) or expected (variable) interest rate.
Expenses of your loan are then deducted from your proceeds. This includes the upfront mortgage insurance, origination fees, and title and escrow costs.