Reverse mortgage LTV by age is the shorthand for how the Home Equity Conversion Mortgage program translates your age at closing into a percentage of your home’s value you can borrow. At a 5.50% expected interest rate, a 65-year-old can access roughly 40% of the home’s value, a 75-year-old about 47%, and an 85-year-old about 57%.1U.S. Department of Housing and Urban Development. FY 2024 Actuarial Review of HECM Loans Those percentages are called Principal Limit Factors, and they are the starting point, not the ending point. Closing costs, existing mortgage payoffs, mortgage insurance, and a first-year disbursement cap all pull the number down before you see cash.
Principal Limit Factors by Age and Rate
HUD publishes a table that assigns a decimal factor to every combination of borrower age and expected interest rate, and lenders must use these tables to size your loan.2U.S. Department of Housing and Urban Development. Home Equity Conversion Mortgage for Lenders The reasoning is simple. Older borrowers have a shorter expected time on the loan, less interest accrues before repayment, and HUD can safely lend a higher share of the home’s value upfront.
Sample PLFs from HUD’s tables, in effect for loans originated on or after October 2, 2017:1U.S. Department of Housing and Urban Development. FY 2024 Actuarial Review of HECM Loans
- Age 65 at 5.50% expected rate: 0.403, or about 40% of home value
- Age 65 at 7.00% expected rate: 0.333, or about 33%
- Age 75 at 5.50% expected rate: 0.467, or about 47%
- Age 75 at 7.00% expected rate: 0.400, or about 40%
- Age 85 at 5.50% expected rate: 0.570, or about 57%
- Age 85 at 7.00% expected rate: 0.511, or about 51%
Two patterns are worth noticing. Every ten years of age adds roughly 6 to 8 percentage points at the same rate. And the gap between a low and a high expected rate is about as wide as the gap between age brackets. A 75-year-old at 5.50% actually beats an 85-year-old at 8.50%. The factors stop climbing at age 90, so anyone older receives the same PLF as a 90-year-old.
Why the Expected Rate Moves Your LTV
Age sets the baseline. The expected interest rate is the second lever. For adjustable-rate HECMs, the expected rate equals the lender’s margin plus the weekly average yield on 10-year Constant Maturity Treasury securities.3U.S. Department of Housing and Urban Development. Mortgagee Letter 2021-08 – HECM Program Changes to Interest Rate Requirements A higher rate means the projected loan balance grows faster, so HUD offsets that by shrinking the upfront percentage. Lower Treasury yields do the opposite.
HUD applies a floor of 5% for PLF calculations. Any expected rate at or below 5% produces the same principal limit factor, so nothing is gained from rates falling below that threshold. When rates sit near the floor, PLFs are at their most generous. Shopping among lenders for a lower margin directly reduces the expected rate and increases the funds available, which is why comparing at least three or four offers is worth the time.
Couples: The Youngest Borrower Rule
Federal regulations calculate the principal limit using the age of the youngest borrower or the youngest Eligible Non-Borrowing Spouse, whichever is younger.4eCFR. 24 CFR 206.3 – Definitions HUD’s handbook confirms it: available funds are based on the age of the youngest borrower or eligible non-borrowing spouse.5U.S. Department of Housing and Urban Development. FHA Single Family Housing Policy Handbook 4000.1 If you are 78 and your spouse is 64, the lender uses 64.
The rule protects the younger person. Without it, a couple could borrow heavily against the older spouse’s age, and after that spouse died the younger spouse could face a loan balance exceeding the home’s value with decades of life ahead. Using the younger age keeps the initial draw conservative enough that the balance has room to grow. Couples with a wide age gap will see a noticeable hit to borrowing power. The tradeoff is housing security for whoever survives.
The Cap on Home Value: The Maximum Claim Amount
The PLF percentage does not apply to your raw appraised value. It applies to the Maximum Claim Amount, which is the lesser of your appraised value or the national HECM lending limit set by FHA.6Consumer Financial Protection Bureau. Reverse Mortgages Key Terms For 2026, FHA set that ceiling at $1,249,125 for all areas, including Alaska, Hawaii, Guam, and the U.S. Virgin Islands.7U.S. Department of Housing and Urban Development. FHA Announces 2026 Loan Limits
If your home appraises at $800,000, the MCA is $800,000 and every dollar counts. If it appraises at $2,000,000, the MCA is capped at $1,249,125 and the excess equity above the cap is ignored. An 85-year-old with a $2,000,000 home at a 5.50% expected rate has a gross principal limit of roughly $711,600 (57% of $1,249,125), not $1,140,000 (57% of $2,000,000). Owners of homes well above the FHA ceiling should look at proprietary reverse mortgages, discussed below.
What Comes Off Before You See Cash
The gross principal limit is not the check you take home. Several mandatory items come off first. Any existing mortgages and liens against the property must be paid off from the reverse mortgage proceeds. An upfront mortgage insurance premium of 2% of the Maximum Claim Amount is charged at closing, which is $8,000 on a $400,000 MCA. An ongoing annual MIP of 0.5% of the outstanding balance accrues and adds to what you owe. Third-party closing costs such as the appraisal, title work, and recording fees also come out of the principal limit.8U.S. Department of Housing and Urban Development. Mortgagee Letter 2013-27 – Changes to HECM Program Requirements
On top of those costs, HUD limits how much you can actually withdraw in the first twelve months. The maximum initial disbursement is the greater of 60% of the principal limit, or the total of your mandatory obligations plus 10% of the principal limit.9Congressional Research Service. HUD’s Reverse Mortgage Insurance Program: Home Equity Conversion Mortgages This is often called the 60% rule. The regulation sets the statutory floor at 50%, with HUD authorized to adjust the percentage by notice.10eCFR. 24 CFR 206.25 – Calculation of Disbursements If mandatory obligations eat up most of the 60%, you may have very little discretionary cash in year one. The rest becomes accessible after twelve months.
A Life Expectancy Set-Aside can shrink year-one cash further. If the financial assessment shows you may have trouble paying property taxes and homeowners insurance, HUD may require the lender to reserve part of the principal limit specifically for those charges. The set-aside amount depends on your age, the expected rate, and the projected annual property costs.
Line of Credit Growth Adds a Time Dimension
Choosing the adjustable-rate HECM with a line of credit changes the math over time. You only pay interest on what you actually draw, and the unused portion of the credit line grows at the note rate plus 1.25%.11Consumer Financial Protection Bureau. How Much Money Can I Get With a Reverse Mortgage and What Are My Payment Options Because that growth is not tied to your home’s market value, a borrower who opens a line of credit early and draws conservatively can have access to more money at 80 than was originally available at 65. Fixed-rate HECMs, by contrast, are limited to a single lump sum at closing and are still subject to the 60% first-year cap, which is why most borrowers pick the adjustable option.
Above the FHA Ceiling: Proprietary Reverse Mortgages
Owners of homes worth well above the $1,249,125 HECM cap can look at proprietary, sometimes called jumbo, reverse mortgages from private lenders. These are not FHA-insured and carry different rules. Depending on the lender and state, eligibility can start at age 55 rather than 62, and maximum loan amounts can reach $4 million. Proprietary products also skip the 60% first-year disbursement limit, so the full loan can be available at closing.
The tradeoffs are real. Proprietary loans lack the non-recourse guarantee backed by federal insurance, interest rates tend to run higher, and disbursement choices may be more limited. Because these products are not standardized the way HECMs are, terms vary widely between lenders and comparison takes more work. For borrowers above the FHA ceiling, they can unlock equity a HECM cannot reach, but the consumer protections are thinner.