HECM Loan Limits in 2021 have changed again. This new change in HECM Reverse Mortgage Loan Limits will surely help many older homeowners with higher loan balances and higher home values. The new 2021 HECM Loan Limit has increased to $822,375.
What Exactly Does the Higher Loan Limit Mean in the Reverse World?
Regular loan officers and the general public alike hear the same thing when they hear about a loan limit change. They tend to think that the new HECM loan limit is equal to the face amount of the loan a person can take. That’s absolutely correct with a regular loan, but it’s different with a reverse mortgage.
When referring to the HECM loan limit, you’re really referring to the HECM maximum claim amount. The max claim amount is actually just the maximum appraisal value that can be considered on a reverse mortgage. So, for 2021 the maximum claim amount or maximum appraised value that can be used for a a reverse loan is $822,375.
So What is the ACTUAL Maximum Loan Amount for a Reverse Mortgage?
If you’re new to the reverse mortgage world, the amount you can borrow is dependent on your age (of the youngest borrower for married couples) and your home’s value. The percentage of the home value that you can borrow increases just a little bit with every passing year. At age 62 you can borrow 52.39% of the value of your home. So, if your home is valued at $100,000.00, then you can borrow about $52,390. Keep in mind this is partially dependent on interest rates too.
Now, remember that the maximum appraised value is $822,375. Since a 62 year old can borrow up to 52.39% of the appraised value, this means that they can borrow $430,842. Hence, for a 62 year old, the max FHA reverse mortgage loan amount is $430,842.
On the opposite side of the spectrum, a 92 year old can borrow 74.99% of their home value. So, if this person’s home value is $822,375 or more, their maximum FHA reverse mortgage loan amount is $616,699.
Max HECM Loan Amounts for Different Age Buckets
Remember, the percentage you can borrower is different at every age bracket. It increases with EVERY passing year. SO, rather than listing every year, we’ll list the max loan amount for just a few age buckets (based on homes valued at $822,375 or more).
Obviously, there’s alot more to reverse mortgage than the loan limits. If you want to educate yourself and get the most current reverse mortgage info., simply send us an email and ask for your free reverse mortgage / HECM info kit at Info@ReverseMortgageLoanAdvisors.com