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Dean Said:

what is the maximum loan to value for a reverse mortgage?

We Answered:

To answer your question, the lending amounts for an FHA HECM reverse mortgage range from around 50-80%, depending upon 3 factors.

The 3 factors that affect the principal limit (how much you can get) are: youngest borrower's age, expected interest rate, and the lesser of either the lending limit or appraised value. It is not like forward mortgages that are based solely on home value.

The minimum age requirement for a reverse mortgage is 62 at closing. Current maximum lending limit, with some exceptions, is $625,500. This means that any dollar over that limit that your home may appraise at will not improve the numbers; this applies only to the HECM, and not any jumbo. The expected rate is a combination of the swap rate and the lender's margin. The calculations that determine how these 3 factors work together is decided by FHA. So while only a lender can decide it's margin (how much it makes), which will affect the expected interest rate, everything else is outside their control.

It is a very conservative program since it is a negative amortization loan and FHA would not want to find themselves without enough equity to pay off the loan when it becomes due and payable.