Reverse Mortgage Calculator
Find out how much you can borrow — no personal information required!
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How to use our reverse mortgage calculator
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Enter the borrower and mortgage information
Start by inputting your youngest co-borrower’s age (if applicable), property type, estimated home value, outstanding mortgage balance and ZIP code. -
Choose how the property will be used
You’ll also need to select the property type — this should be “primary residence” in order to meet reverse mortgage requirements.
Once you’ve added all your loan details, the reverse mortgage calculator will provide your estimated lump-sum payout amount.
What is a reverse mortgage calculator?
LendingTree’s reverse mortgage calculator allows you to estimate how much money you can receive based on your home’s value and how much equity you have. Simply enter a few details, including the home’s value, mortgage balance, the age of the youngest borrower, property type, usage and location. Then, you’ll get a custom quote instantly.
What is a reverse mortgage?
A reverse mortgage is a type of home loan that provides homeowners age 62 and older with income by drawing from their available home equity. Rather than making monthly payments (as you would on a “forward” mortgage), the lender provides funds to you in the form of a lump sum, monthly payout or a line of credit.
- Home equity conversion mortgage (HECM): A HECM is the most common type of reverse mortgage and is insured through the Federal Housing Administration (FHA). HECMs are only available through FHA-approved lenders.
- Proprietary reverse mortgage: These types of reverse mortgages are offered by private mortgage lenders and aren’t federally insured. Since they aren’t restricted by HECM loan limits, many proprietary reverse mortgage borrowers have higher home values.
- Single-purpose reverse mortgage: Some states, local governments and nonprofits may offer single-purpose reverse mortgages. These loans are reserved for a specific purpose, such as renovating your home to be wheelchair-accessible. Ask your local Area Agency on Aging (AAA) or senior resource center about nearby programs.
How does a reverse mortgage work?
A reverse mortgage allows older homeowners to convert their home equity into cash, which can be used for any purpose they choose. To qualify, borrowers must be at least 62 and own their home outright or have significant equity (typically 50% or more). If the home isn’t owned outright, a portion of the loan proceeds is typically used first to pay off any existing mortgage balance.
Repayment isn’t required until the borrower (and co-borrower if applicable) moves out, sells the home or passes away. Often, the loan is repaid using proceeds from the sale of the home.
Learn more about other home improvement loan options and top lenders.
It’s important to be on the lookout for reverse mortgage scams. A scam can involve coercion into the loan by a relative, caregiver or someone selling a “can’t-miss” investment opportunity, according to the Consumer Financial Protection Bureau (CFPB).
- Ignore unsolicited reverse mortgage advertisements and offers
- Cease communication with any salesperson trying to pressure you into a decision
- Watch out for contractors encouraging you to take out a reverse mortgage to cover home improvements
- Don’t sign any documents that aren’t clear
- Work with an FHA-approved lender (if you’re interested in a HECM loan)
How to qualify for a reverse mortgage
- Be at least 62 years old. (Typically, the older you are, the higher the loan amount you’ll qualify for. If you have a co-borrower, the loan amount is based on the youngest borrower’s age.)
- Have zero delinquencies on any federal debt, including student loans and child support
- Own your home free and clear or have at least 50% equity
- Participate in reverse mortgage counseling
- Use the home securing the loan as your primary residence
- Meet the FHA’s rules for HECMs, which apply to both you as a borrower and your property
Reverse mortgage pros and cons
Summarize the biggest benefits and drawbacks of a reverse mortgage.
PROS
- Allows you to supplement retirement income and reach financial goals later in life
- May allow you to stay in your home longer
- Funds received aren’t considered taxable income
- No monthly payments
CONS
- Typically more expensive than other loans
- Loan becomes due if you move out of the home
- Unlike traditional mortgages, the loan balance increases over time
- Upfront and annual mortgage insurance premiums required
- Can’t be used for investment properties or vacation homes
The interest on a reverse mortgage generally isn’t tax-deductible, since it’s considered interest on home equity debt.
Does a reverse mortgage make sense for you?
A reverse mortgage is an option for older homeowners with significant equity in their homes who need to supplement their retirement income. Here are some examples of when a reverse mortgage may be a good idea, versus when you may want to think twice.
A reverse mortgage may be a good idea if:
- You currently have a very low mortgage balance or no mortgage at all
- You don’t have enough income to borrow a traditional mortgage or home equity loan
- You have very limited retirement income
- You plan to stay in your home
A reverse mortgage may not be a good idea if:
- You plan to move out of your home
- You can’t afford to maintain your home
- Home values are dropping in your area
- You’re being pressured by someone to borrow one
- Interest rates are rising
- You want to leave the home to your heirs
Alternatives to a reverse mortgage
| Reverse mortgage | Cash-out refinance | HELOC | Home equity loan | |
|---|---|---|---|---|
| Repayment | Payment is due when the borrower moves out, sells the home or passes away. Typically repaid through sale of the home. | Monthly payments that include principal plus interest. | Monthly payments are usually interest-only during the draw period, then principal plus interest during repayment. | Typically fixed monthly payments over a set term. |
| Typical costs | Upfront and annual mortgage insurance premiums required, plus closing costs that range from 2% to 6%. | Closing costs, including origination and appraisal fees, range from 2% to 6%. | Closing costs typically range from 2% to 5% of the credit line amount. Annual fees, inactivity fees or early termination charges may also apply. | Closing costs typically range from 2% to 5% of the loan amount. |
| Inheritance impact | Home equity decreases over time. | Reduces home equity. | Loan must be repaid. | Loan must be repaid. |
| Best for: | Older Americans in need of more retirement income. | Those who need upfront funds and can afford a higher mortgage payment. | Those who would prefer access to funds over time and don’t mind variable rates. | Those who want cash for one-time expenses and prefer a fixed monthly payment. |
Cash-out refinance
A cash-out refinance allows you to convert some of your home’s equity into cash while replacing your existing mortgage with a new, larger loan. The difference between what you owe and the new loan amount is paid to you in cash. If you qualify for a lower interest rate, you could also reduce the amount of interest you pay over time.
You need at least 20% home equity to qualify for a cash-out refinance, and you don’t have to be 62 or older. However, you do have to be willing to make a bigger monthly mortgage payment since you’re borrowing more than you currently owe on your existing mortgage. A reverse mortgage typically requires no monthly mortgage payments.
With either a cash-out refi or a reverse mortgage, homeowners are still responsible for property taxes, insurance and maintenance costs.
Use a cash-out refinance calculator to find out how much cash you could get from refinancing your home.
Home equity line of credit (HELOC)
If you don’t need access to a one-time lump sum and would prefer access to funds over time, a HELOC may be a better option. A HELOC works much like a credit card in that you can borrow up to a set limit, then pay off the charges as you go.
During the “draw period” (usually 10 years), you typically only have to make interest payments on the amount you borrowed. During the repayment period, you pay both principal and interest on the outstanding balance.
HELOC borrowing limits are typically higher than cash-out refinances, depending on the lender and the home’s value. Many HELOC lenders will let you borrow up to 85% of your home’s value (some even up to 100%) compared to an 80% cap on most cash-out refinances. However, HELOCs also tend to come with stricter income, credit and other requirements than reverse mortgages.
Unlike a reverse mortgage, there’s no minimum age requirement (beyond general state lending laws) to qualify for a HELOC.
Home equity loan
Like a reverse mortgage, a home equity loan provides access to a lump sum of cash upfront. Beyond that, however, there are some distinct differences between the two.
Home equity loan terms typically range from five to 20 years, with fixed monthly payments that begin immediately. Reverse mortgages, on the other hand, don’t require monthly payments and are typically repaid when the homeowner moves out, sells the home or passes away.
Like HELOCs, some lenders may allow you to borrow up to 100% of your home’s value with a home equity loan. However, home equity loans also come with stricter income, credit and other eligibility requirements than reverse mortgages.
Unlike a reverse mortgage, there’s no minimum age requirement (beyond general state lending laws) to qualify for a home equity loan, whereas reverse mortgages are limited to those 62 and older.
Use a home equity calculator to estimate how much you could borrow from your home with a home equity loan or HELOC.
How home equity rates compare to cash-out refinance rates
Frequently asked questions
A reverse mortgage might make sense if you need to supplement your income and plan to age in place in your home. It also works well if you can comfortably keep up with your homeowners insurance, property taxes and routine maintenance. However, failure to stay current with these responsibilities can cause big problems. In some cases, you may face monetary penalties, while in other cases, the lapse may trigger foreclosure.
While a reverse mortgage calculator provides an estimate of what you may be eligible to borrow, it doesn’t identify associated costs. Reverse mortgage costs could include, but aren’t limited to:
- A loan origination fee up to $6,000
- An upfront mortgage insurance premium, which costs 2% of your loan amount
- An annual mortgage insurance premium, which costs 0.5% of your loan amount
- A reverse mortgage counseling fee, which could cost $125 or more
- A home appraisal and title search fee, among other closing cost
LendingTree’s reverse mortgage calculator doesn’t require any personal information. Simply enter the home’s value, mortgage balance, the age of the youngest borrower, property type, usage and location to receive an estimate of how much you might be eligible to borrow.
No, a reverse mortgage calculator provides only an estimate as to what you may qualify for based on your home’s mortgage. Your actual loan terms will depend on the lender, location and individual financial details.
The IRS doesn’t consider reverse mortgage payments as taxable income.
Interest on a reverse mortgage is calculated daily and added to your loan balance monthly. You can find your interest charges on your monthly mortgage statement.