Blog content updated 10/15/21
Have you heard the great news for senior homeowners?
For the fifth consecutive year, the FHA has increased the lending limit for HECM reverse mortgages to $822,375 in 2021—a $56,577 rise from the 2020 limit. Prior to 2017, the lending limit had remained fairly flat for several years before increasing from $625,500 to $636,150 in that year.
Why is this great news, and what does it mean if you’re considering a reverse mortgage? In essence, it means that borrowers with higher home values will now be able to access more equity from their homes. The bottom line? The higher the lending limit, the more available cash.
Plus, because the HECM requires borrowers to pay off existing mortgages before obtaining the loan, some borrowers with high mortgage balances may not have been able to secure enough proceeds to qualify under the previous lending limit. Now, with a higher lending limit, there may just be enough to make it work.
How is the lending limit calculated?
Simply stated, the HECM lending limit is calculated by taking one of these two values, whichever is lower:
- Your total appraised home value, or—
- The Maximum Claim Amount (MCA), which is based on the announced conforming loan limits on Fannie Mae and Freddie Mac mortgages. The FHA adjusts their MCA every year.
How this affects your reverse mortgage proceeds depends on how you choose to take them:
Lump Sum: how much you can take depends on how much equity you can claim, subtracting your current mortgage, closing costs, origination fees and taxes, where applicable.
Monthly Payments: the total amount you borrower determines the size of your monthly payments.
Line of Credit: the maximum amount of your credit line will, at least initially, be limited by the MCA.
How much could you receive from a reverse mortgage under the new limits? Fill out the calculator form on this page for a no-cost, no-obligation quote. The experts at Longbridge Financial would be happy to discuss your options with you. We’re here to help.
HECM Reverse Mortgage Lending Limits
2017: $636,150
2018: $679,650
2019: $726,525
2020: $765,600
2021: $822,375
The new loan limit took effect for loans with case numbers assigned on or after January 1, 2021, through December 31, 2021.
Do you have a high-value home whose value exceeds the lending limit for the standard HECM Reverse Mortgage program? Ask about our Longbridge Platinum jumbo reverse mortgage.
It’s a non-FHA reverse mortgage designed specifically for homeowners aged 60 and older2 with similar borrower benefits and protections of a standard reverse mortgage program. But it offers more cash than a standard reverse mortgage—depending on the value of your home, up to $4,000,000—with low costs. Plus, it has a line of credit option that compares to a standard Home Equity Line of Credit (HELOC), with more flexibility and no monthly mortgage payments required.3
High-value homeowners can use the power of Platinum to:
- Pay off an existing mortgage or other debt to eliminate those monthly payments
- Generate a lump sum of cash to cover significant expenses such as home renovations or repairs, medical expenses and more
- Open a line of credit to create a financial “safety net” for the future
- Refinance an existing mortgage to improve cash flow
- Buy a house or condo closer to family or better suited to your needs
How much could you get from a Longbridge Platinum reverse mortgage? Fill out the form on this page or call (855) 523-4326.
1. The amounts shown above are for illustration purposes only. Actual amount available may vary. This is not an offer to make you a loan, does not qualify you for a loan, and is not an official loan disclosure. Loan disclosures, including a Good Faith Estimate of closing costs, are provided upon receipt of a completed reverse mortgage application. Additional terms and conditions apply.
2. State exclusions apply.
3. Real estate taxes, homeowners insurance, and property maintenance required.
