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FHA Boosts 2024 HECM Lending Limit

New year = new lending limit. The Federal Housing Administration (FHA) recently announced that the national lending limit for the Home Equity Conversion Mortgage (HECM) Program has increased from $1,089,300 to $1,149,825. The new limit is effective as of January 1, 2024.

This change in lending limit marks the eighth consecutive year of increase – and the first time that the limit has risen above $1.1 million.

What does this mean for those considering a reverse mortgage?

The increased lending limit is great news! Essentially, it means that borrowers with higher home values will be able to access additional equity from their homes. Here’s the bottom line: the higher the lending limit, the more cash that’s potentially available.

Here’s a comparison based on a 72 and 75-year-old couple with a home value of $1,200,000:

  • 2023 – Total available proceeds = $453,100
  • 2024 – Total available proceeds = $478,300 – That’s a $25,200 increase!*

With a HECM, borrowers are first required to pay off any existing mortgages before obtaining the new loan. While some borrowers with high mortgage balances may not have been able to secure enough proceeds to qualify previously under the 2023 lending limit, thanks to the 2024 increase, there may now be enough to make a HECM a viable option.

Could now be the right time for you to get a reverse mortgage? To learn more about the HECM lending limits and how to qualify for the loan program, give us a call today. The professionals at Longbridge are here to help and are happy to discuss all your loan options. 

* The estimates shown are based on a CA property and the HECM program as of 12/15/2023. Assumptions include a home value of $1,200,000 and a 72 year old borrower with a $400,000 mortgage. The initial interest rate is 7.130% (5.780% APR), tied to one month CMT with a margin of 1.870%. In this example, closing cost include an origination fee of $6000, third-party closing costs of $4,700 depending on purchase price or appraised value, and an up-front FHA Mortgage Insurance Premium of $22,997 depending on purchase price or appraised value. The information being displayed is for illustrative purposes only. Interest rates and funds available may change daily without notice. Please contact Longbridge Financial LLC for details about credit costs and terms.

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Co-op properties, rental homes, and rental apartments do not typically qualify. Contact a Longbridge specialist for more information.

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