A home equity conversion mortgage (HECM) is the Federal Housing Administration’s (FHA) federally insured version of a reverse mortgage. It allows homeowners aged 62 and older to convert part of their home equity into cash while continuing to live in their home.
As of 2025, the FHA HECM lending limit — the maximum property value that can be used to calculate loan proceeds — is $1,209,750. This cap, also known as the maximum claim amount (MCA), limits how much of your home’s value can be considered when determining your loan size.
However, the amount each borrower can actually receive depends on several personal and financial factors. Understanding how HECMs work can help you estimate how much equity you can access and whether this option fits your retirement goals.
As of 2025, the FHA maximum reverse mortgage lending limit is $1,209,750. This lending limit represents the maximum home value a federally insured Home Equity Conversion Mortgage (HECM) can be based on.
How an HECM works
With an HECM, you borrow against the equity you’ve built in your home. Instead of making monthly payments to a lender, the lender pays you — as a lump sum, monthly payments, or a line of credit. Over time, your loan balance increases as interest and fees accumulate, while your home equity decreases.
The loan doesn’t have to be repaid until you sell your home, move out, or pass away. At that point, the proceeds from the home sale go toward repaying the loan balance, and any remaining equity belongs to you or your heirs.
Because HECMs are insured by the FHA, lenders face less risk — and borrowers gain important protections, such as limits on how much they can owe.
What determines your HECM loan amount
With an HECM, you take out a loan against the equity of your house. As the loan balance increases over time, your equity decreases. You’re effectively trading the equity in your house for cash upfront.
Federally backed HECMs are the most popular type of reverse mortgage and are available to homeowners 62 or older.
An HECM allows you to access a percentage of your home equity. The maximum amount you can receive from an HECM depends on three primary factors:
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Age of the youngest borrower. HECM maximum amounts account for the age of the youngest borrower, who must be at least 62 years old. As a general rule, older borrowers can receive a higher amount
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Home’s appraised value. Calculations are based on the home’s appraised value or the HUD maximum lending limit (whichever is lower).
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Interest rates. The lower the interest rate, the more home equity you can access with a reverse mortgage.
Below is a reverse mortgage age chart showing maximum reverse mortgage percentages at a 6% interest rate:
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The percentages in this table represent the maximum reverse mortgage amount expressed as a percentage of the home’s total value.
For instance, for a home worth $350,000, a 65-year-old could receive a 6% HECM for ($350,000 x 37.8%) = $132.300.
FHA HECM lending limit in 2025
In the context of an HECM, the “maximum claim amount” (MCA)[1] is the maximum property value that can be the basis for a reverse mortgage. The MCA equals the lesser of the home’s appraisal/sales price or the FHA HECM lending limit, which is $1,209,750 as of 2025.
The MCA matters because it limits how much of your home equity you can tap as credit. Specifically, the amount you receive is a percentage of the MCA. Here’s how this works:
Let’s say the property’s appraised value is $500,000. Since this number is less than the lending limit, the MCA for mortgage calculations is just the appraised value — e.g., $500,000.
Alternatively, say the appraised home value is $1,400,000. Since this property value is higher than the lending limit, the MCA is $1,209,750. Reverse mortgage calculations will use this number instead of the actual property value of $1,400,000.
The federal government periodically raises FHA HECM lending limits to keep up with rising home values. A higher lending limit means owners with higher-value homes can access more equity through an FHA reverse mortgage.
HECM principal limit and the 60% first-year rule
The actual amount you can receive from a reverse mortgage is called the principal limit and is calculated by multiplying the MCA by a principal limit factor as determined by HUD.[2] This factor is expressed as a percentage and depends on the borrower’s age and interest rates.
For example, a 70-year-old with a 6% HECM has a principal limit factor of 41.5%. This means they can access up to 41.5% of the home’s value.
For a home worth $350,000, the principal limit is $350,000 x 41.5% = $145,250. This is the maximum gross amount they could take out with an HECM.
The principal limit is the maximum total loan value the borrower can receive, but there are further limits on how much they can access at once. As a general rule, borrowers cannot access more than 60% of loan proceeds within the first year.
So, in our previous example, the borrower would only be able to initially access up to $145,250 x 60% = $87,150. They would have to wait at least 12 months to claim the remaining amount.
The main exception is if the borrower has prior loans or liens to pay off. In that case, they could access an additional 10% to pay these obligations.
Jumbo reverse mortgages
If your home’s value exceeds the FHA lending limit, a jumbo reverse mortgage might be an option. These private loans allow access to much larger home values — often up to $3–4 million — and may be available to homeowners as young as 55.
However, jumbo reverse mortgages are not federally insured, which means fewer borrower protections and higher interest rates. While they can unlock more equity, they come with more lender-specific rules, so it’s crucial to compare terms carefully.
HECM costs and fees
Your principal limit is the total amount of money you can pull out, but there are additional reverse mortgage costs to account for. Below are some of the most common types of upfront costs for reverse mortgages.
Origination fees
These are fees to cover the cost of underwriting and processing the loan. HUD caps origination fees at whichever is greater:
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$2,500, or
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2% for the first $200,000 in property value, plus 1% of the remaining value (up to a $6,000 maximum)
For example, origination fees for a home valued at $350,000 would be $3,500.
Closing costs
You also need to consider closing costs. These are costs paid to third parties at the end of the transaction and can include appraisal, title search, document preparation, certification, notary, and mortgage counseling fees.
Closing costs can vary significantly depending on the lender and state.
Mortgage insurance premiums
FHA-backed reverse mortgages require you to purchase mortgage insurance, which can be split into:
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An upfront premium cost equal to 2% of the home’s value or the maximum lending limit
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An annual mortgage premium equal to 0.5% of the remaining loan balance
HECM payment options
There are three primary reverse mortgage payment options. The same principal limit rules and calculations apply to all — the only difference is the method of payment disbursement.
Lump sum
A lump sum makes all the funds available simultaneously, up to the 60% limit during the first year. You can access the money faster, but you’ll pay interest and fees on the total loan amount when it closes.
Monthly payments
With this option, the loan is split into regular monthly payments. This option has lower costs as you only pay interest on the amount you have used.
However, you won’t get access to the money all at once.
Line of credit
With a line of credit, you can use a portion of the funds, and any unused money will grow. Similar to monthly payments, only the funds you use accrue interest.
Some lenders might allow you to combine payment options to fit your individual needs, so be sure to ask.
The bottom line
To summarize the main points:
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The 2025 FHA HECM lending limit is $1,209,750.
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Your available funds depend on your age, interest rate, and home value.
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Most borrowers access 30%–70% of their home’s equity.
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Homes valued above the FHA limit may qualify for jumbo reverse mortgages.
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Borrowers can choose between lump-sum, monthly, or line-of-credit payouts.
To get the best deal, make sure you shop around and compare rates. You can also consult the CFPB[3] and HUD[4] for more information on HECMs.
FAQ
How much can a 70-year-old borrow with an HECM?
Maximum amounts for HECMs depend on the borrower’s age, interest rate, and HUD’s principal limit factors (PLFs). For a 70-year-old borrowing at a typical 6% rate in 2025, their gross principal limit would be 41% of the home value.
With a median home price of $350,000, that comes out to a principal limit of $350,000 x 41% = $143,500. Keep in mind that this figure does not account for fees and other closing costs.
What’s the 60% rule?
According to the 60% rule, you can only access a maximum of 60% of your reverse mortgage proceeds within the first year of taking an HECM.
Those with additional financial obligations can withdraw an additional 10% above the principal limit. This limit applies to all methods of payment disbursement.
What’s the 95% rule?
The 95% rule is a consumer protection rule meant to protect heirs. If the homeowner dies or moves out and their heirs want to keep the house, they must pay either the loan balance or 95% of the appraised value.
Do HECMs also cover taxes/insurance?
No, reverse mortgages do not typically pay taxes or insurance. With a reverse mortgage, you still own your home and must pay for recurring obligations.
However, you may be able to get a Life Expectancy Set Aside (LESA) to pay for taxes. These funds are not borrowed until they are used and do not accrue interest. If you never use LESA funds, it’s as if you never borrowed them, so you won’t have to repay them.
How do heirs handle payoff?
After the last borrower dies, heirs can repay the loan balance, sell the house, or let the lender acquire the property. If they pay off the loan, any remaining equity goes to the heirs.