How Much Money You Can Get From a Reverse Mortgage

The amount you can borrow depends on your age, home value, and current interest rates

A reverse mortgage converts part of your home's equity into cash you don't have to repay while you live there. The older you are, the more you can borrow — a 62-year-old with a $300,000 home might receive $100,000, while an 80-year-old with the same home could receive $180,000. The exact amount also shifts with interest rates and your lender's rules, so two lenders may offer different sums for the same situation.

The maximum you can borrow is capped by federal law at a percentage of your home's value. That percentage changes each month based on interest rates set by the Department of Housing and Urban Development (HUD). When rates are lower, you can borrow more; when rates are higher, you can borrow less. Your lender will calculate your specific amount using this monthly rate, your age, and an appraisal of your home.

Key Takeaways

• The amount you can borrow increases with your age — the older you are at the time you take out the loan, the larger the percentage of your home's value you can access.
• Your home's current market value sets the ceiling; lenders appraise your property to determine what portion you can borrow against.
• Interest rates change monthly and directly affect how much you can borrow — lower rates mean higher borrowing amounts for the same home and age.
• Outstanding mortgage balances, property taxes, homeowners insurance, and HOA fees reduce the amount available to you after closing costs are paid.
• You can receive the money as a lump sum, a monthly payment, a line of credit, or a combination of these options.

How age affects the amount you can borrow

The youngest borrower on a reverse mortgage must be at least 62 years old. At that age, you can typically borrow around 50 to 60 percent of your home's value, depending on interest rates. By age 75, that percentage rises to roughly 60 to 70 percent. At 85 or older, you may reach 70 to 80 percent of your home's value.

These percentages are not fixed — they move with the monthly interest rate index that HUD publishes. The reason age matters so much is actuarial: a lender expects to hold the loan longer for a younger borrower, so they lend less upfront to account for the interest that will accumulate over time. An older borrower means a shorter expected loan term, so the lender can offer a larger initial sum.

What reduces the amount you actually receive

The calculation starts with how much you can borrow, but several costs and debts come out before you see any money. If you still owe a mortgage balance, that must be paid off first — many borrowers take a reverse mortgage specifically to eliminate an existing mortgage payment. Property taxes, homeowners insurance premiums, and any HOA fees that are past due also come out of your proceeds.

Closing costs for a reverse mortgage typically run between $7,000 and $15,000, though this varies by lender and your location. The largest single cost is usually the mortgage insurance premium, which protects the lender if the home sells for less than the loan balance. These costs reduce the net amount you walk away with, even though they are factored into the loan itself.

If you have a small home value or a large existing mortgage, you may find that after payoff and closing costs, very little cash remains. Some borrowers in this situation find a reverse mortgage is not worth the expense.

How interest rates affect borrowing power

HUD sets a maximum lending limit each month based on a published interest rate index. When that index is low, the limit is higher — meaning you can borrow a larger percentage of your home's value. When the index rises, the limit drops. This happens automatically; you do not choose the rate, and it changes whether you are shopping with one lender or many.

The actual interest rate your lender charges you may be higher than the HUD index, depending on the lender's margin and your credit. But the maximum you can borrow is always tied to the HUD index for that month. If you are shopping around, checking rates in a month when the index is lower will show you a higher possible borrowing amount than checking in a month when the index is higher.

Different ways to receive the money

Once you know how much you can borrow, you choose how to receive it. A lump sum gives you all the money at closing — useful if you need to pay off a mortgage or cover a large expense immediately. A monthly payment (called a tenure payment) sends you a fixed amount each month for as long as you live in the home. A line of credit lets you draw money as you need it, and you only pay interest on what you actually use.

Many borrowers choose a combination: a small lump sum at closing to cover immediate costs, plus a line of credit for future needs. The line of credit grows over time — the unused portion earns additional borrowing power each month, even if you never draw on it. This makes a line of credit attractive for people who want flexibility but do not need all the money right away.

Comparing offers from different lenders

Because the HUD rate is the same for all lenders in a given month, the main differences between lenders are closing costs and the interest rate margin they add. One lender might charge $8,000 in closing costs with a 2 percent margin, while another charges $12,000 with a 1.5 percent margin. The lower-cost lender is not always the better deal — a lower margin means your interest rate is lower, which affects how fast the loan balance grows.

Request loan estimates from at least two or three lenders. Each estimate will show the maximum you can borrow, the interest rate, closing costs, and the net proceeds you would receive. Comparing these side by side shows you which lender offers the best combination for your situation. Keep in mind that some lenders specialize in larger loans or specific regions, so availability varies.

What happens if your home value drops

The amount you can borrow is locked in at the time you close the loan, based on the appraisal done then. If your home's value drops after you close, your borrowing amount does not change — you keep the same loan. However, if you have not yet drawn all available funds (for example, if you set up a line of credit), a significant drop in home value could affect how much additional credit remains available to you.

Conversely, if your home value rises, you cannot automatically borrow more. You would need to refinance the reverse mortgage into a new loan, which means new closing costs and a new appraisal. Most borrowers do not refinance unless their home has appreciated substantially and they need significantly more cash.

Frequently Asked Questions

Can I borrow the full value of my home?

No. Federal rules cap the amount at roughly 50 to 80 percent of your home's value, depending on your age and current interest rates. The exact percentage changes monthly. Additionally, any existing mortgage balance, property taxes owed, and closing costs reduce the net cash you receive.

What if I am younger than 62?

You cannot take out a federally insured reverse mortgage (called a Home Equity Conversion Mortgage, or HECM) if you are under 62. Some private lenders offer non-federally insured reverse mortgages to younger borrowers, but these are less common and typically have higher costs and fewer protections.

Does the amount I can borrow change after I close the loan?

The maximum amount is fixed at closing based on your age, home value, and the interest rate that month. If you set up a line of credit, the unused portion grows each month, giving you access to more funds over time. However, a significant drop in home value could reduce the available line of credit.

How do I know if the lender's offer is fair?

Request loan estimates from at least two lenders. Compare the maximum borrowing amount, interest rate, closing costs, and net proceeds. The HUD rate is the same for all lenders that month, so differences come down to the lender's margin and fees. A lower closing cost is not always better if the interest rate margin is higher.

What if I want to borrow more later?

If you set up a line of credit, you can draw more as you need it (up to your available credit limit). If you have already received all funds as a lump sum or tenure payments, you would need to refinance into a new reverse mortgage to access additional equity, which involves new closing costs and an appraisal.