California Reverse Mortgage Calculator
A reverse mortgage (HECM) allows homeowners 62+ to convert home equity into tax-free cash. Use this calculator to estimate how much you could receive.
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Note: This is an estimate, not an application for a loan. There is no commitment required and your credit score will not be impacted.
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How a California Reverse Mortgage Works
A Home Equity Conversion Mortgage (HECM), the most common type of reverse mortgage, is a government-insured loan that allows older homeowners to tap into their home equity without having to sell their home or make monthly mortgage payments.
Key Concepts:
- No Monthly Payments: You are not required to make monthly principal and interest payments. The loan balance grows over time.
- Loan Repayment: The loan becomes due when the last surviving borrower sells the home, moves out permanently, or passes away.
- Non-Recourse Loan: You or your heirs will never owe more than the home's appraised value at the time of sale. The FHA insurance covers any shortfall.
- Ownership: You retain ownership and title to your home. You are still responsible for property taxes, homeowners insurance, and home maintenance.
Who is Eligible for a Reverse Mortgage?
Age Requirement
All borrowers on title must be at least 62 years old.
Home Equity
You must own your home outright or have a low mortgage balance that can be paid off with the reverse mortgage proceeds.
Primary Residence
The home must be your primary residence where you live for the majority of the year.
Financial Assessment
You must demonstrate the financial ability to continue paying property taxes, insurance, and maintenance costs.
Counseling
You must complete a counseling session with an independent, HUD-approved HECM counselor.
Property Type
Eligible properties include single-family homes, 2-4 unit properties (owner-occupied), and FHA-approved condos.
How Reverse Mortgage Proceeds are Calculated
The amount you can borrow, called the "Principal Limit," depends on three main factors:
- Age of the Youngest Borrower: The older you are, the more you can generally borrow.
- Current Interest Rates: Lower rates typically result in higher proceeds.
- Home's Appraised Value: Based on the home's value up to the FHA's national lending limit of $1,149,825 for 2024.
Principal Limit Factor (PLF) × Home Value = Max Loan Amount
The PLF is a percentage set by HUD based on age and interest rates. For example, a 75-year-old might have a PLF of around 45-50%.
Payout Options
Lump Sum
Receive all available proceeds at closing. Best for paying off a large existing mortgage or a single major expense.
Line of Credit
Draw funds as needed, up to your limit. The unused portion of the credit line grows over time, giving you access to more funds later.
Monthly Payments
Receive a fixed monthly payment for a set term (Term) or for as long as you live in the home (Tenure).
Combination
Combine options, such as taking a partial lump sum and leaving the rest in a line of credit.
Pros and Cons of a Reverse Mortgage
Pros
- Eliminates existing mortgage payments, improving cash flow.
- Proceeds are tax-free and generally don't affect Social Security or Medicare.
- You remain the owner of your home.
- A growing line of credit can serve as a powerful financial safety net.
- Non-recourse feature protects you and your heirs from owing more than the home is worth.
Cons
- Loan balance increases over time, reducing home equity.
- Upfront costs can be high, including origination fees and FHA mortgage insurance.
- May affect eligibility for needs-based programs like Medicaid (Medi-Cal).
- Heirs must repay the loan or sell the home, receiving only the remaining equity.
- You must continue to pay for property taxes, insurance, and maintenance.
Reverse Mortgage FAQs
Can the bank take my home?
No. As long as you meet the loan obligations—paying property taxes and insurance, maintaining the home, and living in it as your primary residence—you cannot be forced to sell or leave. You retain title to the home.
What happens to the remaining equity when the loan is repaid?
Any equity remaining after the loan balance is paid off belongs to you or your heirs. For example, if the home sells for $800,000 and the loan balance is $450,000, your heirs would receive $350,000.
Will a reverse mortgage affect my Social Security or Medicare benefits?
No. Reverse mortgage proceeds are treated as a loan, not income, so they do not affect your Social Security or Medicare benefits. However, they can impact needs-based programs like Medicaid (Medi-Cal) if the funds are not spent down within the month they are received.
What are the costs associated with a reverse mortgage?
Costs include an FHA mortgage insurance premium (2% of the home value upfront), an origination fee (capped by the FHA), servicing fees, and third-party closing costs (like appraisal and title). These costs are typically financed into the loan.