HECM reverse mortgage loan limits have changed yet again in 2023. The new revers mortgage loan limits are jumping to $1,089,300 in California, Colorado, & Idaho. In fact, the reverse mortgage loan limits should change to $1,089,300 nationwide, but we’re more focused on CA, CO, & ID since that’s where we do business. HUD / FHA has officially announced the new HECM limits, but traditionally the reverse mortgage limits mirror the maximum loan amount for the high cost states. FHFA has already announced that the high cost states of Alaska and Hawaii will be $1,089,300 which equates to 1.5 times the conventional loan limits throughout most of the rest of the country (which are set at $726,200).
2023 HECM Reverse Mortgage Loan Limits Questions and Answers
Reverse mortgages are just a home loan, like any other, but with a few tiny differences. A key difference most people enjoy is the fact that there are no required monthly payments if you do a reverse mortgage, but this article is not about the reverse mortgage basics. Another key difference however, pertains to how the HECM Reverse Mortgage Loan Limits work versus a conventional loan or a regular FHA loan. Hence, we’ve crafted a nice Q & A about the HECM reverse mortgage loan limits for 2023.
The 2023 HECM Limit is $1,089,300.00, Does That Mean I Can Take a Loan for That Amount?
No, you cannot borrow that amount with an FHA insured reverse mortgage. The technical term for the HECM Reverse Mortgage Loan Limit is Maximum Claim Amount. The max claim amount is basically the highest appraised value used to calculate the reverse mortgage benefit amount.
Here’s an example. At age 62 you can borrow a little over 52% of the appraised value of your home (this percentage could potentially change weekly based on the performance of the 10 year CMT). For example, a 62 year old can borrow a little over $52,000 if their home is valued at $100,000.00. This same 62 year old could borrow about $104,000 if their home appraised for $200,000.
The aforementioned 62 year old’s maximum loan amount would be $566,000 if their home appraised for the 2023 HECM Reverse Mortgage Loan Limit (aka max claim amount) of $1,089,300.00. If this same person’s home was worth anything more than the $1,089,300.00 max claim amount, it would not yield a higher borrowing power than the $566,000. However, there is a proprietary jumbo reverse mortgage that allows you to borrow up to $4,000,000 and as high as $6,000,000 on an exception basis. We’ll talk more about these later in this post.
What Percentage of The Appraised Value Can I Borrow With A Reverse Mortgage?
The amount or percentage of the home value you borrow can change weekly if interest rates rise enough, but for now the amount or percentage of the appraised value one can borrow starts at 52.39% for 62 year old homeowners. It increases a little bit with each passing year and caps out at 74.99% for 92 year olds. To the right you’ll see an age chart that shows the percentage of
the appraised value that can be borrowed. Rather than listing 30 years of figures, we just did every other year.
What’s the Actual Maximum Loan Amount Available for Reverse Mortgages with the New HECM Loan Limits?
As we mentioned before, the amount or percentage of your home value that you can borrow changes with each passing year. Below, we’ve provided a chart (to the left) with the maximum
loan amount available for a few different age buckets along with the LTV / loan to value. All are based on the assumption that the home is worth $1,089,300.00 or more therefore yielding the
maximum hecm reverse mortgage loan amount. As you can see, the maximum loan amount for FHA reverse mortgages in 2023 varies widely. On the one hand, a 62 year old can borrow up to $566,000 assuming their home is worth $1,089,300.00 or more. On the other hand a 92 year old can borrow up to $816,866 if their home is at the max claim amount or higher.
Is there a Way to Borrow More than HECM Reverse Mortgage Loan Limits?
Yes, there is a jumbo or proprietary reverse mortgage option. Aside from being able to borrow larger loan amounts, the point of entry is also lower. These can be done as young as 55 in some states.
You can borrow as much as $4,000,000 and even up to $6,000,000 on an exception basis.
However, the loan to value or percentage of your home’s value that you can
borrow is a little more conservative than the FHA version of the reverse mortgage. While the LTV’s are lower, these percentages have increased greatly over the last few years.
If the real estate market slows, they may decrease again. so timing is everything. Off to the right you’ll find a jumbo reverse mortgage age and loan to value chart. As you can see, a 55 year old can borrow about 27.4% up to 40.1% of the appraised value.
For example, a 55 year old with a home worth $2,000,000 can borrow anywhere from $548,000 to $802,000. On the opposite side of the spectrum a prospective borrower that is 88 or older can borrow ($2,000,000 home value again) anywhere from $1,024,000 up to $1,246,000.
Want more info about the reverse mortgages in California, Colorado, or Idaho? Email us at; [email protected]
Author; LifeSource Mortgage, headquartered in Orange County, CA and an Idaho, Colorado, & California licensed Reverse Mortgage Broker.