Reverse Mortgage Amortization Calculator

Every other calculator on this site models a forward amortization: you borrow a lump sum, make a fixed payment every month, and the balance shrinks toward zero by a set date. A reverse mortgage flips every part of that mechanism.

Because no payment is required, the interest charged each month — plus the ongoing mortgage insurance premium on FHA-insured HECMs — doesn't get paid down. It gets capitalized: added directly to the balance, which means next month's interest is calculated on a slightly bigger number. That compounding is the entire mechanism this calculator models.

Three components typically stack into a reverse mortgage's growing balance:

• Interest — charged on the outstanding balance at your loan's rate, compounding monthly since it's never paid down.
• Ongoing mortgage insurance premium (MIP) — on a HECM, FHA charges an annual MIP (currently 0.5% of the outstanding balance under current program rules) in addition to the upfront MIP paid at closing.
• Servicing fees — some servicers add a small monthly fee to cover loan administration, which also gets added to the balance rather than billed separately.

Enter your starting balance (or the amount you plan to draw), your home's value, your expected rate, and the MIP and servicing fee assumptions above to see exactly how these three components compound against your equity year by year.

Say you're 72, your home appraises at $450,000, and you draw $150,000 as a lump sum at a 7% rate with the standard 0.5% annual MIP. In year one, interest and MIP add roughly $11,250 to your balance, bringing it to about $161,250. By year 10, compounding pushes the balance to somewhere in the $290,000-$310,000 range, depending on the exact rate path — more than double the original draw, entirely from unpaid interest and insurance premiums rather than any additional cash you received.

Meanwhile, if your home appreciates modestly (say 3% a year), its value climbs toward roughly $605,000 over that same decade. The calculator above lets you toggle exactly this scenario — draw amount, rate, home value, and appreciation — and flags the year your projected balance would cross your projected home value, which is the point a non-recourse HECM's FHA insurance backstop actually starts to matter to you.

Push the same scenario out another 10 years (to year 20) and the gap typically widens further: a $150,000 starting draw compounding at 7% with 0.5% annual MIP can approach $600,000-$650,000, even as 3% annual appreciation only carries the home to roughly $810,000. The two lines are moving toward each other in percentage terms even though the home is still technically worth more — which is exactly the trend this calculator is built to surface years before it becomes a surprise at closing.

Not every reverse mortgage borrower draws the same way, and the choice materially changes how fast your balance amortizes upward. A lump-sum draw at closing starts interest and MIP compounding on the full amount immediately — the fastest-growing path, all else equal. A line of credit, by contrast, only accrues interest and MIP on the portion you've actually drawn; an undrawn line typically grows in available credit over time (a feature unique to HECM lines of credit) without adding to your balance until you tap it. Monthly tenure payments sit in between — your balance grows gradually as each disbursement is added, rather than all at once.

Run the calculator above with the same total draw amount split across a lump sum versus a smaller line-of-credit draw to see the difference directly: delaying when money leaves the loan is one of the few levers you have to slow down how fast the balance amortizes against your equity, independent of the rate or MIP you're charged.

Because the balance can grow indefinitely while home values can fall, federally-insured HECMs are structured as non-recourse loans: you (or your heirs) will never owe more than the home is worth when the loan comes due, even if the amortized balance has grown past the home's value. That guarantee is backed by the FHA Mutual Mortgage Insurance Fund — which is exactly what the ongoing MIP in this calculator is paying for. It's not a fee without a purpose; it's the price of the protection that caps your downside.

Proprietary (non-FHA) reverse mortgages sometimes offer similar non-recourse protection through the lender directly, but terms vary by product, so confirm this explicitly for any non-HECM loan before assuming it applies.

Nothing about this growing balance requires a monthly payment — but it isn't open-ended forever. A HECM becomes due and payable when the last surviving borrower (or eligible non-borrowing spouse) sells the home, permanently moves out (including a stay of 12 consecutive months or longer in a care facility), or passes away. At that point, the home is typically sold to repay the balance, with any remaining equity going to the borrower or their estate — or heirs can choose to repay the balance directly and keep the home.

Because the amortized balance is what ultimately gets repaid, it directly determines what — if anything — is left over for your estate. Heirs generally have three options when a HECM becomes due: sell the home and keep whatever equity remains after the balance is repaid, repay the balance directly (through refinancing or other funds) and keep the home, or, if the balance has grown larger than the home's value, sign a deed in lieu of foreclosure and walk away with no penalty, since the non-recourse guarantee means they're never on the hook for the shortfall.

Running your own numbers through this calculator years in advance — rather than leaving your heirs to discover the balance at the worst possible moment — is one of the more considerate things a borrower can do with an afternoon. A balance projection that shows little remaining equity by year 15 is useful information for estate planning regardless of what you ultimately decide to do with the loan itself.

This calculator projects your balance forward using compound growth: each month, interest and the ongoing MIP rate you specify are applied to the current balance, and the result becomes next month's starting balance — the mirror image of the standard fixed-rate amortization formula used everywhere else on this site. For the official rules governing HECM mortgage insurance premiums, non-recourse protection, and counseling requirements, see HUD's HECM program page and the CFPB's reverse mortgage guidance. For the forward-amortization math this calculator's logic mirrors, see our calculation methodology page.