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 can 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 of 0.5% of the outstanding balance, in addition to the upfront MIP of 2% of the maximum claim amount paid at closing (HUD Mortgagee Letter 2017-12).
• Servicing fees — some servicers add a monthly fee to cover loan administration, which also gets added to the balance rather than billed separately. The calculator above does not include one; if your Loan Estimate shows a servicing fee, your real balance will grow a little faster than the projection.

Enter your home's value, the youngest borrower's age, your expected rate, any mortgage you need to pay off, and the cash you plan to draw at closing. The calculator looks up HUD's principal limit factor, adds the upfront MIP, origination fee and your closing-cost estimate to the starting balance, and then compounds that balance at your rate plus the 0.5% annual MIP, showing the loan balance, unused line of credit, home value and remaining equity every five years.

Say you're 72, your home appraises at $450,000, and your reverse mortgage balance stands at $150,000 at a 7% rate with the standard 0.5% annual MIP, and you make no further draws. Compounding monthly at 7.5% (the 7% rate plus 0.5% MIP), interest and MIP add $11,645 to your balance in year one, bringing it to $161,645. By year 10, if the rate stays at 7%, the balance reaches $316,810: more than double the starting balance, entirely from unpaid interest and insurance premiums rather than any additional cash you received. (These figures compound a $150,000 balance and nothing else. In the calculator above, the same home at age 72 and a 7% expected rate has a principal limit of $167,400, and HUD's first-year limit lets you take $82,440 in cash at closing on top of $18,000 of financed costs, assuming $3,000 of other closing costs. A $150,000 balance on that loan would come from drawing more of the line after the first year.)

Meanwhile, if your home appreciates modestly (say 3% a year), its value climbs to $604,762 over that same decade. The calculator above lets you set up exactly this scenario (cash drawn, rate, home value and a home-value growth rate) and shows the equity left every five years. Watch for the row where equity left reaches $0: that is the point where the balance has caught up with the home's projected value and a non-recourse HECM's FHA insurance backstop starts to matter to you.

Push the same scenario out another 10 years (to year 20) and the gap narrows sharply: a $150,000 balance compounding at 7% with 0.5% annual MIP reaches $669,123, while 3% annual appreciation carries the home to $812,750, leaving $143,628 of equity against $287,953 at year 10. 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 HECM line grows in available credit over time, at the same rate as the balance (the note rate plus the annual MIP, under 24 CFR 206.3), 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 twice, once with a large amount in the cash-to-draw field and once with a small one, and compare the loan balance and unused line of credit columns. Whatever you don't draw stays in the line and grows there instead of in your balance: 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: the starting balance is any mortgage payoff, plus the financed closing costs (2% upfront MIP, the origination fee, which defaults to the federal maximum, and your estimate of other closing costs), plus the cash you draw. Each month, 1/12 of your expected rate plus the 0.5% annual MIP is applied to the current balance, and the result becomes next month's starting balance. That is the mirror image of the standard fixed-rate amortization formula used everywhere else on this site. How much you can borrow in the first place comes from HUD's official principal limit factor table, looked up from the youngest borrower's age and your expected rate. The projection assumes the rate never changes, no further draws and no servicing fee. 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.