"How much could I actually get?" is the first question almost every homeowner asks me about a reverse mortgage. The honest answer is that there's no flat percentage. The amount comes from a formula FHA sets, and then a few things come off the top before you see a dollar. Here's how it works for a Home Equity Conversion Mortgage (HECM), the FHA-insured reverse mortgage most people mean when they use the term.
Step 1: Your "principal limit"
The starting number is called the principal limit. It's the most you can borrow on day one, before costs and any existing mortgage are paid. According to the CFPB, three things drive it:
Age of the youngest borrower (or eligible non-borrowing spouse). The older the youngest person is, the larger the share of value you can access. If one spouse is 74 and the other is 63, the 63-year-old sets the number.
Interest rates. Lower rates generally mean a higher principal limit. That's why the same home can qualify for a different amount a few months later.
Your home's value, up to FHA's limit. FHA uses the lesser of your appraised value or the HECM limit. For FHA case numbers assigned on or after January 1, 2026, HUD set that limit at $1,249,125. HUD reviews it each year.
FHA publishes "principal limit factor" tables that combine age and the expected interest rate. The lender multiplies that factor by the lesser of value or the limit, and that's your principal limit.
Why coastal Orange County homes often hit the ceiling
Here's the part that surprises a lot of homeowners near the coast. If your home is worth $2 million, FHA still only counts $1,249,125 in the formula. Above the limit, more value doesn't raise a HECM amount at all.
That doesn't mean a reverse mortgage is off the table. It means it's worth comparing the HECM with a private ("proprietary") reverse mortgage, which some lenders offer for higher-value homes. Those loans aren't FHA-insured, and their rules, costs and protections differ, so look at both side by side rather than assuming one is better.
Step 2: What comes off the top
The principal limit isn't cash in hand. Before you can draw, the loan typically pays:
Any existing mortgage or lien. A HECM must be the only lien, so a remaining mortgage is paid off first. This is often the biggest factor in what's left.
Upfront costs. FHA's initial mortgage insurance premium is 2% of the home value counted (up to the limit), with 0.5% of the balance charged each year after (HUD Mortgagee Letter 2017-12). Add origination and normal closing costs like appraisal and title. These can be financed, but that leaves less for you.
A set-aside, if required. Lenders do a financial assessment of credit, income and your history paying taxes and insurance. If it shows a gap, part of your proceeds may be held back to pay property taxes and insurance for you.
Step 3: The first-year rule
Even when plenty is available, HUD caps what you can take in the first 12 months. Under HUD's rule, first-year draws are limited to the greater of 60% of the principal limit, or your required payoffs and costs plus 10% of the principal limit. The rest becomes available after the first year.
How you take the money matters too. With an adjustable-rate HECM you can choose a line of credit, monthly payments, or a mix, and you pay interest only on what you use. A fixed-rate HECM pays one lump sum at closing, which the CFPB notes is usually the most expensive way to borrow because interest starts on the full amount right away.
Before you apply in California
Every HECM borrower meets with a HUD-approved counselor first. California adds a signed checklist you review with that counselor, covering things like moving out early and alternatives to a reverse mortgage. I'd encourage you to bring your kids or a trusted advisor to that conversation.
For agents
If you have a listing or buyer client 62 or older, the reverse mortgage numbers can change the plan. A seller who thought they had to move might be able to stay. A downsizing buyer might be able to purchase with a HECM for Purchase and no monthly mortgage payment. Bring me in early: age, the payoff on their current loan and condo eligibility all affect the number, and counseling has to happen before the application.
Find out your number
The only way to know what you'd actually get is to run your age, your home's value and your current payoff through today's figures. I'm happy to do that with you, no pressure and no obligation. Start with a refinance review request, see my reverse mortgage page, or call or text (949) 910-3943. I'm licensed in CA, AZ, WA and OR.
You may also find these helpful: How a Reverse Mortgage (HECM) Works and Reverse Mortgage vs. HELOC vs. Cash-Out Refinance.
Mack Davidson, NMLS #1006831, E Mortgage Capital. Your rate and terms depend on credit, property and loan program. Not all applicants or properties will qualify. HELOCs are not available in all states. Equal Housing Lender.
