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Reverse Mortgage Limits: What They Mean to You

Jul 24, 2008
Prior to getting a reverse mortgage, you may want to learn about the reverse mortgage limits. These upper barriers could influence you depending on the worth of the home. In reality, there are "hard" upper barriers and "soft" upper barriers.

A hard limit is the limit set by the FHA. As of today, 90 percent of reverse mortgages are FHA insured. Obviously, the upper barriers set by the FHA are very considerable.

At this time, the FHA limit fluctuates from $200,160 and $362,790. The lower limits are used for country areas and the upper ones for large cities or states where the cost of living is higher. Also, the upper barrier can be adjusted up to 150 percent in Alaska, Guam, Hawaii and the Virgin Islands.

These upper barriers are raised every year. However, to have a realistic picture of how much you can expect to get, you have to understand about the soft boundaries. Soft ceilings restrain homeowners of high price houses to borrow more than those with homes around the FHA boundary and also set the actual amount you can get.

The soft boundary can be considered the actual limit for your house since it will set how much you can borrow. The amount that you can borrow is calculated from the lower of the appraised worth and the FHA boundary.

The real money homeowners can get depends on their age, the present rate, different mortgage costs and the appraised value of their house or FHA's home ceilings for their region. Usually, the more worth your house is, the older you are, and the lower the rates, the more you can get.

For instance, homeowners with a $100,000 mortgage at 9% interest rate might get up to 22% of the home's value if they are 65. If the homeowners are 75, they might get up to 41%, and up to 58% if they are 85 years of age.

In addition, remember that there are no asset or income ceilings on borrowers applying for a HUD's reverse mortgage. This basically means that you can have poor credit or earn no money or too much money and still be able to qualify for the loan. Nobody could be excluded because earnings, assets, or poor credit.

Remember, before you get a home mortgage, discuss it with your professional mortgage broker about the reverse mortgage limits so that you can get a more realistic opinion of how much money you can borrow by apply for this type of mortgage.
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