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Reverse Mortgage Glossary
The loan limit is the maximum loan amount FHA will insure for a HECM reverse mortgage. As of this writing (April 2016), the loan limit is $625,500, which means that the principal limit (the total pool of cash available) is calculated based on the lesser of your appraised value or $625,500.
For example, if the appraised value is $150,000, the principal limit will be calculated based on a maximum claim amount of $150,000. If your appraised value is $800,000, then the principal limit will be calculated based on a maximum claim amount equal to the loan limit of $625,500.
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