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Reverse Amortization Calculator (That Actually Works)

Are you looking for a free and easy-to-use reverse amortization calculator? You’re definitely in the right place! MyHECM has probably one of the best reverse amortization calculators available online.

If you’d like more information about how to use our reverse mortgage amortization calculator, keep reading. We’ll walk you through steps to use the calculator and provide some additional explanations that may be helpful. If you’d like skip the lessons and just go straight to the calculator, click the following link:

–> Click Here to Access the Calculator (Opens in New Tab)

How to Use the Reverse Amortization Calculator

Most mortgages use standard amortization, which means you borrow a certain amount of money and pay it down over time. Reverse amortization, which is used by reverse mortgages, is the opposite. Instead of borrowing a set amount up front and paying it down, you borrow over time without having to make a payment. Any accrued interest is simply added to the loan balance.

The most popular reverse mortgage program in the United States today is the federally-insured home equity conversion mortgage, or HECM (often pronounced heck-um by industry insiders). The HECM enables homeowners 62 and over to access a portion of their home’s equity without giving up ownership of the home or taking on a mortgage payment. No mortgage payments are required as long as at least one borrower paying the required property charges and living in the home.

HECM proceeds can be taken in the form of a monthly term or tenure payment, line of credit, lump sum, or some combination of all these.

How much the HECM offers depends on the age of the youngest borrower, the value of the home, current interest rates, what program is selected (variable-rate HECM or fixed-rate HECM), and how the program is structured. The following will walk you through how to use our reverse mortgage calculator.

Step 1: Age and Home Value

Your age and the value of your home are two of the most important factors that determine how much you qualify for. Enter the age of the youngest borrower and the estimated market value of your home (not the tax value) and click “Next”.

Step 2: Mortgage Balances and Payments

Enter the total mortgage balances owed and the combined principal and interest payments. Also enter the number of years left on the loan, which will help make the amortization projections in Step 7 more meaningful for you. If the home is free and clear, enter zeroes for all three fields. Click “Next” to continue.

Step 3: Select the State

Select the state where the home is located and click “Next” to continue.

Step 4: Select How to Receive Proceeds

The reverse amortization calculator is programmed with several different options for receiving proceeds:

  • Lump Sum/LOC – You’ll receive the maximum proceeds available at closing as a lump sum (variable-rate HECM and fixed-rate HECM), then the remainder at one year in the form of a line of credit (variable-rate HECM only).
  • LOC Only – You’ll receive all proceeds in the form of a line of credit (variable-rate HECM only).
  • Lifetime payment – You’ll receive all proceeds in the form of a lifetime, or tenure, payment to you (variable-rate HECM only).
  • 20-Year Payment – You’ll receive all proceeds in the form of a 20-year term payment to you (variable-rate HECM only).
  • 15-Year Payment – You’ll receive all proceeds in the form of a 15-year term payment to you (variable-rate HECM only).
  • 10-Year Payment – You’ll receive all proceeds in the form of a 10-year term payment to you (variable-rate HECM only).

Click “Next” to continue.

Step 5: Confirm and Calculate

Confirm all the information is correct, then click “next” to continue.

Step 6: Calculation Results

This page shows estimated interest rates, closing costs, and available proceeds. Note that the interest rates and closing costs are estimates; actual lender interest rates and closing costs will likely vary.

Note also that the fixed-rate HECM only offers proceeds in the form of a lump sum. The variable-rate HECM offers lump sum, line of credit, and term/tenure options.

Click “Next” to continue.

Step 7: Projected Amortization

The amortization schedule displays an analysis of how the loan balance and line of credit (if applicable) change over time. It also displays cumulative mortgage payment savings and/or added term/tenure income (if applicable).

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