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Reverse Mortgage Glossary


Because the HECM reverse mortgage has an annuity-like component to it, age plays a role in how much you can qualify for. The lender uses your age and the expected interest rate (EIR) to determine the applicable principal limit factor (PL factor). The PL factor is then multiplied by the maximum claim amount (usually equal to the appraised value) to determine the principal limit, which is the initial pool of cash available that can be allocated to existing mortgage balances, closing costs, taxes or insurance due, and payments to the borrower in the form of term or tenure payments, line of credit, or lump sum.

Generally speaking, the older you are, the larger the principal limit. Assuming the EIR and value of the home is the same, an 85 year-old will qualify for a much larger principal limit than a 65 year-old.