Principal Limit Factor Tables, PL Factor Tables

This article may contain affiliate links. If you click a link and make a purchase, we may receive compensation at no added cost to you. We work hard to provide great free resources and we appreciate your support!

HECM Principal Limit Factor TablesHECM principal limit factor tables are published by FHA and used by the reverse mortgage industry to calculate HECM reverse mortgage proceeds.

The tables contain lists of principal limit factors that are used to calculate the principal limit (PL). The principal limit is the percentage of the maximum claim amount (the appraised value for most people) the lender is allowed to lend based on age and the current expected interest rate.

How principal limit factors are used

Before we can calculate the total pool of cash available through a HECM, we have to first establish the maximum claim amount. The maximum claim amount is equal to the appraised value of the home or the FHA HECM lending limit, whichever is less.

As an example, let’s assume we’re working with a home value of $300,000. This is less than the lending limit, so the maximum claim amount is $300,000 as well. Let’s also assume we’re working with a borrower who is 70-years old and the expected interest rate is 5%. Using these variables, we look up the appropriate PL factor in the tables and determine it to be 0.465.

To calculate the principal limit, we simply multiply the maximum claim amount by the PL factor:

$300,000 (maximum claim amount) * 0.465 (PL factor) = $139,500 (principal limit)

As you can see the principal limit works out to be $139,500 in this example. This is the total pool of cash available to the borrower at closing to pay off existing mortgages, supplement income or retirement assets, pay closing costs, allocate to term/tenure income, line of credit, etc.

Where to find the HECM principal limit factor tables

The FHA principal limit factor tables are available on the HUD website at the links below. For case numbers issued:

You’ll need to have Microsoft Excel (or a compatible program) installed to open the tables.

A easier way to calculate PL

Are you interested in a far easier way to calculate principal limits? We’ve already done the work for you! You can easily calculate principal limits for various home values, ages, and expected interest rates using our principal limit calculator.

 

You wouldn't even think of posting your Social Security Number online, right? Unfortunately, there's a good chance somebody else already has. Are you a sitting duck for identity thieves?

Over 147 million Americans had their personal information (Social Security Numbers, account numbers, addresses, etc.) exposed in the Equifax data breach of 2017. That means there's nearly a 1 in 2 chance that some of your personal information was compromised.

If you haven't protected your identity yet, you're potentially a sitting duck for identity thieves. Data breaches happen all the time. It's not a matter of if, but when your personal information will be compromised.

Identity theft can wreck your good credit for years to come and be an absolute nightmare to clean up. Get protected today! I personally recommend Zander Identity Theft protection. I've been with them for over ten years, they're endorsed by Dave Ramsey, their prices are great, and their service and protection are excellent.

Get Zander Identity Theft Protection now

- Mike Roberts, Founder, MyHECM.com