FHA/HECM Reverse Mortgage Loan Limit Increased To $417,000.

The long awaited announcement from HUD regarding what the national loan limit will be for federally insured HECM reverse mortgages, was finally announced this morning. The new loan limit will be $417,000. and will be the same throughout the country. Previously, every county was subject to different lending limits.

This is welcome news for not only the industry as a whole but for seniors that may have been a little bit short of equity to qualify previously. The national HECM loan limit simplifies the program for lenders as well as borrowers. The new limit of $417,000. is expected to become effective on November 1, 2008. Since it usually takes about 30 days to process and close a reverse mortgage, it is not too early to begin your application if you are interested and will now benefit from the revised lending limit.


An example of how a senior borrower may benefit from the loan limit increase is illustrated by this profile of a homeowner that previously did not qualify but now does.

Estimated Home Value: $290,000.
First Mortgage Balance: $139,000.
Borrower's Age: 69
Location: South Carolina

Previously this borrower did not have enough equity to qualify for a reverse mortgage. With the old lending limit in South Carolina of $220,160. this borrower would have had an equity shortfall of over $20,000.

Today this borrower is eligible to pay off the entire first mortgage balance of $139,000. plus have access to an additional $36,870., which can be taken as a lump sum, a line of credit, monthly supplemental income or a combination of these options.

*The above illustration is based upon the borrower obtaining the monthly adjustable HECM reverse mortgage loan at today's initial interest rate.

Not all of the online calculators have been updated yet, so if you would like to find out if the new lending limit will help you to qualify or offer you a higher benefit amount, please feel free to request a free reverse mortgage quote here.