HECM Reverse Mortgage 2026: Principal Limit Table, Heirs, Tax
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Quick Answer
A HECM reverse mortgage lets a borrower aged 62 or older borrow a share of the home’s value set by HUD’s principal limit factor (PLF): for a 72-year-old at a 6.0% expected rate it is 41.6% of the home’s value, up to the 2026 cap of $1,249,125. HUD’s factor falls as the expected rate rises: at age 62 it is 47.0% at 4%, 35.7% at 6% and 27.2% at 8% (HUD PLF table, case numbers on or after October 2, 2017, which is still the table HUD lists). The 2026 maximum claim amount is $1,249,125 for case numbers assigned on or after January 1, 2026 (Mortgagee Letter 2025-22, December 11, 2025). FHA charges 2% of the maximum claim amount up front and 0.50% a year on the balance. The borrower has no personal liability for the balance, and when the last borrower dies the heirs can pay the lesser of the balance or 95% of the appraised value (HUD Handbook 4000.1). IRS Publication 936 (2025) treats the money received as “loan advances and not income.” Data as of October 20, 2026.
Key Takeaways
- The principal limit is the maximum claim amount times a HUD factor. The factor rises with the age of the younger borrower and falls with the expected rate. Age 62 at 6% is 35.7%; age 90 at 6% is 61.8%; age 72 at 4% is 52.4% and at 8% is 33.2% (HUD PLF table).
- The table has not changed since October 2, 2017. HUD’s FY 2025 Actuarial Review says “The PLF table was last updated in Mortgagee Letter (ML) 2017-12.” What changes each year is the dollar cap: $1,249,125 for 2026, up from $1,209,750 in 2025 and $765,600 in 2020 (HUD lender page).
- Rates move the loan more than age does. On our $800,000 example at age 72, the principal limit is $373,600 at 5%, $332,800 at 6% and $297,600 at 7% (our arithmetic). A one-point rate move costs about $35,000 to $41,000 of borrowing power.
- Up-front cost is set by HUD: a 2.00% initial premium ($16,000 on $800,000), an origination fee capped at $6,000 in 24 CFR 206.31(a)(1) and a 0.50% annual premium that accrues on the balance. The loan then grows; it is never repaid monthly.
- Heirs have 30 days from the lender’s notice to act under 24 CFR 206.125(a)(2). They can pay the balance, sell, or hand over the deed. For a sale, HUD’s Handbook says the property may be sold for “the lesser of the full HECM debt” or 95% of the current appraised value.
- Our worked example: $199,680 borrowed against an $800,000 home grows to $527,994 after 15 years at 6.5% and to $1,009,622 after 25. With the value flat, the balance reaches 95% of the value after about 20.6 years (our arithmetic).
- Volume has collapsed: HUD endorsed 114,421 HECMs in fiscal year 2009 and 27,995 in fiscal year 2025, 24.5% of the 2009 count. Fixed-rate loans were 42 of them (HUD FY 2025 Actuarial Review).
CSV · 238 rows
HECM reverse mortgage: HUD principal limit factors by age and expected rate, 2026 maximum claim amount, endorsements by fiscal year, costs, heir rules and a worked example
238 rows: 145 cells of HUD’s principal limit factor table (ages 62 to 90 at 4%, 5%, 6%, 7% and 8%), 9 cross-check cells from HUD’s actuarial review, 39 rows of HECM endorsements and fixed-rate counts for fiscal years 2009 to 2025, 8 maximum claim amounts, 11 rows of costs and rules, 2 IRS rows and 24 rows of our worked example.
How the principal limit is built
Searches for “hecm reverse mortgage” are answered by lenders and trade groups, and most of them show a few rows of a chart. The rule itself is short and set by HUD, not by the lender.
- Maximum claim amount (MCA). HUD’s Actuarial Review defines it: “The MCA is the minimum of the FHA HECM loan limit and the appraised value.” For case numbers assigned on or after January 1, 2026, the limit is $1,249,125, which Mortgagee Letter 2025-22 sets at “150 percent of Federal Home Loan Mortgage Corporation’s (Freddie Mac) national conforming limit of $832,750.” A home worth $1.6 million is treated as worth $1,249,125 for this purpose (our reading).
- Principal limit factor (PLF). Looked up by the age of the youngest borrower and the expected average mortgage interest rate. HUD’s Actuarial Review says the initial principal limit is the MCA multiplied by the factor for the youngest borrower’s age and the expected rate “rounded to the nearest 0.125 %.”
- The expected rate is not always the rate you pay. 24 CFR 206.3 says that for a fixed-rate HECM it equals the note rate; for an adjustable one it is “the sum of the mortgagee’s margin plus the weekly average yield for U.S. Treasury securities (CMT) adjusted to a constant maturity of 10 years or an additional SOFR index as approved by the Secretary.” Your lender’s margin therefore moves your principal limit.
- Cash available in the first year. For adjustable-rate loans, Handbook 4000.1 caps the first-year draw at the greater of 60 percent of the principal limit or the mandatory obligations plus 10 percent, and 24 CFR 206.25 repeats the structure.
Eligibility starts at 24 CFR 206.33: “The youngest borrower shall be 62 years of age or older at the time of loan closing.”
HUD’s principal limit factors: dollars per $100,000 of maximum claim amount
We read the factors from HUD’s own workbook, “FY 2018 PLF Tables” (General Table, ages 62 to 99), which HUD’s HECM lender page lists as the table “On or after 10/2/17.” We cross-checked nine cells against the extract printed in HUD’s FY 2025 Actuarial Review (for example 0.403 at age 65 and 5.5%), and all nine match. The table below shows the principal limit on each $100,000 of maximum claim amount (factor times $100,000, our arithmetic). The full grid of ages 62 to 90 is in the CSV.
| Age of youngest borrower | Expected rate 4% | 5% | 6% | 7% | 8% |
|---|---|---|---|---|---|
| 62 | $47,000 | $41,000 | $35,700 | $31,200 | $27,200 |
| 65 | $49,000 | $43,000 | $37,800 | $33,300 | $29,400 |
| 70 | $52,200 | $46,500 | $41,500 | $37,000 | $33,000 |
| 75 | $54,700 | $49,200 | $44,300 | $40,000 | $36,000 |
| 80 | $58,500 | $53,400 | $48,800 | $44,600 | $40,800 |
| 85 | $63,600 | $59,100 | $54,900 | $51,100 | $47,600 |
| 90 | $69,100 | $65,300 | $61,800 | $58,600 | $55,500 |
Three things the table shows (our reading):
- Age buys less than rate costs. Waiting from 62 to 72 at 6% lifts the factor from 35.7% to 41.6%. A two-point rate rise at age 72 (4% to 6%) lowers it from 52.4% to 41.6%, a bigger drop.
- The factor stops at 75%. In HUD’s table the highest cell is 0.750 (ages 93 and up at low rates); a borrower never gets more than three-quarters of the maximum claim amount.
- Young borrowers get the least. At 8% a 62-year-old gets $27,200 per $100,000; an 85-year-old gets $47,600.
The rate grid on the largest loan
At the 2026 cap the principal limit tops out at these amounts (maximum claim amount $1,249,125 times the factor, our arithmetic):
| Age | Factor at 6% | Largest principal limit at 6% | Same age at 4% | Same age at 8% |
|---|---|---|---|---|
| 62 | 0.357 | $445,938 | $587,089 | $339,762 |
| 72 | 0.416 | $519,636 | $654,542 | $414,710 |
| 82 | 0.511 | $638,303 | $755,721 | $542,120 |
Those are limits, not payouts. Several items come out first.
What it costs, from the rules
| Cost | Amount | Source |
|---|---|---|
| Initial mortgage insurance premium | 2.00% of the maximum claim amount ($16,000 on $800,000) | HUD Mortgagee Letter 2017-12; Handbook 4000.1 |
| Annual mortgage insurance premium | 0.50% of the outstanding balance, payable monthly; may be added to the balance | HUD Mortgagee Letter 2017-12; 24 CFR 206.27(b)(7) |
| Loan origination fee | Greater of $2,500 or 2% of the first $200,000 of MCA plus 1% of the rest, capped at $6,000; can be financed | 24 CFR 206.31(a)(1) |
| Third-party charges | Recording, credit report, survey, title exam and insurance, appraisal, flood certification, at reasonable and customary amounts | 24 CFR 206.31(a)(2) |
| Interest | Accrues on the balance at the note rate | 24 CFR 206.3 (expected rate definition) |
| Property charges | Taxes, insurance and upkeep stay the borrower’s job; failing to pay them can make the loan due | 24 CFR 206.27(b)(6), (c)(2)(iii) |
The loan does not ask for monthly payments on the debt, but it is not free of obligations. A HECM becomes due and payable, among other triggers, if the last borrower dies, the borrower conveys title, the home stops being the principal residence, or a borrower is away more than 12 consecutive months for illness (24 CFR 206.27(c)).
What the heirs owe, step by step
When the last borrower dies and no eligible spouse stays, the lender tells HUD within 60 days and then the estate or heirs within 30 days of HUD’s notice or approval. 24 CFR 206.125(a)(2) gives them 30 days from the date of notice to choose one of these:
- pay the outstanding loan balance in full, including accrued interest, premiums and advances;
- sell the property for an amount that “shall not exceed 95 percent of the appraised value”;
- give the lender a deed in lieu of foreclosure.
The regulation leaves the exact sale floor to HUD notice. HUD’s Handbook 4000.1 states it: the estate may sell “for the lesser of the unpaid principal balance or 95 percent of the Property’s appraised value.” An eligible non-borrowing spouse has the same choice and may “satisfy the HECM and retain the Property” at that price.
The borrower side is protected by 24 CFR 206.27(b)(8): “The borrower shall have no personal liability for payment of the outstanding loan balance.” The lender may not obtain a deficiency judgment. In plain terms, heirs never owe more than the house is worth to them (our reading), and if the sale brings less than the debt, HUD’s insurance pays the lender the difference.
Our worked example (our arithmetic)
Assume a borrower aged 72, an $800,000 appraised value, a 6.0% fixed rate (so the expected rate is 6.0%) and a starting balance of 60% of the principal limit. The balance grows at 6.5% a year, monthly compounded: 6.0% note rate plus the 0.50% annual premium. We ignore draws and repayments.
- Principal limit: $800,000 × 0.416 = $332,800. Initial premium $16,000 and a maximum origination fee of $6,000 leave $310,800 before third-party costs.
- Starting balance: 60% × $332,800 = $199,680.
| Year | Balance | Home value, flat | Heirs pay if value flat | Home value, +3% a year | Heirs pay if value +3% |
|---|---|---|---|---|---|
| 5 | $276,121 | $800,000 | $276,121 | $927,419 | $276,121 |
| 10 | $381,825 | $800,000 | $381,825 | $1,075,133 | $381,825 |
| 15 | $527,994 | $800,000 | $527,994 | $1,246,374 | $527,994 |
| 20 | $730,119 | $800,000 | $730,119 | $1,444,889 | $730,119 |
| 25 | $1,009,622 | $800,000 | $760,000 (95% of value) | $1,675,022 | $1,009,622 |
In the flat-value case the 95% limit starts to bind at about 20.6 years. In the case where the home gains 3% a year, the heirs keep the equity above the balance: at year 15, $1,246,374 minus $527,994 is $718,380 of value before selling costs. A longer-lived borrower, a rising rate or an unchanged market make the balance win; this is a result of compounding, not a forecast.
The tax rules
- Proceeds are not income. IRS Publication 936 (2025): “Because reverse mortgages are considered loan advances and not income, the amount you receive isn’t taxable.”
- Interest is generally not deductible while it accrues. The same page says accrued interest “is considered interest on home equity debt and isn’t deductible.”
- Heirs get a stepped-up basis. A house inherited by an heir has a basis equal to its value at death, so a sale to pay off the loan usually produces little or no gain; see our step-up in basis guide and the probate guide for real estate.
- Selling instead. If the alternative is selling while alive, the home-sale exclusion decides the tax: capital gains tax on a home sale.
How many people actually do this
| Fiscal year | HECMs endorsed | Fixed-rate | Fixed-rate share (our arithmetic) |
|---|---|---|---|
| 2009 | 114,421 | 13,311 | 11.6% |
| 2010 | 79,052 | 54,469 | 68.9% |
| 2013 | 59,923 | 36,329 | 60.6% |
| 2017 | 55,290 | 5,716 | 10.3% |
| 2019 | 31,272 | 1,890 | 6.0% |
| 2021 | 49,196 | 3,549 | 7.2% |
| 2022 | 64,472 | 2,850 | 4.4% |
| 2023 | 32,974 | 304 | 0.9% |
| 2024 | 26,502 | 51 | 0.2% |
| 2025 | 27,995 | 42 | 0.15% |
FHA endorsed 27,995 HECMs in fiscal year 2025 with an approximate maximum claim amount of $14.87 billion, about $531,000 a loan (our arithmetic). HUD’s Actuarial Review adds that the average borrower age is “almost 75 years old in Fiscal Year 2025” and that 94.4% of FY 2025 loans used the line of credit. Over fiscal years 2009 to 2025, HUD counts 917,665 endorsements; the 17 yearly figures in its Exhibit III-2 add to 917,655 (our arithmetic), a ten-loan gap that does not change any conclusion here. The full 17 years are in the CSV.
Reverse mortgage, sale, HELOC or leaving the house
| Choice | What the rules say | Where to read more |
|---|---|---|
| HECM | Non-recourse; balance grows with interest and the 0.50% premium; due on death, sale or move-out; heirs may pay the lesser of balance or 95% of value | 24 CFR 206.27, 206.125; Handbook 4000.1 |
| Sell the home | Gain taxed under the home-sale exclusion; no loan left to repay | Our capital gains page |
| HELOC or home equity investment | Different contracts with their own payments, caps and, for equity-sharing, state-law disputes | Our home equity investment page and HELOC page |
| Leave it to heirs | Basis steps up to value at death; probate or a deed decides who controls the sale | Our step-up, probate and life estate deed pages |
Related reading: home equity investment contracts, life estate deeds and Medicaid, Medicaid asset protection trusts with rental property and a HELOC on an investment property.
What a reader can do with this
- Ask any lender for three numbers in writing: the expected rate used, the resulting factor (check it against the table above) and the margin. A different expected rate changes the borrowing power by the table’s gap, as much as $41,000 per point on $800,000.
- Check the cap before comparing. If the home is worth more than $1,249,125, the factor applies to the cap, not to the value.
- Add up the first-year cost: 2% premium, origination fee up to $6,000, third-party charges, and any existing mortgage that must be paid from the proceeds.
- Run the heirs test with your own numbers. Use the balance-growth line above with your note rate plus 0.50% and your own horizon.
- Name a spouse as borrower or ask about the non-borrowing spouse deferral before closing; under 24 CFR 206.55 only a spouse disclosed at origination can qualify.
- Tell the heirs where the loan papers are and that the 30-day clock in 24 CFR 206.125(a)(2) starts at the lender’s notice.
This is analysis of public documents, not investment, legal or tax advice.
FAQ
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An email when the hecm reverse mortgage numbers change
When a rate, rule or filing behind this page changes: what changed, the one number that matters, and the source to check it yourself.
Sources, read and saved on October 20, 2026: HUD, Home Equity Conversion Mortgage for Lenders page (hud.gov/stat/sfh/hecm) and its FY 2018 PLF Tables workbook (case numbers on or after 10/2/17); HUD Mortgagee Letter 2017-12 (August 29, 2017) and Mortgagee Letter 2025-22 (December 11, 2025); HUD Handbook 4000.1, Title II HECM (transmittal issued October 31, 2023); 24 CFR part 206 (eCFR, October 2026); HUD, Annual Actuarial Review of the FHA Mutual Mortgage Insurance Fund, HECM Loans, FY 2025 (December 12, 2025); and IRS Publication 936 (2025). Worked examples are our arithmetic.
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