Caleb Adams
Licensed Mortgage Broker
The first question almost everyone asks me about a reverse mortgage is simple: how much money can I actually get? I would rather show you how the number is built, so you can sanity check any quote you get, whether it comes from me or from someone else.
I’m Caleb Adams, a mortgage broker based in North Logan, Utah, licensed in Utah, Idaho, and Texas. This post focuses on the Home Equity Conversion Mortgage (HECM), the FHA-insured reverse mortgage that most homeowners 62 and older in Utah and Idaho end up using. If you want the bigger picture on how reverse mortgages work, start with my reverse mortgage overview. This article is only about the dollars: what you can borrow, what comes off the top, and what you actually walk away with.
With a HECM, the amount you can access is called your principal limit. HUD and the CFPB both say it depends on three things:
Your principal limit is not the same as the cash you receive. From that number we subtract any existing mortgage you have to pay off, plus upfront costs. What is left is what you can actually use, and even that has a first-year cap. I’ll walk through each piece.
For FHA case numbers assigned from January 1, 2026 through December 31, 2026, the HECM maximum claim amount is $1,249,125, according to HUD Mortgagee Letter 2025-22. That limit is national. It is the same in Logan, Salt Lake City, St. George, Boise, Idaho Falls, and Coeur d’Alene. Unlike regular FHA purchase loans, HECM limits do not change by county.
What that means in practice: if your home appraises for $500,000, the calculation uses $500,000. If your home appraises for $1,600,000, the calculation stops at $1,249,125. The equity above the limit does not increase your HECM proceeds. For higher-value homes, there are private or “proprietary” reverse mortgages that are not FHA insured. The FTC notes these may offer larger advances on high-value homes but often come with a higher interest rate, so they need their own comparison.
HUD publishes tables of principal limit factors. Each factor is a percentage tied to a borrower age and an expected interest rate. The lender multiplies that percentage by your home value (capped at the HECM limit). That product is your principal limit.
You do not need to memorize the tables. The key ideas are:
This is why two neighbors in the same subdivision with the same home value can get very different numbers. Age and the rate on the day the loan is priced matter a lot.
A HECM must be the only lien on the home, so any existing mortgage or HELOC gets paid off out of your principal limit at closing. This is the single biggest factor for most people I talk to. If your principal limit is $250,000 and you owe $180,000, you have far less left over than someone who owns the home free and clear. For some homeowners the most valuable result is simply eliminating a monthly mortgage payment, even if there is little extra cash.
Under HUD Mortgagee Letter 2017-12, the initial mortgage insurance premium is 2% of the maximum claim amount. The maximum claim amount is the lesser of your appraised value, the sales price, or the HECM limit. On a $500,000 home, that is $10,000. On a home at or above the 2026 limit, it tops out at $24,982.50. There is also an annual premium of 0.50% of the outstanding balance, which is added to the loan balance over time rather than paid out of pocket.
HUD caps the HECM origination fee. The lender can charge the greater of $2,500 or 2% of the first $200,000 of the maximum claim amount plus 1% of the amount above $200,000, with a hard cap of $6,000. Lenders can charge less than the maximum.
Appraisal, title, recording, and similar third-party costs vary by property and county. These can usually be financed into the loan, which reduces your available proceeds.
Every HECM includes a financial assessment that looks at credit history, income, and residual income. If the review shows a risk that property taxes and homeowners insurance will not get paid, the lender may require a Life Expectancy Set-Aside. That money is reserved from your principal limit to pay those bills, which lowers the amount you can draw for other uses.
Even after costs, you usually cannot take everything in year one. Federal rules limit what can be disbursed at closing and during the first 12 months to the greater of 60% of the principal limit, or your “mandatory obligations” (payoffs and closing costs) plus 10% of the principal limit. After the first year, the rest becomes available. If you choose the line of credit option, the CFPB notes that the unused portion grows over time.
This is a made-up illustration to show the mechanics. The percentage below is not a quote and is not tied to any current rate. Your real numbers depend on your age, the rate the day you lock, your appraisal, and actual fees.
| Item | Hypothetical amount |
|---|---|
| Home value (below 2026 HECM limit) | $550,000 |
| Assumed principal limit factor | 45% |
| Principal limit | $247,500 |
| Existing mortgage payoff | minus $100,000 |
| Upfront MIP (2% of $550,000) | minus $11,000 |
| Origination fee (HUD cap for this value) | minus $6,000 |
| Assumed other closing costs | minus $4,000 |
| Net remaining proceeds | $126,500 |
Now the first-year rule. Sixty percent of $247,500 is $148,500. Mandatory obligations here are $121,000, plus 10% of the principal limit ($24,750) equals $145,750. The greater of the two is $148,500, so that is the most that can be disbursed in year one. After the $121,000 of payoffs and costs, about $27,500 is available in the first 12 months, and roughly $99,000 more opens up after that.
Change one input and everything shifts. If the same homeowner owned the home free and clear, net proceeds would be about $226,500 before the first-year cap. If they were ten years older, the factor would generally be higher. If rates were higher, it would generally be lower.
According to the CFPB, HECM funds can come as a line of credit, monthly payments (for a set term or for as long as you live in the home and meet the loan terms), or a lump sum. The lump sum is typically paired with a fixed rate, and the CFPB notes the amount available that way may be lower than other options. Adjustable-rate options allow a line of credit where you only pay interest and fees on what you use. Many people combine options, such as a partial line of credit with monthly payments.
The HECM rules are federal, so the math above works the same whether your home is in Cache Valley or the Treasure Valley. A few local points are still worth knowing:
Every HECM borrower must complete counseling with a HUD-approved counselor before applying. I think that’s a good thing. A counselor has no stake in the loan and will walk you through the costs, alternatives, and what happens to the home later. You can find one through HUD’s counselor roster or by calling (800) 569-4287.
It is also worth comparing a reverse mortgage to other options. If you are still working, have strong income, and only need a modest amount, a second mortgage or HELOC may cost less. I compare the two side by side in reverse mortgage vs HELOC. If you want to see how equity fits into a longer plan, my wealth builder calculator is a good starting place.
For FHA-insured HECMs with case numbers assigned in 2026, the maximum claim amount is $1,249,125. That caps the home value used in the calculation. Your actual principal limit is a percentage of that value based on age and interest rate, so it will be well below the limit itself.
No. The HECM limit is national. It is $1,249,125 in every Utah and Idaho county for 2026. Local home values matter only because they determine where your appraisal lands relative to that limit.
Often yes. The existing mortgage is paid off from your principal limit at closing. The loan works when your principal limit is large enough to cover the payoff and closing costs. Whatever remains is available to you, subject to the first-year limit.
Federal rules limit first-year disbursements to the greater of 60% of the principal limit or mandatory obligations plus 10% of the principal limit. The rest becomes available after 12 months.
The biggest known costs are the 2% initial mortgage insurance premium on the maximum claim amount and an origination fee capped at $6,000 by HUD. Third-party closing costs vary. Most of these can be financed into the loan, which lowers your available proceeds.
Yes. The calculation uses the age of the youngest borrower or eligible non-borrowing spouse. A younger spouse generally means a lower principal limit.
If you live in Utah or Idaho and want to see your own numbers, not a generic estimate, book a call with me. I’ll walk through your home value, any existing mortgage, and the options side by side so you can make the decision with your family and your counselor.
Caleb Adams, NMLS #2281316. First Class Home Mortgage, NMLS #1843. Terms, programs, and eligibility vary; not all applicants will qualify. This is not a commitment to lend. For HECMs, HUD-approved counseling is required.