A reverse mortgage at 80: the most cash in year one
What turning 80 does to a HECM: a higher HUD factor, the largest amount you can take in the first year, and what that draw has become by 90 and 95.
Cash you can use in the first 12 months
$65,815
Then $50,710 more after month 12, growing at 6.49 % a year while unused.
| Factor at age 80, 6.625 % | 0.461 |
| Maximum claim amount | $275,000 |
| Principal limit (line 1) | $126,775 |
| Upfront MIP, 2 % (line 3) | $5,500 |
| Origination fee | $4,750 |
| Other closing costs | $0 |
| Mortgage paid off (line 5) | $0 |
| Mandatory obligations (line 10) | $10,250 |
| First-year limit (line 21) | $76,065 |
| Net principal limit (line 25) | $116,525 |
Expected rate 6.65 % (10-year Treasury + margin), read as 6.625 % in HUD's table. Estimate, not a loan offer.
| Year | Age | Loan balance | Unused credit line |
|---|---|---|---|
| 1 | 81 | $81,151 | $54,101 |
| 2 | 82 | $86,577 | $57,718 |
| 3 | 83 | $92,366 | $61,578 |
| 5 | 85 | $105,132 | $70,088 |
| 10 | 90 | $145,306 | $96,870 |
| 15 | 95 | $200,831 | $133,888 |
| 20 | 100 | $277,575 | $185,050 |
| 25 | 105 | $383,645 | $255,763 |
| 30 | 110 | $530,247 | $353,498 |
Worked out by Radif Partners · How we calculate · factors read on hud.gov · not a loan offer
At 80, HUD's principal limit factor at an expected rate of 6.65 % is 0.461, against 0.386 at 70, so a $275,000 home with no mortgage gives a principal limit of $126,775. Taking the most allowed in the first 12 months means $65,815 at closing: 60 % of the principal limit, less $5,500 of upfront mortgage insurance and $4,750 of origination fee, both financed. Another $50,710 opens in month 13 and grows while unused. With the note rate held at 5.99 %, the balance of that full draw plus costs would be about $145,306 at 90 and $200,831 at 95, still below 95 % of a home worth the same $275,000. Leaving everything in the credit line instead, the balance at 95 would be $27,063 and the unused credit $307,656. Those are projections at a constant rate, not offers.
What ten more years add to the factor
HUD's principal limit factor (PLF) table gives a larger share of the home to an older borrower, because the loan is expected to run for fewer years before it is repaid. In the 6.625 % column, which is where an expected rate of 6.65 % is read, the factor is 0.386 at 70, 0.415 at 75 and 0.461 at 80 (HUD factor table). At this age the curve is steepening: one more year, to 81, takes it to 0.473.
On a $275,000 home, the factor turns into $106,150 of principal limit at 70 and $126,775 at 80. The costs taken from it do not change with age. The upfront mortgage insurance premium (MIP) is 2 % of the maximum claim amount (MCA), here $5,500, and the origination fee is capped at $4,750 for this value under 24 CFR 206.31. So every extra dollar of principal limit that age brings is a dollar you can use.
The largest draw the first-year rule allows
On an adjustable HECM, what you can receive in the first 12 months is capped. The cap is the greater of 60 % of the principal limit and the mandatory obligations plus 10 % of it, and the obligations come out first (HUD Handbook 4000.1). With no mortgage, the obligations are only the insurance and the fee, $10,250 in all, so the 60 % branch applies: $76,065 minus $10,250 leaves $65,815. That is 51.9 % of the principal limit, in cash, on the day the loan funds.
| Home value | Principal limit at 80 | Most cash in year one | Opens in month 13 |
|---|---|---|---|
| $180,000 | $82,980 | $42,588 | $33,192 |
| $275,000 | $126,775 | $65,815 | $50,710 |
| $425,000 | $195,925 | $103,055 | $78,370 |
| $600,000 | $276,600 | $147,960 | $110,640 |
You do not have to take it all at once. The HUD payment plan form asks how much you draw at closing and keeps the remainder of the first-year room available as a credit line until the year ends (HUD payment plan). Drawing less keeps the balance lower, because interest and the annual MIP run only on what has been paid out.
A mortgage still on the house changes the branch. Say our 80-year-old owes $70,000. The obligations become $80,250, more than half of the $126,775 principal limit, so the cap switches to the obligations plus 10 % of the principal limit. The loan pays off the mortgage and the costs, and the cash on top is $12,678 for the whole first year. The remaining $33,848 waits until month 13. The monthly mortgage payment is gone, which for many owners at this age matters more than the cash.
The full draw at 80 on your home
Cash you can use in the first 12 months
$54,718
| Factor at age 80, 6.625 % | 0.461 |
| Maximum claim amount | $230,000 |
| Principal limit (line 1) | $106,030 |
| Upfront MIP, 2 % (line 3) | $4,600 |
The balance at 90 and at 95
A balance grows each month by one twelfth of the note rate plus 0.5 % of annual MIP. Starting from the $65,815 drawn plus the $10,250 of financed costs, and holding the note rate at 5.99 % (1-year Treasury at 4.49 % plus an example margin of 1.5 %), the projection below compares that full draw with a borrower who leaves everything in the credit line.
| Age | Balance, full draw | Credit left, full draw | Balance, nothing drawn | Credit, nothing drawn |
|---|---|---|---|---|
| 85 | $105,132 | $70,088 | $14,167 | $161,053 |
| 90 | $145,306 | $96,870 | $19,580 | $222,596 |
| 95 | $200,831 | $133,888 | $27,063 | $307,656 |
By 90 the full draw has become $145,306, and by 95 $200,831. The credit line that was not used keeps growing next to it, which is why $133,888 would still be available at 95 even after the large first draw. The borrower who drew nothing owes only the financed costs and their growth, $19,580 at 90, and has a line of $222,596 at that age.
Real note rates on an adjustable HECM move with the index. A rate one point higher for the whole period would make each balance noticeably larger, and a lower one smaller, so treat the table as a scale, not a schedule.
What the first draw owes later
Loan balance after 10 years
$145,306
| Effective yearly growth | 6.69 % |
| Years to double | 10.7 |
| Interest | $63,906 |
| Mortgage insurance | $5,334 |
Against the home's value at the end
A HECM is non-recourse: when it ends, the debt is limited to the home. Heirs who want to keep the house can settle for the lesser of the balance and 95 % of the appraised value, a rule written in 24 CFR part 206. If our $275,000 house is still worth that at 95, 95 % of it is $261,250, and the balance of $200,831 is below it: the heirs would repay the balance and keep the difference. Should prices fall or the rate climb, the cap would protect them. The heirs page has the calculator for that case.
Cash now or room later
A large first draw at 80 usually has a purpose, such as repairs or a debt that is not secured by the house. The cost is the interest and premium on money you may not spend for a while. The other route is to leave it in the line, where the unused part grows at the same rate as a balance would, and draw when needed. The line of credit page explains that growth, and the first-year limit page shows how a mortgage payoff changes the cap.