Monthly payments from a HECM: tenure and term
What an adjustable HECM can pay you every month, for life or for a set number of years, worked out with the month count and the rate that the regulation prescribes.
Monthly payment for life (tenure)
$823
Sized on 360 months (to age 100), paid as long as the home is your residence.
| Factor at age 70, 6.625 % | 0.386 |
| Principal limit | $135,100 |
| Mandatory obligations | $12,500 |
| Net principal limit | $122,600 |
| Months used | 360 |
| Paid in year one | $9,878 |
Payments are fixed; interest at 5.99 % and 0.5 % MIP accrue on each one.
Worked out by Radif Partners · How we calculate · factors read on hud.gov · not a loan offer
A HECM paid monthly for life, the tenure plan, is sized as if payments ran for 12 × (100 − age) months, with the age capped at 95, at the expected rate plus 0.5 % of mortgage insurance (MIP), yet it keeps paying for as long as the loan is not due. On a $350,000 home with an expected rate of 6.65 % (10-year Treasury at 5.15 % plus an example margin of 1.5 %), and after the upfront MIP and the maximum origination fee, the tenure payment is $649 a month at 62, $823 at 70, $1,161 at 80 and $2,287 at 90. The term plan spreads the same net principal limit over the years you choose: $1,424 a month for 10 years at 70. A modified plan keeps part of the money as a line of credit and pays the rest monthly. Payments stay level; they are not indexed to prices.
The tenure payment, age by age
The table applies HUD's formula to one home at ten ages. The net principal limit is what remains after the upfront premium of $7,000 and an origination fee of $5,500; the tenure payment spreads it over the regulation's month count, and the 10-year term over 120 months, both at 6.65 % + 0.5 %.
| Age | Months used | Net principal limit | Tenure payment | 10-year term |
|---|---|---|---|---|
| 62 | 456 | $102,300 | $649 | $1,189 |
| 65 | 420 | $109,650 | $708 | $1,274 |
| 68 | 384 | $118,050 | $779 | $1,372 |
| 70 | 360 | $122,600 | $823 | $1,424 |
| 73 | 324 | $126,450 | $877 | $1,469 |
| 76 | 288 | $135,200 | $977 | $1,571 |
| 80 | 240 | $148,850 | $1,161 | $1,729 |
| 85 | 180 | $171,250 | $1,544 | $1,990 |
| 90 | 120 | $196,800 | $2,287 | $2,287 |
| 95 | 60 | $227,250 | $4,489 | $2,640 |
Two forces lift the payment with age: the principal limit factor is higher, and the month count is shorter. At 62 the payment is sized on 456 months; at 90, on 120. From 95 on, the count stays at 60 months, which is why a 95-year-old's tenure payment of $4,489 equals a five-year term.
Your tenure payment
Monthly payment for life (tenure)
$1,364
| Factor at age 83, 6.625 % | 0.498 |
| Principal limit | $174,300 |
| Mandatory obligations | $12,500 |
| Net principal limit | $161,800 |
The formula in the regulation
24 CFR 206.25(f) sets the tenure calculation: monthly payments are computed "as if the number of months in the payment term equals 100 minus the lesser of the age of the youngest borrower or 95, multiplied by 12". Term payments, under 206.25(e), are sized so that the initial disbursement, the set-asides, the MIP and all interest through the end of the term add up to the principal limit at that date, using "the expected average mortgage interest rate" (24 CFR part 206). In both cases the rate is the expected rate, the one that also picks the column of the factor table, and each payment is due on the first business day of the month (206.27(b)(1)).
Because the payment is sized on a rate rather than tied to it, a later change in the note rate does not change the check. It changes how fast the balance grows. When the borrower asks the lender to pay property taxes and insurance from the monthly payments, HUD's form deducts one twelfth of the yearly charges from each payment on line 32 and prints the net amount on line 33; the withheld money joins the balance only when the bills are actually paid (HUD payment plan form). For a term plan, 206.25(e)(2) makes the lender pay "all monthly disbursements through the payment term even if the outstanding loan balance exceeds the principal limit".
Term payments: choose the number of years
A term plan pays more each month and stops on a date you pick. At 70 on the same home, the net principal limit of $122,600 gives $2,422 a month over 5 years, $1,424 over 10 and $1,106 over 15. Once the term ends, no more money comes, but the loan does not become due: you keep living in the home and the balance keeps growing until you leave. A term can make sense to bridge a gap with a known end date, such as years before a pension starts; tenure is built for income that lasts.
Try a term payment
Monthly payment for 7 years
$1,859
| Factor at age 72, 6.625 % | 0.388 |
| Principal limit | $135,800 |
| Mandatory obligations | $12,500 |
| Net principal limit | $123,300 |
The first 12 months can cap the payment
Monthly payments count against the initial disbursement limit like any other draw. If twelve payments plus the costs paid at closing would exceed it, 206.25(e)(3) and (f)(2) tell the lender to lower the payments during year one; after that, you may ask for a recalculation. This happens when a mortgage payoff uses most of the first-year room. A 66-year-old with $60,000 to pay off on a $350,000 home has $12,495 of cash room in year one, the 10 % of the principal limit allowed on top of the obligations. A 3-year term on the net principal limit of $52,450 would pay $1,613 a month, $19,362 over twelve months, so the lender reduces the first year's checks to fit, and the borrower can ask for the plan to be recalculated once the year is over.
Modified tenure and modified term
The modified plans split the money: part stays as a line of credit you draw when you choose, and the rest is paid monthly (24 CFR 206.19(d); Handbook 4000.1). They exist only on adjustable-rate HECMs, like tenure and term. At 70, keeping $40,000 as a line and putting the rest into tenure gives $555 a month instead of $823. The $40,000 kept aside grows at the note rate plus 0.5 % while unused, as explained on the line of credit page.
A fixed-rate HECM cannot pay monthly at all: its only plan is a single lump sum at closing. Every payment you receive adds to the balance with its own interest and MIP, which the loan balance page follows over time. The amount behind the payment, the net principal limit, falls when costs or a payoff are larger; the full calculator shows the line-by-line route from home value to monthly check.