A reverse mortgage on a $200,000 home
A $200,000 appraisal is where the HECM fee formula changes rate; here is what that means for the fee, and what the house gives at each age with or without a mortgage left on it.
Highest origination fee allowed
$4,000
2.00 % of the maximum claim amount.
| Maximum claim amount | $200,000 |
| 2 % of the first $200,000 | $4,000 |
| 1 % above that | $0 |
| Formula result | $4,000 |
| Floor and cap | $2,500 to $6,000 |
A lender may charge less or nothing; the fee can be financed in the loan.
| Home value | Fee cap | Share |
|---|---|---|
| $100,000 | $2,500 | 2.50 % |
| $150,000 | $3,000 | 2.00 % |
| $200,000 | $4,000 | 2.00 % |
| $300,000 | $5,000 | 1.67 % |
| $400,000 | $6,000 | 1.50 % |
| $600,000 | $6,000 | 1.00 % |
| $1,000,000 | $6,000 | 0.60 % |
Worked out by Radif Partners · How we calculate · factors read on hud.gov · not a loan offer
On a $200,000 home, the most a lender may charge as a HECM origination fee is $4,000: 2 % of the first $200,000 of value, and this value uses up that first band exactly. Each $10,000 of appraisal above it adds only $100 to the cap, against $200 below it. With $4,000 of upfront mortgage insurance, the two charges come to $8,000. At an expected rate of 6.65 %, the principal limit is $68,400 at 64, $77,200 at 71 and $119,600 at 90. A debt still owed changes the first year most. A 71-year-old with no mortgage can use $38,320 in the first 12 months; with $50,000 owed, the obligations pass half the principal limit, and the first year leaves only $7,720 on top of the payoff, with $11,480 more from month 13. At 64, a $75,000 mortgage would require $14,600 in cash at closing.
Exactly at the bend of the fee formula
The origination fee of a HECM (Home Equity Conversion Mortgage, the FHA-insured reverse mortgage) is capped by a formula in 24 CFR 206.31: 2 % of the first $200,000 of the maximum claim amount (MCA), plus 1 % of anything above it, no less than $2,500 and no more than $6,000. The MCA is the appraised value, up to the national limit of $1,249,125 in 2026. A $200,000 house fills the first band to the dollar, which gives $4,000.
Below this value, every $10,000 of appraisal moves the allowed fee by $200. Above it, by $100. The upfront mortgage insurance premium (MIP) does not bend: it stays at 2 % of the MCA, $4,000 here. So $200,000 is also the last value at which the fee and the insurance are the same amount; above it, the insurance is the larger of the two.
| Appraised value | Origination cap | Fee added per $10,000 more | Upfront MIP | Both, share of value |
|---|---|---|---|---|
| $160,000 | $3,200 | $200 | $3,200 | 4.00 % |
| $180,000 | $3,600 | $200 | $3,600 | 4.00 % |
| $200,000 | $4,000 | $100 | $4,000 | 4.00 % |
| $220,000 | $4,200 | $100 | $4,400 | 3.91 % |
| $250,000 | $4,500 | $100 | $5,000 | 3.80 % |
| $300,000 | $5,000 | $100 | $6,000 | 3.67 % |
The cap is a ceiling, not a price list. The same section lets a lender charge less. When two offers differ, one with a lower fee and the other with a lower margin, the margin matters too: it feeds the expected rate, and the expected rate sets the factor. Comparing them in dollars of principal limit is the fair test, and the full calculator lets you do it.
Move the appraisal around $200,000
Highest origination fee allowed
$4,125
| Maximum claim amount | $212,500 |
| 2 % of the first $200,000 | $4,000 |
| 1 % above that | $125 |
| Formula result | $4,125 |
What a $200,000 house gives from 64 to 90
The principal limit is the MCA times HUD's principal limit factor (PLF) for the youngest borrower's age and the expected rate (HUD factor table). The expected rate used here is 6.65 %: the 10-year Treasury rate (CMT) at 5.15 % plus an example margin of 1.5 %, read in HUD's 6.625 % column. The house carries no mortgage in this table.
| Age | Factor | Principal limit | First 12 months | From month 13 |
|---|---|---|---|---|
| 64 | 0.342 | $68,400 | $33,040 | $27,360 |
| 67 | 0.365 | $73,000 | $35,800 | $29,200 |
| 71 | 0.386 | $77,200 | $38,320 | $30,880 |
| 74 | 0.405 | $81,000 | $40,600 | $32,400 |
| 77 | 0.433 | $86,600 | $43,960 | $34,640 |
| 80 | 0.461 | $92,200 | $47,320 | $36,880 |
| 83 | 0.498 | $99,600 | $51,760 | $39,840 |
| 86 | 0.539 | $107,800 | $56,680 | $43,120 |
| 90 | 0.598 | $119,600 | $63,760 | $47,840 |
Between 64 and 90 the principal limit grows by $51,200 on the same house. With nothing to pay off, the first-year amount is 60 % of the principal limit minus the $8,000 of charges.
The month-13 column is not a fixed sum. On an adjustable HECM, the unused part of the line grows each month at the note rate plus 0.5 % of annual MIP. If our 71-year-old, debt-free, drew nothing for ten years at a note rate held at 5.99 %, the line would stand near $132,192, against a balance of about $15,282 made of the financed charges and their growth. Read it as an order of size: the note rate follows the 1-year Treasury index and will move.
A monthly payment for life is the other way to use the same principal limit. With no mortgage, it would be about $388 at 64, $469 at 71 and $772 at 83, each sized on the months left to age 100. A payoff at closing lowers it, because less of the principal limit is left to spread: at 71 with $50,000 owed, about $130.
With a mortgage still owed
A remaining mortgage must be paid off at closing, and the payoff joins the charges as a mandatory obligation (HUD payment plan, line 5). Once the obligations pass 50 % of the principal limit, the first-year rule switches from 60 % of the principal limit to the obligations plus 10 % of it (HUD Handbook 4000.1). On a $200,000 house that threshold is reached with fairly small balances, as the table shows.
| Age | Owed | Obligations | First 12 months | From month 13 | Cash to bring |
|---|---|---|---|---|---|
| 64 | $25,000 | $33,000 | $8,040 | $27,360 | $0 |
| 64 | $50,000 | $58,000 | $6,840 | $3,560 | $0 |
| 64 | $75,000 | $83,000 | $0 | $0 | $14,600 |
| 71 | $25,000 | $33,000 | $13,320 | $30,880 | $0 |
| 71 | $50,000 | $58,000 | $7,720 | $11,480 | $0 |
| 71 | $75,000 | $83,000 | $0 | $0 | $5,800 |
| 77 | $25,000 | $33,000 | $18,960 | $34,640 | $0 |
| 77 | $50,000 | $58,000 | $8,660 | $19,940 | $0 |
| 77 | $75,000 | $83,000 | $3,600 | $0 | $0 |
| 83 | $25,000 | $33,000 | $26,760 | $39,840 | $0 |
| 83 | $50,000 | $58,000 | $9,960 | $31,640 | $0 |
| 83 | $75,000 | $83,000 | $9,960 | $6,640 | $0 |
For our 71-year-old owing $50,000, the obligations are $58,000 against a principal limit of $77,200, so the 10 % branch applies: $7,720 of cash in the first year, $11,480 from month 13. Without the debt, the same owner would have $38,320 in year one. Ten years on, with nothing drawn, the line would be about $36,677 instead of $132,192. A smaller balance can stay under the threshold: at 64 with $25,000 owed, the obligations of $33,000 are below half of the $68,400 principal limit, so the 60 % branch still applies and leaves $8,040. What the loan still buys is the end of the monthly mortgage payment, which the existing mortgage page weighs in more detail.
Your payoff on a $200,000 house
Cash available in the first 12 months
$7,720
| Principal limit | $77,200 |
| 60 % of it (line 17) | $46,320 |
| Obligations + 10 % (line 18) | $57,720 |
| Greater of the two (line 19) | $57,720 |
The largest payoff with no cash at closing
A quick test before applying: the principal limit minus the two charges is the largest mortgage the loan can clear on its own. For this house, that is $60,400 at 64, $69,200 at 71, $78,600 at 77 and $91,600 at 83. Appraisal and title charges come off each figure dollar for dollar. Above that line, the gap is due in cash at closing, and the loan cannot close without it. A lender that waives its fee would raise each figure by $4,000. The first-year limit page explains the rule in full, and the origination fee page has the fee for any value.