How Lenders Decide Your Reverse Mortgage Amount -- Simple, Clear, Practical

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Reverse Mortgage Radio

Education

Have you wondered how lenders figure out the exact dollar amount you can get from a reverse mortgage? On this episode I walk you through the formula step by step, using plain English and real examples. I explain why age, home value, and interest rates matter, and why the numbers you see today look very different from those a few years ago. If you want to know how much cash you might access without monthly payments, this episode will give you the clear picture.


What You'll Learn


  • The three factors that set your borrowing limit: the youngest borrower’s age, the home’s value (and FHA caps), and the expected interest rate.
  • Why older borrowers get a higher loan percentage and how that works with a simple example.
  • The two interest rates that matter: the expected interest rate (used to set your borrowing power) and the initial interest rate (what you actually pay on the withdrawn balance).
  • How the 10-year and 1-year Treasury rates drive those two interest measures and why that matters for you.
  • How interest accrues on a reverse mortgage, why loan balances grow over time, and why lenders don’t loan 100% of your home value.
  • A short history of major program changes since 2009, why rules tightened, and how those changes protect you today.
  • How FHA’s maximum claim amount affects higher-value homes and when a proprietary loan might make sense.
  • Practical examples: a 62-year-old vs an 82-year-old on a $350,000 home — what each could expect now versus past low-rate years.
  • Red flags to watch for: lump-sum misuse, failure to pay taxes and insurance, and the signs that a reverse mortgage may not be the right choice.
  • Action steps you can take next: where to get a ballpark quote, what information to prepare, and questions to ask a certified reverse mortgage professional.


This episode gives you a clear, usable map of how reverse mortgage amounts are set. You’ll understand the formula lenders use, the two interest rates you need to know, and the key policy shifts that shape today’s loans. With that knowledge you can decide whether a reverse mortgage fits your goals, protect your home equity, and plan for future costs like home repairs and healthcare. Tune in to get straightforward answers, real examples, and the exact questions to ask when you talk to a lender.