Loan Inputs — enter Option A and Option B
Each option models a different HECM product, lender, or rate scenario. Leave Option B blank or duplicate Option A if you only want to model one.
Option A
Option B
Draw Schedule — shared across both options
Up to three scheduled annual draws, plus an optional monthly voluntary payment (reduces the loan balance and replenishes the line of credit). Leave amounts at $0 to model a pure zero-draw scenario.
1st Draw
2nd Draw
3rd Draw
Voluntary Monthly Payment
How This Calculator Works
Every number is derived from a transparent monthly recurrence. No opaque lookups. All formulas below.
Per-month engine
For each month t = 1 … 480, the calculator runs the same four lines:
LOC[t] = LOC[t-1] × (1 + r/12) + Prepayment[t] − Draws[t] + Payment[t-1]
Interest[t]= Balance[t-1] × r/12
Balance[t] = Balance[t-1] + ServicingFee + Interest[t] − Prepayment[t] + Draws[t] − Payment[t-1]
Home[year] = Home[0] × (1 + appreciation)^year
r is the note rate (= LOC growth rate). MIP is already inside the note rate (HUD requires LOC growth = note rate). Voluntary payments reduce the balance AND grow the LOC by the same amount (HUD HECM rule).
Initial values
Month 0 starts with:
LOC[0] = PrincipalLimit − ClosingCosts − DebtPayoff
Balance[0] = DebtPayoff + ClosingCosts
Home[0] = User-entered home value
If you enter mandatory obligations (existing mortgage payoff, liens) and discretionary cash that exceed the PL, the LOC goes to zero — exactly as the lender's worksheet would show.
Principal Limit lookup
The "Auto from PLF" button uses the current HUD Principal Limit Factor table — 128 expected rates × 82 ages. PL = Home Value × PLF(age, expected rate). The lender will use the lower of your home value or the FHA HECM lending limit ($1,209,750 for 2025).
Scheduled draws & voluntary payments
Each draw block is converted to a monthly stream:
- Start month = (start year × 12) − 11
- End month = (start month + duration × 12) − 1
- Monthly draw = annual amount ÷ 12
The voluntary monthly payment follows the same window logic. Setting all draws to $0 produces a clean zero-draw growth projection — that's what the LOC chart shows.
Important. This tool models the mechanics of a HECM line of credit. It does not represent a loan offer, a guaranteed line of credit, or any specific lender's pricing. Reverse mortgage Principal Limits, MIP, and servicing fees are set by HUD/FHA and can change. The borrower must continue paying property taxes, homeowner's insurance, and home maintenance. Failure to do so can result in loan acceleration. Heirs can satisfy the loan by paying the lesser of the balance or 95% of appraised value, or by surrendering the home. This material is not from HUD or FHA and is not approved by HUD or any government agency.