Reverse Mortgage Guide
What Is the Principal Limit?
The principal limit is your HECM borrowing power — set by age, home value, and expected rates — not the same as your raw home equity.
Borrowing Power, Not Equity
Your principal limit is the ceiling on how much a HECM can lend before closing costs, payoffs, and set-asides. HUD calculates it using a principal limit factor (PLF) tied to the youngest borrower’s age and the expected interest rate, applied to the lesser of your home’s appraised value or the FHA maximum claim amount.
That number is not your equity. Existing mortgages, liens, upfront MIP, origination, and required set-asides all reduce what you actually receive. On high-value homes, the FHA cap alone can leave substantial equity untouched even when the PLF looks strong.
Ryan and Steve walk through principal limit illustrations so you see gross borrowing power and net cash side by side — then match payout options to your plan.
At a Glance
What Moves Your Principal Limit
Four inputs drive the number — and what you keep is lower still.
How Ryan & Steve Build Your Estimate
From formula to cash in hand.
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Keep Exploring
Related guides on proceeds, equity, rates, and jumbo options.
How Much Money Can I Receive?
From principal limit to net cash in your pocket.
How Much Equity Do I Need?
Why equity and principal limit are related but not the same.
How Do Interest Rates Work?
How expected rates move your PLF and borrowing power.
What Is a Jumbo Reverse Mortgage?
When FHA caps leave equity on the table.
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See Your Principal Limit Illustrated
Ryan & Steve will walk through gross limit and net proceeds on your home — not a commitment to lend; subject to credit and property approval.