2022 Reverse Mortgage Limits

There is some pretty big news about reverse mortgages in 2022, especially if you live in California.  The U.S. Department of Housing and Urban Development (HUD) has increased the limit on Home Equity Conversion Mortgages (the most common type of reverse mortgage) from $822,375 to $970,800.  The reverse mortgage limit is the maximum amount at which your home can be valued to receive funds when calculating the proceeds (e.g. payments to you) as part of the loan.

So what does this mean for seniors considering a reverse mortgage?  And why is it so impactful in California?

Let’s start with the impact to those thinking of a reverse mortgage.  Prior to 2022, borrowers could leverage the equity in their home to take out an HECM up to a property value limit of $822,375.  So while folks with homes worth more than $822,375 could still do so, they would receive no more than someone with a home worth $822,375.  Due to the double digit increases in home prices seen in many places across the country over the past year and expected in 2022, the limit has been significantly increased by HUD.

If your home is worth less than $822,375, this change doesn’t have any impact for you.  But for seniors in places like California, where home prices can easily exceed $822,375, this update can be a game changer.  This means there could be more money available for the borrower using the HECM for higher priced homes.  Even if your home is worth more than $970,800, this change offers much more financial benefits than a year ago.

If this impact you, you’ll want to do your homework on interest rates.  That’s because an increase in the interest rate could actually cancel out or severely limit the financial gain caused by the increase of the reverse mortgage limit to $970,800.  So if you’re considering a reverse mortgage, don’t delay too long.  You’ll want to capitalize while rates are low.

Here’s a blog post I wrote recently that will explain all of the details about who can qualify for a reverse mortgage.  You can also call the team at Equity Access Group for more information.  They’ll be happy to talk to you more about reverse mortgages, your property, and the current interest rates.