A loan limit – also known as a – lending limit is the maximum Reverse Mortgage loan amount that any home would qualify for.
Presently, the national lending limit on an HECM Reverse Mortgage is $625,500. Lending Limits are used along with your age
and prevailing interest rates to determine your "Loan Amount."
This loan limit is high compared to historic norms. In the midst of the worst of the Financial Crisis, in early 2009,
President Barack Obama signed a new bill, The American Recovery and Reinvestment Act of 2009 (ARRA) on February 17, 2009.
This was the “stimulus bill” we heard so much about.
Under ARRA, the national Federal Housing Administration (FHA) loan limit
for the Home Equity Conversion Mortgage (HECM) was increased from $417,000 to $625,500. The increased limit was intended
to only last through 2009. Since then, several continuing resolutions from the US Congress have extended it at least through
the end of 2013.
The increase has allowed many senior homeowners living in higher valued homes the ability
to receive significantly more money from a FHA Reverse Mortgage than in the past.
The New Loan Limit was Latest in String of Reverse Mortgage Improvements
Congress recognizes the many benefits of Reverse Mortgages and continues to improve the benefits and safeguards of the popular
FHA insured program. Over the past few years, Congress increased the amount of money that seniors can receive from the program,
reduced the fees, and expanded the program by allowing the proceeds to be used for home purchase.
The new HECM Saver has also been rolled out, offering seniors a lower-cost option for their reverse mortgage needs.
A Reverse Mortgage is a loan that enables homeowners aged 62 or older to borrow against the equity in their home without having to sell the home, give up title, or take on a monthly mortgage payment. The money can be used for any purpose. Homeowners should only consider a Reverse Mortgage if you plan to stay in your home at least a few years, as the upfront costs are considered high.