2019-HECM-reverse-mortgage-Limits

2019 HECM Reverse Mortgage Limits Announced

The 2019 reverse mortgage limit is officially $726,525. These limits apply to the Home Equity Conversion Mortgage or HECM (pronounced HECK-Um)

That is good news for those older homeowners with high home values. The increase represents a 150 percent of Fannie Mae and Freddie Mac’s national conforming loan limit of $484,350. That is a $46,875 increase over the 2018 limits. This increased limit applies only to loans with case numbers issued on or after January 1, 2019.

2019 Reverse Mortgage Limits Example

The chart below compares estimated loan proceeds based on the new 2019 limits as compared to the old 2018 limits.

AgeNew 2019 Limits
($726,525)
2018 Limits
($679,650)
Difference
62$297,875$278,657$19,219
65$312,406$292,250$20,156
70$337,834$316,037$21,797
75$357,450$334,388$23,063
80$387,964$362,933$25,031
85$429,376$401,673$27,703
90$474,421$443,811$30,609
95$528,184$494,106$34,078

The above table assumes an expected rate of 5.0% and a home value of $726,525. A lower expected rate will generate more proceeds, where a higher expected rate will generate less proceeds.

The 2019 reverse mortgage loan limits are determined based on property value. It’s important to understand that the HECM reverse mortgage will fund a percentage of the limit of $726,525. It does not represent a loan amount.

Loan proceeds are determined by 3 factors:

  1. Age of the youngest homeowner or non-borrowing spouse (NBS)
  2. Lesser of appraised value of the home or lending limit
  3. Current interest rates

The new HECM reverse mortgage lending limits were announced on 12/14/18 via Mortgagee Letter 2018-12.

If you are actively looking to get a reverse mortgage and have a home value higher than $679,650, you may want to wait until the after January 1, 2019 to compete you loan application so that you can realize all the benefit of the increased limit. You should complete your counseling in the meantime, especially in CA, as there is a 7-day waiting period between counseling and ordering services, such as a case number.

A Brief Look at the HECM Lending Limit History

Prior to 2006: the HECM lending limit or MCA varied from county to county.

2006: A national lending limit of $417,000 was established.

2009: Congress increased the HECM loan limit to $625,500

2017: the lending limit was increased to $636,150.

2018: the limit was increased to $679,650.

2019: limit increased to $726,525

If you have any questions about how the new reverse mortgage loan limits will impact you, please don’t hesitate to call us toll free at 1-888-888-4834 or run your scenario on our reverse mortgage calculator. Our calculator has been updated with the higher lending limit.

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