2025 HECM Cap Raised:
The Federal Housing Administration (FHA) has announced an increase in the maximum lending limit for Home Equity Conversion Mortgages (HECMs) for the 2025 calendar year. The new cap is set at $1,209,750, up from $1,149,825 in 2024. This adjustment will apply to case numbers assigned on or after January 1, 2025.
Further information can be found in Mortgagee Letter 2024-22, and these changes will be incorporated into an upcoming update of the Single Family Housing Policy Handbook 4000.1 (Handbook 4000.1).
2024 vs 2025 Reverse Mortgage Limit Comparison
| Age | New 2025 Limits ($1,209,750) | 2024 Limits ($1,149,825) | Increase ($) |
|---|---|---|---|
| 62 | $404,056 | $384,041 | $20,015 |
| 65 | $429,461 | $408,187 | $21,274 |
| 70 | $474,222 | $450,731 | $23,491 |
| 75 | $509,304 | $484,076 | $25,228 |
| 80 | $563,743 | $535,818 | $27,925 |
| 85 | $641,167 | $609,407 | $31,760 |
| (Table is based on home values of $1,209,750 or higher and assumes a 6.50% Expected Rate) | |||
Understanding the Implications of the Lending Limit
The lending limit sets the maximum property valuation considered for loan calculations, even if the home’s actual appraised value is higher. For instance, a home valued at $1,300,000 in 2025 would have its lending value capped at $1,209,750. This limit is vital in determining the proceeds available through a HECM.
To calculate a HECM loan, the FHA uses the lesser of the home’s value or the lending limit, multiplied by a HUD-determined percentage. This percentage depends on the borrower’s age and current interest rates. Generally, older borrowers qualify for more substantial proceeds, and lower interest rates further increase the loan amount.
Evolution of HECM Lending Caps:
HUD lending limits have historically mirrored housing market trends. A pivotal change occurred in 2008, transitioning from regional caps to a single national limit of $417,000. A year later, the Housing and Economic Recovery Act raised the limit to $625,500, a figure that remained unchanged for eight years.
In 2017, the limit increased modestly to $636,150, reflecting steady housing market growth. Since then, the cap has climbed consistently:
- 2018: $679,650 (+$43,500)
- 2019: $726,525 (+$46,875)
- 2020: $756,600 (+$39,075)
During the COVID-19 pandemic, the cap continued to rise:
- 2021: $822,375 (+$56,775)
- 2022: $970,800 (+$148,425)
- 2023: $1,089,300 (+$118,500)
- 2024: $1,149,825 (+$60,525)
For 2025, the new limit of $1,209,750 represents an additional increase of $59,925.
These steady increases highlight the strength of the housing market and expand opportunities for homeowners exploring reverse mortgages.
| YEAR | NATIONAL HECM LENDING LIMIT | LIMIT INCREASE ($) | LIMIT INCREASE (%) |
|---|---|---|---|
| 2025 | $1,209,750 | $59,925 | 5.21% |
| 2024 | $1,149,825 | $60,525 | 5.56% |
| 2023 | $1,089,300 | $118,500 | 12.21% |
| 2022 | $970,800 | $148,425 | 18.05% |
| 2021 | $822,375 | $56,775 | 7.42% |
| 2020 | $765,600 | $39,075 | 5.38% |
| 2019 | $726,525 | $46,875 | 6.90% |
| 2018 | $679,650 | $43,500 | 6.84% |
| 2017 | $636,150 | $10,650 | 1.7% |
| 2009 - 2016 | $625,500 | $208,500 | 50% |
| 2006 - 2008 | $417,000 | * National Lending Limit of $417,000 was Implemented in 2006, which replaced regional loan limits. | |
Additional Reading: History of the reverse mortgage program from 1961 through present
Comparing 2025 HECM and Jumbo Reverse Mortgages
When considering reverse mortgage options, it’s essential to evaluate all available programs. Jumbo reverse mortgages, or proprietary reverse mortgages, often benefit properties with higher values.
With the HECM limit now exceeding $1.2 million, jumbo mortgages may be advantageous for homes valued at $1,250,000 or more.
While several factors influence the choice between HECM and jumbo products, properties exceeding $1,209,750 in value remain subject to the HECM cap for calculations. Below is a comparative analysis of HECM and jumbo loan proceeds.
| HOME VALUE | 2025 HECM | 2025 JUMBO | NET BENEFIT ($) |
|---|---|---|---|
| $1,209,750 | $509,304 | $516,563 | -$7,259 |
| $1,350,000 | $509,304 | $576,304 | $67,000 |
| 1,500,000 | $509,304 | $640,500 | $131,196 |
| 2,000,000 | $509,304 | $854,000 | $344,696 |
| 2,500,000 | $509,304 | $1,067,500 | $558,196 |
| 3,000,000 | $509,304 | $1,281,000 | $771,696 |
| 3,500,000 | $509,304 | $1,494,500 | $985,196 |
| $4,000,000 | $509,304 | $1,708,000 | $1,198,696 |
(Table based on borrower age 75. HECM Rate used in illustration: 2.25% CMT Margin. Expected rate at time of calculation on 12/3/2024: 6.50%. Jumbo reverse chosen for comparison is HomeSafe. Note that proceeds change week to week to it’s best to obtain a written estimate from one of our licensed reverse mortgage advisors.)
Real Estate and Mortgage Trends in 2024 and 2025
The real estate and mortgage markets have experienced notable shifts. The spike in interest rates in 2022 and 2023 reduced reverse mortgage proceeds. At the same time, softening home prices added new challenges. However, homeowners with properties valued over $1 million have benefited from rising lending limits, which allow for increased proceeds.
As we transition into 2025, reverse mortgages remain a valuable tool, helping over a million homeowners age in place. This financial solution continues to offer stability and flexibility, making it a worthwhile consideration with guidance from a seasoned reverse mortgage professional.
Source:
2025 HECM limit details were published in Mortgagee Letter 2023-22 and will be included in a future Single Family Housing Policy Handbook 4000.1 (Handbook 4000.1) release.