2017 HECM Loan Limits
For 2017, the reverse mortgage limit or maximum claim amount (MCA) for FHA-insured Home Equity Conversion Mortgages (Reverse Mortgage) has increased from the prior limit of $625,500 to the new limit of $636,150, according to Mortgagee Letter 2016-19. The Mortgagee Letter was published December 2, 2016 by the Department of Housing and Urban Development.
The new MCA is equal to 150% of Fannie Mae and Freddie Mac’s national conforming limit of $424,100. It’s important to note that the $636,150 limit is a national limit and is applicable to all HECM loans, including loans in special exception areas such as Alaska, Hawaii, Guam and the Virgin Islands.
For clarification purposes, the maximum claim amount (MCA) is the amount used to determine the principal limit and mortgage insurance for a HECM. So, if a home appraises for $640,000, the reverse mortgage comparison numbers will be based on a value of $636,150 because the MCA would be less than the appraised value. Any home that appraises for less than $636,150 would use the actual appraised value as the MCA or lending limit.
Comparison of Principal Limit
The new limit allows a little more borrowing power than previously. This is important to those senior homeowners who may have attempted to do a reverse mortgage, but possibly had a shortfall due to the $625,500 cap in the lending limit. In our example above, a 72 year old homeowner with a $640,000 home can now get an additional $6,294 in proceeds with the 2017 reverse mortgage limits. That may not sound like a lot, but we come across people nearly every day who have a payoff that is just a little too large for their reverse mortgage and they don’t have the funds available to come up with the shortfall.
A Brief Look at the HECM Lending Limit History
Prior to 2006, the HECM lending limit or MCA varied from county to county. In 2006, a national lending limit of $417,000 was established. Later, in 2009, Congress increased the HECM loan limit to $625,500 and had remained at that level until the most recent change to $636,150, effective January 1, 2017.