Reverse Mortgage Limits

Before applying for a reverse mortgage, you may want to know about the reverse mortgage limits. These limits might influence you depending on the value of the home. In reality, there are "hard" limits and "soft" limits.

A hard limit is the limit set by the FHA. At present time, 90 percent of reverse mortgages are FHA insured. Therefore, the limits set by the FHA are very considerable.

As of this writing, the FHA limit fluctuates from $200,160 and $362,790. The lower limits are used for country areas and the upper ones for big cities or states where the cost of living is more expensive. In addition, the limit can be adjusted up to 150 percent in Alaska, Guam, Hawaii and the Virgin Islands.

These limits are raised every year. Yet, to get a clear picture of how much you can expect to get, you have to understand about the soft ceilings. Soft ceilings veto homeowners of expensive houses to borrow more than those with houses set at the FHA limit and also regulate the realistic amount you may borrow.

The soft limit can be thought as the actual limit for your house because it will determine how much you can borrow. The money that you can borrow is calculated from the lower of the appraised value and the FHA limit.

The actual funds homeowners can borrow depends on their age, the current interest rate, diverse credit fees and the appraised value of their house or FHA's home ceilings for their neighborhood. Usually, the more valuable your house is, the older you are, and the better the interest, the more you may borrow.

For instance, homeowners with a $100,000 home lona at 9% interest rate might borrow up to 22% of the house's value if they are 65. If the homeowners are 75, they might borrow up to 41%, and up to 58% if they are 85 years of age.

Also, remember that there are no asset or income ceilings on borrowers applying for a HUD's reverse mortgage. This basically means that you may have bad credit or earn no money or too much money and still qualify for the mortgage. Nobody could be excluded because income, assets, or poor credit.

Remember, before you apply for a home mortgage, talk to your trusted home mortgage broker about the reverse mortgage limits so that you may have a more realistic representation of how much money you can borrow by apply for this kind of home mortgage.