Home Equity Calculator
Find out how much equity you have in your home and what that could mean for a reverse mortgage.
What Is Home Equity?
Home equity is the difference between your home's current market value and the amount you still owe on your mortgage. It represents the portion of your home that you truly own, free and clear of any debt. For example, if your home is worth $400,000 and you owe $100,000, you have $300,000 in equity.
Your equity grows in two ways: as you make mortgage payments that reduce your loan balance, and as your home appreciates in value over time. For many homeowners aged 62 and older, their home is their single largest asset, and decades of payments plus appreciation often mean substantial equity.
How Equity Affects Your Reverse Mortgage
The amount of equity you have directly impacts how much you can receive from a reverse mortgage. With a Home Equity Conversion Mortgage (HECM), higher equity generally means higher available loan proceeds. Your existing mortgage must be paid off from the reverse mortgage proceeds first, so the more equity you have above your remaining balance, the more funds become available to you.
Lenders also consider your age, current interest rates, and property value when determining your principal limit. Older borrowers and those with more equity typically qualify for a larger percentage of their home's value.
Why the HECM Max Claim Matters
The Federal Housing Administration (FHA) sets a maximum claim amount for HECM loans, which is currently $1,249,125 in 2026. Even if your home is worth more than this amount, the HECM calculation uses this ceiling. Homes valued at or below the limit use the full appraised value; homes valued above it are capped at the maximum claim amount.
This means if your home is worth $1.5 million, the HECM principal limit will be calculated based on $1,249,125, not your full home value. For higher-value homes, proprietary (jumbo) reverse mortgages may offer better terms.
Related Resources
- Reverse Mortgage Basics — How HECMs work and what to expect
- Eligibility Requirements — Age, equity, and property requirements
- Costs & Fees — Understand origination fees, MIP, and closing costs
- Counselor Finder — Find a HUD-approved counselor near you
Disclaimer: While every effort has been made to ensure accuracy, this tool is for educational purposes only. ReverseReady is not a lender or financial advisor. Results are estimates — actual figures will vary based on your specific situation, current rates, and lender terms. Consult a HUD-approved counselor or licensed lender for personalized guidance.