In a bit of good news for seniors who may be considering a FHA reverse mortgage, HUD has announced that they will extend the loan limits for 2010 at 150% of the regular conforming loan limit. This means that the nationwide reverse mortgage loan limit is $625,500 through 2010.
HUD made the official announcement in Mortgagee Letter 2009-50 - and if you read it, chances are that you may be confused.
But the simple answer is that no matter where you live in the US, the loan limit for a reverse mortgage is $625,500 -- even if you live in places that are considered "high cost" areas or "special exception" areas such as Alaska, Hawaii, Guam or the Virgin Islands.
This $625,500 loan limit is in effect right now - according to the announcement:
The loan limit shall be effective for all HECMs that have been assigned a FHA case number on or after the effective date of this Mortgagee Letter.
The maximum amount of money that you can borrow with a reverse mortgage is a factor of your age, the interest rate on the loan, the loan type (fixed or adjustable) and the amount of equity in your home. While some people claim that this new reverse mortgage loan limit may impact some people, the ones who are possibly most impacted from the change are the "younger" people eligible for a reverse mortgage (you must be age 62 in order to qualify).
As the economy has went through a downturn over the last few years, a reverse mortgage has been a good option for many Seniors who are looking for tax free income for monthly obligations - although the amount of money that those Seniors have been able to borrow has been somewhat impacted by the downturn in real estate values.
Not as much equity in a home = can't borrow as much money with a reverse mortgage.