Reverse mortgages don’t use a traditional loan-to-value ratio. Instead, your borrowing power is based on a formula that HUD calls the Principal Limit. Three factors determine it:

• The home’s appraised value (up to the national lending limit)
• The age of the youngest borrower
• Current interest rates

The calculator applies HUD’s Principal Limit Factors to estimate how much of your equity you can access. Older borrowers and lower interest rates both increase the available amount. Younger borrowers and higher rates reduce it.

You can have an existing mortgage, but it must be paid off at closing. If the reverse mortgage proceeds are not enough to cover the payoff, you would need to bring the difference to closing. If the home is free and clear, the available proceeds go directly to you in the form you choose.

Even though reverse mortgages don’t use LTV in the traditional sense, you still must meet HUD’s financial-assessment guidelines. That means showing a satisfactory credit history and enough residual income to cover property charges and required monthly debts.

To see your own numbers, you can use our reverse mortgage calculator. It shows your estimated Principal Limit, with no personal information required, and lets you compare lump-sum, line-of-credit, and monthly-payment options.

For a deeper explanation, see Reverse Mortgage Principal Limit Explained.