Reverse Mortgage Limits Will Jump in 2022

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Senior couple standing in front of their home
Monkey Business Images /

House prices spent 2021 surging into the stratosphere. Now, the limits on certain reverse mortgages are rising, too.

In 2022, the maximum claim amount on home equity conversion mortgages will rise to $970,800, up from $822,375, the Federal Housing Administration has announced.

A home equity conversion mortgage, or HECM, is a type of reverse mortgage that is insured and backed by the federal government. It can be used for any purpose.

This new maximum amount for HECMs will apply to case numbers assigned on or after Jan. 1. It also will apply to so-called “special exception areas” — Alaska, Hawaii, Guam and the Virgin Islands.

The higher limits will open new opportunities for seniors who hope to use a reverse mortgage to help fund their retirements.

Currently, senior homeowners’ housing wealth tops $9.5 trillion, according to the National Reverse Mortgage Lenders Association (NRMLA).

In a press release, the NRMLA praised the higher national lending limit for HECMs, noting the “very aggressive” rise in home prices during 2021 and saying the higher limit recognizes the current state of housing in the U.S.

Given that housing costs vary so much across the nation, it might seem strange that one limit will apply nationwide, regardless of where a home is located. But the NRMLA — which advocated for the single national limit — explains that seniors typically use a HECM to tap cash from their accumulated home equity so they can continue to live in their homes.

As the NRMLA says in the press release:

“The costs of aging, prescription drugs, durable medical equipment, adapting a home with stair glides, etc. do not differ regionally. So a homeowner with a higher value property in an area with a low FHA loan limit should not be penalized by only being able to borrow based on the [traditional] mortgage loan limit.”

Is a reverse mortgage right for you? Possibly. But not everyone can benefit from using this option. To learn more about the pros and cons of reverse mortgages, check out “Should I Get a Reverse Mortgage?

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