The U.S. Department of Housing and Urban Development (HUD) has announced there will be an increase to the Maximum Claim Amount (MCA) for reverse mortgages effective January 1.1 The MCA will increase by $118,500 up from $970,800 in 2022 to $1,089,300 for 2023.
The Federal Housing Administration (FHA) is responsible for determining the MCA for Home Equity Conversion Mortgages (HECMs), also known as reverse mortgages. This is the maximum dollar amount the FHA will insure for a HECM loan, even if your home is appraised above the current MCA.
When the FHA increases loan limits, it allows borrowers who have higher home values the ability to access more equity than what was allowed in the previous year. The increase may help older adult homeowners to access more funds, refinance their existing reverse mortgage, or even benefit those who weren’t able to previously qualify for the product.
The FHA has increased loan limits for the past seven years:
- 2023: $1,089,300
- 2022: $970,800
- 2021: $822,375
- 2020: $765,600
- 2019: $726,525
- 2018: $679,650
- 2017: $636,150
A reverse mortgage loan is insured by the FHA2 and allows homeowners who are 62 years and older to access a portion of their home equity without having to make monthly mortgage payments.3 If there’s a mortgage on the home, it must be paid off using the proceeds from the reverse mortgage loan. If the borrower(s) do not have a current mortgage, it increases the amount of money they may be eligible to receive.
As a non-recourse loan, lenders can only look to the value of the home for repayment; no other assets may be attached if the loan balance grows beyond the mortgaged home value.
Call 1 (800) 976-6211 to speak with a licensed loan advisor for a free, personalized reverse mortgage loan assessment to discover your options.
Disclosures:
1 https://www.hud.gov/sites/dfiles/OCHCO/documents/2022-21hsgml.pdf
2 As required by the Federal Housing Administration (FHA), you will be charged an initial mortgage insurance premium (MIP) at closing and, over the life of the loan, you will be charged an annual MIP based on the loan balance.
3 Your current mortgage(s) and any other existing liens against the property must be paid off at or before closing. You must live in the home as your primary residence, continue to pay required property taxes, homeowners insurance, and maintain the home according to FHA requirements. Failure to meet these requirements can trigger a loan default that may result in foreclosure.