Reverse Mortgage Loan Limit to Increase in 2017

After several years of stagnant reverse mortgage lending limits, the Federal Housing Administration will raise limits “slightly” in 2017, the agency announced Thursday via Mortgagee Letter 2016-19.

For Home Equity Conversion Mortgages, the maximum claim amount will rise to $636,150, up from $625,500. The amount is 150 percent of the national conforming limit of $424,100, the Department of Housing and Urban Development noted in a press release detailing the changes.

Loan limits for forward mortgages will also rise in some areas under the new schedule. In high-cost areas, the FHA national loan limit ceiling will increase to $636,150 from $625,500, and FHA will increase its floor to $275,665 from $271,050.

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The changes are being implemented due to rising home prices, the agency said. The “floor” and “ceiling” changes will impact 2,948 counties across the nation, while in 286 counties the loan limits for forward mortgages will remain unchanged.

The national loan limit floor is set at 65 percent of the national conforming loan limit, which applies in areas where 115 percent of the medial home price is less than 65 percent of the national conforming loan limit, HUD noted.

Loan limit changes and the maximum claim amount change for reverse mortgages will apply to case numbers issued on or after January 1, 2017. The new limit is in effect through December 31, 2017, according to the mortgagee letter.

View HUD’s loan limits page for more information.

Written by Elizabeth Ecker

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  • Take a percentage of the $10,650 increase to see the increase in the principal limit and is that really much in the way of an increase for HECMs? It is OK but is really all that much?

      • REVGUY JIM,

        Perhaps the story is that the pragmatic conforming limit has risen for all residential mortgages, not just for forward mortgages!

      • REVGUY JIM,

        If the GSEs had not initiated the increase do you really think HUD would have? Why would HUD roll back higher level? Again and again HUD has pointed out that that their initial fears about increasing the lending limit were ill founded. In fact where borrowers with homes at or under the fiscal year 2008 conforming limit have given FHA troubles, those with home values above that limit have not only fewer troubles but that their total amounts are proportionally less.

      • REVGUYJIM,

        Wow, where is your optimism? Yes, it is a great thing HUD is doing for upper middle income senior homeowners but why so pessimistic about the position of HUD senior staff on this issue?

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