Reverse Mortgage Loan Limit to Rise Again in 2018

For the second year in a row, the lending limit for federally backed reverse mortgages is increasing.

The Department of Housing and Urban Development on Thursday announced a maximum claim amount of $679,650 for calendar year 2018, up from $636,150 this past year.

HUD arrives at that figure by calculating 150% of the Freddie Mac national conforming limit of $453,100; the Federal Housing Finance Authority, which establishes conforming limits for Freddie Mac and Fannie Mae, announced that figure late last month.

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HUD’s numbers also apply to certain areas that receive exceptions to Freddie Mac limits, including Alaska, Hawaii, Guam, and the U.S. Virgin Islands.

Under the Housing and Economic Recovery Act of 2008 (HERA), HUD and the Federal Housing Administration peg forward lending limits at 115 precent of median home prices, though the exact figures can vary by region — specifically in certain high-cost areas of the country. Under the National Housing Act, however, the lending limit for Home Equity Conversion Mortgages must remain uniform throughout the country.

On the forward side, loan limits are set to rise next year in 3,011 counties, with HUD and FHA citing increases in median housing prices.

HECM maximum claim amounts had remained flat for several years leading up to 2017, when HUD and FHA bumped them up to $636,150 from $625,500. The new figure will take effect for loans with case numbers assigned on New Year’s Day through December 31, 2018.

For more detailed information about the new limits, check out HUD’s Mortgagee Letter 2017-17 and its loan limits page.

Written by Alex Spanko