Maximum Claim Amount: Maximum Reverse Mortgage Loan Limits

The Home Equity Conversion Mortgage (HECM) program is federally insured and regulated, which means that the Federal Housing Administration (FHA) sets limits on the maximum amount that can be claimed through a HECM reverse mortgage.

What is an MCA (Maximum Claim Amount)?

The maximum claim amount in 2021 is $822,375. This is an increase from 2020, when the maximum claim amount was $765,600. 

A maximum claim amount (MCA) is the highest amount that the FHA will insure on a reverse mortgage. That means that, if your home is valued greater than this, then the amount above that limit will not be eligible for the HECM program.

However, that does not mean that you are unable to secure any kind of reverse mortgage.

Jumbo reverse mortgages are available to those whose homes are appraised above this value. If you’re worried that you might not be eligible for an HECM loan due to the value of your home being above the FHA reverse mortgage limit for 2021, speak with a GoodLife Reverse Mortgage Specialist to find out more about your options. 

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How is the Maximum Claim Amount Calculated?

The maximum claim amount available for your property is calculated by determining the lesser of two values:

  • The total appraised value of your home: If your home is worth $250,000, then the maximum amount that you can claim on your reverse mortgage is $250,000. 
  • The MCA as decided upon by the FHA: In 2021, the maximum amount that the FHA will insure is $822,375.

The FHA increases the limit on their MCA requirements every year to account for inflation and other factors. 

How Does the Maximum Claim Amount Affect Proceeds?

The maximum reverse mortgage amount will affect the total amount that you can receive in reverse mortgage proceeds. Those with higher claim amounts available to them — i.e., those whose homes have a higher value, or who own more equity in their homes — will be able to claim more, up to the FHA-determined maximum. 

The precise way that the MCA affects your proceeds will depend, in part, on the method that you choose for receiving funding. If you choose to receive a lump sum, this lump sum will be determined by the maximum amount of equity you are able to claim, minus origination fees and taxes. If you receive monthly payments, the maximum amount you can claim will determine the size of each payment. And if you choose to use a line of credit, the size of your line of credit will be limited by the MCA, at least initially. 

If you’re curious how much you may be able to claim with a reverse mortgage, try out our free reverse mortgage calculator, which can give you a helpful estimate. You can also download our free HECM guide or speak with a Reverse Mortgage Specialist to find out more about how you can use an HECM or jumbo reverse mortgage to help you fund your retirement.

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