Reverse mortgage calculator

Use this calculator to figure the annual growth of your loan balance for a lump-sum payment or series of monthly payments from a reverse mortgage.

How does a reverse mortgage work?

A reverse mortgage is a special type of home equity loan for seniors age 62 and above. It allows you to borrow against your home equity without having to make any loan payments for as long as you live in the home. As such, it can be a useful financial tool for persons on a fixed income.

A reverse mortgage allows you to borrow money in a variety of ways. You can receive a single lump sum of cash, all at once. You can set up a line of credit to draw on as needed. Or you can receive a series of regular payments over a period of time. You can also have a combination of these.

When you have a reverse mortgage, you don't have to make any payments but interest charges accrue over time. When you vacate the home, the loan comes due and the principal and interest charges are paid at that time, often by selling the home. Any money left over goes to you or your estate.

With a reverse mortgage, you can never owe more than your home is worth. However, it's good to know how quickly the loan balance will increase, so you can figure how much equity you will have remaining at a given point in time. An online reverse mortgage calculator, such as this one, can help.

Using the reverse mortgage calculator

This particular reverse mortgage calculator is designed to allow you to calculate how quickly your loan balance will increase after receiving a lump sum payment, a series of monthly payments or a combination of both.

Simply enter the amount of the lump sum received and the size of the monthly loan advance in the spaces indicated. If you are receiving just one of these, enter "0" for the other. Then enter the interest rate you're being charged and the number of years for which you wish to calculate accumulated charges.

The chart will show the increase in your loan balance over time. Click "view report" for a detailed breakdown of the interest charges and loan balance on a year-by-year basis.