HECM rates
The lender's margin is added to a published index to set HECM rates. This rate determines your borrowing amount and how quickly the balance grows.
- The calculator uses a 4.98% 10-year Treasury rate
- Median rate for HECMs in HUD's latest year: 5.875%
- Median note rate for fixed-rate HECMs: 7.62%
- Fixed-rate HECMs: 12 out of 24,529
HECM rates begin by adding the lender's margin to an index. When the 10-year Treasury is 4.98% and the margin is 1.750%, the expected rate becomes 6.730%. HUD's factor is picked by that expected rate, and it decides how much you can borrow. The balance grows at a second rate, called the note rate.
Lenders have no authority to change HUD's factors or fee caps. Because the margin is what they compete on most, it is the number worth comparing.
The two rates on every HECM
- The expected rate. At closing, use this rate once to find HUD's principal limit factor. With an adjustable HECM, add the margin to the 10-year Treasury to determine this rate. When the expected rate rises, the factor falls and the available amount shrinks.
- The note rate. Interest on what you owe is charged at this rate. For an adjustable HECM, the rate is the sum of a short-term index and the same margin; it changes over time. With a fixed HECM, it never changes.
Each of the two rates includes the margin. So a small gap in margin shows up twice: once in the amount you receive and again in what the loan costs over the years.
How the expected rate determines your amount
Before the factor lookup, the expected rate is rounded downward to the closest eighth of a point and is never below 3.000%. The 10-year Treasury rate used here comes from the Federal Reserve's H.15 release.
When a 70-year-old owns a $450,000 home without a mortgage, three margins lead to three results:
| Margin | Expected rate | Rate used for the factor | HUD factor | Available after costs |
|---|---|---|---|---|
| 1.250% | 6.230% | 6.125% | 0.409 | $165,550 |
| 1.750% | 6.730% | 6.625% | 0.386 | $155,200 |
| 2.500% | 7.480% | 7.375% | 0.355 | $141,250 |
Here, moving from a 2.500% margin down to 1.250% adds $24,300. Request each lender's margin in writing, then enter that figure in More settings through the calculator. The PLF table shows the full grid of factors arranged by rate.
What rates recent HECMs closed at
Every HECM that HUD insures appears in HUD's portfolio snapshot. In the latest twelve months of HUD's data, 24,529 HECMs closed at a median rate of 5.875%. Because most are adjustable loans, that figure mainly represents an initial note rate rather than the expected rate.
Fixed-rate loans accounted for only 12 of them. The median note rate for those loans was 7.62%, and that is the calculator's default once you choose Fixed.
Fixed rate reverse mortgage vs adjustable
| Feature | Fixed rate | Adjustable rate |
|---|---|---|
| How you get the money | One lump sum at closing | A line of credit, monthly payments, a lump sum or a mix of these |
| Line of credit | Not offered | Yes, and it grows |
| Rate on the balance | Never changes | Moves with a short-term index |
| First-year limit | All of it at closing | 60% of the principal limit, or the payoffs plus 10% |
| Share of HECMs in HUD's latest year | 12 loans | Nearly all the rest |
Take a fixed rate reverse mortgage as an example. At age 70 with a $450,000 home, the 7.62% fixed rate uses HUD's factor of 0.35 at 7.500%. After costs, that works out to $139,000, and it is all paid at closing. On default settings, the adjustable loan totals $155,200, of which $85,720 is available in the first year and the remainder sits in a growing line of credit.
Someone who needs one large sum right now, such as to pay off a big mortgage, is a good fit for a fixed loan. Interest starts building on all money drawn right away, so this option rarely suits someone who wants to keep funds in reserve.
Why the margin outweighs the headline rate
No lender controls the index that moves the headline rate on an adjustable HECM. Once a loan is set, the margin stays the same for its whole life. When the margin is lower:
- raises the HUD factor and adds money at closing
- slows how fast the balance grows each month
- An unused credit line also grows slightly more slowly because its rate is the note rate plus 0.5%.
A lower origination fee is offered by some lenders in exchange for a higher margin. For a loan you intend to keep for many years, the margin generally costs more than the fee saves. Fee rules appear in the costs guide.
Current reverse mortgage rates: where to check
Without asking who you are, no website can give you a live quote. These are the items you can check on your own:
- The expected rate uses the 10-year Treasury published in the Fed's H.15 release.
- Each lender's margin, stated in writing.
- The written estimate from each lender, showing the initial note rate next to the margin.
The lenders page shows which lenders closed the most HECMs.
Questions people ask
What is the HECM interest rate right now?
Across HUD's latest twelve months of data, the median HECM closed at 5.875%. The index when you lock plus your lender's margin determine your rate.
Do fixed rate reverse mortgages exist?
They do. A fixed-rate HECM pays out a single lump sum at closing and has no line of credit. In HUD's latest year, only 12 of the 24,529 HECMs were fixed-rate.
Is this a good time to take a reverse mortgage?
A lower rate produces a higher HUD factor, so when rates fall you can borrow more. Still, your age, needs and plans matter more to the timing than the rate does.
What are the drawbacks of the adjustable rate on an HECM loan?
The note rate can go up, and then the balance grows faster. Your closing approval amount remains unchanged.
Fixed rate reverse mortgage pros and cons?
The rate stays the same, but you must take the full amount at closing and pay interest on it all from day one. No growing line of credit is available.