Reverse Mortgage Details
Balance By Year
Definitions
The starting balance or amount you expect to receive immediately from your reverse mortgage.
The number of years you want to project the loan balance forward.
An optional recurring monthly draw added to your balance, on top of the lump sum.
The annual interest rate applied to your growing reverse mortgage balance, compounded monthly.
This calculator estimates how a reverse mortgage balance can grow over time based on your lump sum advance, monthly advances, and interest rate. This is an illustrative estimate only and not financial advice.
A reverse mortgage calculator helps homeowners estimate how much their loan balance will grow over time. Unlike a traditional mortgage where your balance shrinks with every payment, a reverse mortgage works the opposite way the amount you owe increases as interest and any additional advances are added to your balance each month. This tool lets you enter your lump sum advance, interest rate, loan term, and any recurring monthly advances to see a year-by-year projection of your outstanding balance, along with a visual chart of how it grows.
How Does a Reverse Mortgage Work?
A reverse mortgage lets homeowners aged 62 and older convert part of their home equity into cash, without selling the home or making monthly mortgage payments. Instead of paying down a balance, the loan balance increases over time as interest accrues on the amount borrowed. Homeowners can receive funds as a lump sum, fixed monthly advances, a line of credit, or a combination of these. The loan is typically repaid when the homeowner sells the home, moves out permanently, or passes away.
What Affects Your Reverse Mortgage Balance?
Several factors influence how fast your reverse mortgage balance grows. The interest rate is the biggest driver — even a small rate difference compounds significantly over a 10 or 20 year period. The size of your initial lump sum advance and any ongoing monthly advances also add directly to the principal, which then continues to accrue interest. Because interest compounds monthly, the balance can grow considerably faster than many homeowners expect, which is why running the numbers with a calculator before committing to a reverse mortgage is important.
Reverse Mortgage vs. Traditional Mortgage
The core difference between a reverse mortgage and a traditional mortgage is the direction the balance moves. With a traditional mortgage, homeowners make monthly payments that gradually reduce the amount owed until the loan is paid off. With a reverse mortgage, no monthly payments are required, and the balance grows instead of shrinking, since interest and any advances are added to the loan each month rather than paid down.
Who Typically Considers a Reverse Mortgage?
Reverse mortgages are generally aimed at homeowners aged 62 or older who have significant equity in their home and want additional income during retirement without taking on monthly payments. They can be useful for covering living expenses, medical costs, or home improvements. Because the balance grows over time and reduces the equity left for heirs, it’s worth comparing the long-term cost against other options like a home equity loan or downsizing.
