Mortgage Payoff Calculators
Reverse Mortgage Payoff Calculator
If the loan balance has grown larger than the home is worth, heirs don't owe the full amount — a federal rule caps what you actually have to pay at 95% of the home's current value.
Calculate the actual payoff amount
For FHA-insured HECM reverse mortgages — the most common type.
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This applies to HECM (federally insured) reverse mortgages, not proprietary/jumbo reverse mortgages, which may have different rules. Confirm with the loan servicer and a HUD-approved counselor.
The protection most heirs don't know exists
A reverse mortgage — most commonly a HECM (Home Equity Conversion Mortgage) — grows over time instead of shrinking. Since the borrower makes no monthly payments, interest and mortgage insurance premiums accrue and get added to the balance every month. Over enough years, especially if home values haven't kept pace, it's entirely possible for the loan balance to exceed what the home is actually worth. That sounds like a serious problem for heirs — but it isn't, because of a specific federal protection.
The 95% Rule
| Scenario | Loan balance | Home value | Actual payoff required |
|---|---|---|---|
| Underwater | $400,000 | $350,000 | $332,500 (95% of value) |
| Underwater | $300,000 | $250,000 | $237,500 (95% of value) |
| Not underwater | $100,000 | $200,000 | $100,000 (the full balance, since it's lower) |
Three real options for heirs
- Pay off the loan and keep the home — either from savings, other estate assets, or by refinancing into a new conventional loan. If refinancing while the loan is underwater, the new loan must cover at least 95% of the appraised value.
- Sell the home and keep any remaining equity — if the home sells for more than the loan balance, that excess belongs to the estate or heirs; the lender does not keep it. If it sells for less, FHA insurance covers the shortfall, and heirs owe nothing further.
- Walk away via deed-in-lieu of foreclosure — signing the property back to the lender. This is often the cleanest exit when the loan is underwater and there's no interest in keeping the home: the debt is fully satisfied, and heirs owe nothing further.
The timeline after the borrower dies
The loan becomes due and payable when the last surviving borrower dies, sells, or permanently moves out. Heirs typically receive an initial notice within 30 days and then have roughly 6 months to decide how to proceed and act, with the possibility of extensions that can push the total window to around 12 months in some circumstances. If the loan was already in default before death — commonly due to unpaid property taxes or lapsed homeowners insurance — the timeline can be considerably shorter, and foreclosure proceedings may already be underway.
The 95% rule, the non-recourse protection, the three heir options, and the general post-death timeline verified across multiple independent 2026 sources with consistent, matching worked examples. This applies specifically to federally insured HECM reverse mortgages. This is a planning estimate — a HUD-approved counselor or the loan servicer can confirm your exact figures and deadlines.
Frequently asked questions
Before you settle a reverse mortgage.
Do heirs have to pay the full reverse mortgage balance?
No - if the loan balance exceeds the home's current value, heirs can satisfy the entire debt by paying just 95% of the current appraised value, thanks to the FHA non-recourse protection on HECM loans.
What happens if the reverse mortgage balance is more than the house is worth?
Heirs are never personally liable for the difference. They can keep the home by paying 95% of its current appraised value, walk away with no further debt via a deed-in-lieu of foreclosure, or sell the home with FHA insurance covering any shortfall.
Does the lender keep extra money if the home sells for more than the loan balance?
No - any proceeds beyond the loan balance belong to the estate or heirs, not the lender.
How much time do heirs have to deal with a reverse mortgage after death?
Typically about 6 months after an initial 30-day notice, with possible extensions that can push the total window to around 12 months, depending on the circumstances.
Does the 95% rule apply to all reverse mortgages?
It applies specifically to federally insured HECM reverse mortgages, the most common type. Proprietary or jumbo reverse mortgages may have different terms.