How Reverse Mortgage Proceeds Are Calculated
The PLF Formula — In Plain English
JP Dauber · Licensed HECM Specialist
NMLS# 386298 · Published June 29, 2026
What are the three PLF inputs?
Your age
The youngest borrower (or NBS) age. Older = higher PLF. A 62-year-old might get a PLF of 0.38. An 80-year-old might get 0.58.
Home value
Appraised value, capped at the FHA lending limit ($1,249,125 in 2026). Higher value = higher dollar amount, though the PLF percentage stays the same.
Expected interest rate
For adjustable-rate HECMs: the 10-year swap rate + lender margin. For fixed-rate: the note rate. Lower rate = higher PLF.
The formula in plain English
Here's the calculation in four steps:
Step 1: Determine the Maximum Claim Amount (MCA) = lesser of appraised value or $1,249,125
Step 2: Look up the PLF based on age + expected rate (from HUD's tables)
Step 3: Principal Limit = MCA × PLF
Step 4: Net proceeds = Principal Limit − closing costs − existing mortgage payoff
Example: if your home appraises at $400,000 and your PLF is 0.50, your principal limit is $200,000. After closing costs (~$12,000) and paying off an existing $80,000 mortgage, your net available proceeds are approximately $108,000.
How do age and rates interact in the PLF?
The PLF increases with age and decreases with higher rates. Here's an approximate range at different combinations:
Approximate PLF percentages for illustration. Actual PLFs are published by HUD and vary with specific expected rates. Use our calculator for a personalized estimate.
First-year draw limits
Even though the PLF determines your total principal limit, FHA limits how much you can draw in the first 12 months. For most borrowers, the initial draw cap is 60% of the principal limit. You can draw more if you have a mandatory obligation (like paying off an existing mortgage) — up to the mandatory amount plus 10% of the principal limit.
After year one, the remaining balance is available — either as a lump sum, ongoing draws from your line of credit, or monthly payments.
Three inputs, one number
The HECM calculation is straightforward once you understand the three inputs: age, home value, and interest rate. The PLF turns those into a dollar amount. Our free calculator does the math instantly — or reach out and I'll walk you through a detailed breakdown for your specific situation.
Keep reading
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HECM Line of Credit Growth Rate Explained →
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