Model negative amortization for FHA HECM reverse mortgages. Calculate compounding loan balance growth, monthly payout draws, and future remaining home equity.
Eligible for reverse mortgage
Paid off from proceeds
Standard FHA premium is 0.5%
Monthly cash to homeowner
Estimated annual increase
| Year (Age) | Draws Received | Loan Balance | Home Value | Remaining Equity |
|---|---|---|---|---|
| Yr 1 (Age 69) | $12,000 | $66,007 | $465,750 | $399,743 |
| Yr 2 (Age 70) | $12,000 | $83,171 | $482,051 | $398,880 |
| Yr 3 (Age 71) | $12,000 | $101,576 | $498,923 | $397,347 |
| Yr 4 (Age 72) | $12,000 | $121,312 | $516,385 | $395,073 |
| Yr 5 (Age 73) | $12,000 | $142,474 | $534,459 | $391,985 |
| Yr 6 (Age 74) | $12,000 | $165,166 | $553,165 | $387,999 |
| Yr 7 (Age 75) | $12,000 | $189,499 | $572,526 | $383,027 |
| Yr 8 (Age 76) | $12,000 | $215,590 | $592,564 | $376,974 |
| Yr 9 (Age 77) | $12,000 | $243,568 | $613,304 | $369,736 |
| Yr 10 (Age 78) | $12,000 | $273,568 | $634,769 | $361,202 |
| Yr 11 (Age 79) | $12,000 | $305,737 | $656,986 | $351,250 |
| Yr 12 (Age 80) | $12,000 | $340,231 | $679,981 | $339,750 |
| Yr 13 (Age 81) | $12,000 | $377,219 | $703,780 | $326,561 |
| Yr 14 (Age 82) | $12,000 | $416,881 | $728,413 | $311,532 |
| Yr 15 (Age 83) | $12,000 | $459,410 | $753,907 | $294,497 |
| Yr 16 (Age 84) | $12,000 | $505,013 | $780,294 | $275,281 |
| Yr 17 (Age 85) | $12,000 | $553,913 | $807,604 | $253,691 |
| Yr 18 (Age 86) | $12,000 | $606,348 | $835,870 | $229,522 |
| Yr 19 (Age 87) | $12,000 | $662,574 | $865,126 | $202,552 |
| Yr 20 (Age 88) | $12,000 | $722,864 | $895,405 | $172,541 |
In traditional mortgages, payments reduce the principal balance over time. In a reverse mortgage (HECM), the loan undergoes reverse amortization (also known as negative amortization). Because the borrower makes no monthly mortgage payments, the interest and mandatory FHA mortgage insurance premiums (MIP) are added to the loan balance each month, causing the total debt to compound and grow over time.
A major fear of negative amortization is ending up "underwater." Fortunately, all government-backed HECM reverse mortgages carry an explicit federal non-recourse clause. If the compounding loan balance eventually exceeds the home's market value when the borrower passes away or moves into assisted living, FHA insurance covers the shortfall. Neither you nor your heirs will ever be personally liable for any deficit.
If you are looking for a standard forward mortgage or loan schedule showing how regular payments pay down principal to zero, use our standard Amortization Calculator.
Go to Bret Whissel Amortization Calculator →