HECM Loan Limits: What They Are and How They Work in 2026

A Home Equity Conversion Mortgage (HECM) lets homeowners 62 and older borrow against their home equity without making monthly mortgage payments. And each year, the Federal Housing Administration (FHA) sets a maximum loan limit for these reverse mortgages.

Here’s how the HECM loan limits work and what they mean for older adults considering a reverse mortgage.

What is the HECM loan limit?

The HECM loan limit is the maximum property value that the FHA will recognize when calculating a borrower’s available proceeds. It isn’t the amount you’ll receive - it’s simply a cap on the home value used in the HECM formula.

If your home is valued below the limit, your full appraised value counts toward your calculation. If your home is above the limit, only the value up to the loan limit is considered. That’s why homeowners with higher-value properties tend to pay closer attention to annual limit increases.

Why the HECM loan limit changes each year

The FHA adjusts the HECM loan limit based on shifts in national home prices. The limit is tied to a percentage of the conforming loan limit used for traditional forward mortgages. When home prices rise, as they have in recent years, conforming loan limits typically increase, with HECM limits following suit.

For older homeowners, this matters because a higher limit means more of their home value can be included in the reverse mortgage calculation. That can translate to more accessible equity or more flexibility when paying off an existing mortgage at closing.

How the HECM loan limit affects your borrowing power

A borrower’s available proceeds, also known as the principal limit, depend on four primary factors:

• Age of the youngest borrower or eligible non-borrowing spouse
• Expected interest rate
• Home value (capped at the HECM limit)
• Mandatory obligations, including existing mortgage balances and closing costs

For homeowners with lower-priced homes, the loan limit may not affect the calculation at all. But for borrowers with properties near or above the limit, a higher cap could significantly increase the amount of equity available.

Here are a few common situations:

• Your home value is below the limit: The full value counts, so you won’t see any direct impact from the limit itself.
• Your home value is near the limit: If the 2026 limit is higher than past years, more of your property value may count in the calculation.
• Your home value exceeds the limit: Only the value up to the 2026 limit is considered. In this case, increases can matter because they raise the portion of your equity recognized by FHA.

Increasing the limits also help borrowers who are trying to pay off a sizable existing mortgage. If the full payoff amount couldn’t fit under last year’s limit, a higher cap may make the numbers work.

Who benefits most from rising HECM loan limits?

Rising limits tend to benefit three types of borrowers:

• Owners of higher-value homes: These properties previously exceeded the limit, so increases can help unlock more equity.
• Borrowers with large existing mortgages: A higher limit can make full payoff at closing more feasible.
• Borrowers planning to use a line of credit: Higher initial proceeds can lead to a larger starting line of credit and faster growth over time.

For these borrowers, annual loan-limit increases can create more flexibility and make the HECM program an option when it previously wasn’t.

When a higher limit may not increase your proceeds

Higher HECM loan limits don’t always translate to higher borrowing power and you may not see an increase if:

• Your home value is already well below the limit
• Expected interest rates rise, reducing principal limits
• Mandatory obligations absorb most of your available equity
• Your age or payout choice limits available funds more than the property value cap

What are the current HECM loan limits?

The national HECM loan limit for 2026 is $1,249,125, up from $1,209,750 in 2025. A higher limit does not automatically boost your proceeds, but it can expand your options if your home value or existing mortgage balance previously bumped up against the limit.

If you’re considering a HECM, start by comparing your estimated home value to the new limit. A lender or reverse mortgage calculator can show whether rising limits improve your borrowing power, and counseling sessions will walk you through how different payoff amounts and loan obligations shape your available funds.