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On December 11th, the U.S. Department of Housing and Urban Development (HUD) established a new HECM limit for calendar year 2026. This will benefit many homeowners applying for the federally insured reverse mortgage known as a Home Equity Conversion Mortgage (HECM).
HUD increased the limit to $1,249,125 for all HECM case numbers assigned on or after January 1, 2026. For homeowners with high value homes, this may represent an increase of up to $39,375 in usable home value when calculating HECM proceeds.
WHAT IS THE “HECM LIMIT?”
The HECM limit is the maximum home value that can be used for calculating principal limits for the calendar year when the FHA case number was assigned.
Keep in mind, the HECM Limit is not a “loan limit” or “lending limit.” Those are terms often used with traditional (forward) mortgages. Reverse mortgages use different terms because homeowners can borrow much more than this amount if they hold the HECM loan long enough.
The HECM Limit is also not the “Maximum Claim Amount,” or MCA, even though regulators once again mistakenly used that term. The MCA is quite different. It is the lesser of the home’s appraised value, the HECM Limit, or the sales price (if a purchase).
WHY DOES THE HECM LIMIT MATTER?
From a sales perspective, the increase in the HECM Limit provides a fantastic opportunity for “update” calls to prospects with high value homes. Let them know the good news.
Some may question the market for high-value HECM origination. But that market certainly exists, and not just in California. Furthermore, those loans tend to represent low-risk opportunities for FHA’s Mutual Mortgage Insurance Fund (MMIF), and we should not neglect such homeowners.
To put this figure in perspective, consider the history of the HECM Limit after HUD moved away from county limits in 2008:
- 2008-09 $417,000
- 2010-16 $625,500
- 2017 $636,150
- 2018 $679,650
- 2019 $726,525
- 2020 $765,600
- 2021 $822,375
- 2022 $970,800
- 2023 $1,089,300
- 2024 $1,149,825
- 2025 $1,209,750
- 2026 $1,249,125
WILL MY SOFTWARE REFLECT THE CHANGE?
Yes. If you are using REVERSE plus ANALYZER Pro, it has been updated.
If you are using RapidReverse, updates are now available for both iOS and Android versions. If you wish to demonstrate the new limits in QuantumReverse, simply go to the Loan Details screen. Under Set Asides, you can select your FHA Case Number to be “Next Year.”
Here is how you need to plan for the announcement:
- Review your HECM proposals for higher value homes (>$1,209,750).
- Review your Proprietary proposals where the new HECM Limit may be more attractive.
- If you take an application for a higher-value home in December, you may want to review your lender’s policy for assigning the FHA case number in January to capture additional principal.