The principal limit factor is HUD’s published percentage that converts maximum claim amount into a HECM principal limit. Mortgagee Letter 2017-12 put the current General Table in force for case numbers on or after 2 October 2017. The lookup uses the youngest borrower’s age and the expected average mortgage interest rate. Jay Zayer, a Certified Reverse Mortgage Professional (CRMP) licensed in California and Arizona, treats the factor as a table cell, not as a percentage a neighbor can lend you.
In the mid-to-upper 6% expected-rate range used on many 2026 files, published factors typically sit in the mid-30s to low-50s depending on age. Run the calculator for your file. Do not treat a blog percentage as current.
How is the expected-rate column actually chosen?
For an adjustable HECM, 24 CFR 206.3 sets expected rate as the lender’s margin plus the weekly average yield on 10-year constant-maturity Treasury securities, or another index the Secretary has approved, then rounded to the nearest one-eighth of one percent. For a fixed HECM, expected rate equals the note rate.
This site’s published illustrations use a 7.000% expected rate as of 22 September 2026 (10-year CMT 5.01% on 18 September 2026 plus a 2.00% margin, rounded). A lower margin lands nearer 6.500% and raises the factor. A higher expected rate lowers it. The coupon you pay in month one is not the column HUD used to size the loan.
HUD’s workbook does not let originators interpolate. Ages 70 and 71 are the same cell at 7.000%. Linear averaging between documented ages is how old site copy overstated age 72.
What three numbers does the factor multiply, and in what order?
- Confirm the youngest borrower will be 62 or older at closing (24 CFR 206.33).
- Set maximum claim amount as the lesser of appraised value and $1,249,125 for 2026 (Mortgagee Letter 2025-22).
- Look up the integer age in the expected-rate column of the Mortgagee Letter 2017-12 General Table.
- Gross principal limit = claim amount × that factor.
- Subtract liens, initial MIP of 2.00% of claim amount (Mortgagee Letter 2017-12), origination under 24 CFR 206.31, third-party costs, and any LESA. That remainder is what you can actually use.
Walk through the arithmetic on a paid-off $700,000 house with a youngest borrower aged 68, at 7.000% as of 22 September 2026. HUD’s cell is 35.7%. Gross principal limit = $700,000 × 0.357 = $249,900. Initial MIP = 2.00% × $700,000 = $14,000. After roughly $24,000 of financed costs, net is about $225,900. That cell is an illustration, not your quote. See principal limit for how leftover cash is then split among payment plans.
First-year disbursement under 24 CFR 206.25 can still leave part of that principal limit untouched even though the factor “gave” you the larger number on paper.
What goes wrong when people treat a friend’s factor as theirs?
They copy an age-75 percentage onto an age-62 file. They apply a low-rate column from a 2013 article to a 7.000% file. They multiply the factor by a $1.8 million appraisal and ignore the 2026 cap. Each error overstates cash. Proprietary programs such as HomeSafe, Longbridge Platinum, Finance of America, and Mutual of Omaha’s Secure Equity do not use this workbook. Ask for the private table in writing.
Waiting a year can raise the factor if you cross an age whose cell actually changes. It does not raise it if you are sitting in a shared cell, and it can be offset if expected rates move against you while you wait.
This page does not help a household that needs 100% of equity in cash. A sale, not a factor, is that tool. See versus selling. It does not help someone shopping a jumbo label while still modeling HUD cells. See jumbo reverse mortgages.
Expected-rate rounding is not cosmetic. 24 CFR 206.3 sends the ARM lookup to the nearest 0.125%. A margin that produces 7.01% becomes 7.000%. A margin that produces 6.94% becomes 6.875% and a different column. Ask which expected rate the Loan Estimate used. If the originator cannot name the column, the illustration is a guess.
Who this does not help: a household that needs the neighbor’s 2013 percentage to make a payoff work. If the live cell cannot retire the first lien, the file needs cash, a reverse second, or a sale. Jay will say that before anyone pays for an appraisal on hope.
A follow-up: if expected rates fall after closing, does the old factor reset? No. The origination cell is locked. A later HECM-to-HECM refinance under 24 CFR 206.53 would use a new expected rate and a new table lookup, plus anti-churning tests. Holding the loan does not give you a free annual factor raise.
If two originators show different cells on the same day, they are using different expected rates or different ages. Ask for the 10-year CMT print, the margin, and the rounded column. 24 CFR 206.3 is the rounding rule. A marketing PDF that omits those three inputs is not a principal-limit factor. It is a sales page.