Unused HECM line of credit growth rate tracks the note rate — 1-month CMT plus lender margin — plus 0.50% annual MIP of outstanding balance (Mortgagee Letter 2017-12). Jay Zayer, CRMP, is a reverse mortgage specialist at reversemortgage.coach. It is unused capacity getting larger. It is not a savings yield, not an IRA return, and not cash heirs inherit. See how the line grows for compounding mechanics. Stay here for the rate itself.
A common scenario: Fionn, 62, occupies a house in El Cajon, California, and a worksheet promised “about 7% growth.” That worksheet was teaching a teaser, not Fionn’s note. I will not quote a live PLF or a live growth percent. Run leftover cash today.
A HECM remains FHA-insured. Line growth is not a public interest coupon.
What rate actually grows unused HECM line capacity?
The same economic rate the drawn balance accrues: note rate plus annual MIP. Note rate on the ARMs I originate is 1-month CMT plus lender margin. Annual MIP is 0.50% of outstanding balance. Unused line can increase at that combined pace per the documents. Expected rate — 10-year CMT plus margin, rounded to 0.125% under 24 CFR 206.3 — already sized leftover cash at origination. Mixing EAMIR with growth is how people invent a HUD CD.
Fionn’s leftover cash still lands in a mid-30s to low-50s percent of appraised value, depending on age and expected rate. Growth does not change that origination cell. Counseling still costs $125–$175.
Proprietary notes Jay closes — HomeSafe, Longbridge Platinum, Finance of America, Mutual of Omaha Secure Equity — are not FHA-insured and do not use this HECM growth formula. Read the private note.
Why I will not quote a live growth percentage on this page
1-month CMT moves. Margins differ. Annual MIP is 0.50% of outstanding balance, not of unused line as a slogan. A radio “7%” is not Fionn’s LE. 24 CFR Part 206 does not assign a guaranteed yield to unused line. I will not publish one. See how the interest rate is set.
A second geography: a 79-year-old in Show Low whose Arizona illustration used last year’s index as if it were a HUD constant. Same formula. Different honesty. Same leftover-cash gate. Initial MIP is still 2.00% of claim amount. Origination is still capped at $6,000 under 24 CFR 206.31.
If residual income requires a LESA, that set-aside is origination-only. Jay confirmed it cannot be modified after closing. A LESA is not a growth engine.
What stops growth even while the note is still outstanding?
Drawing the unused line to zero. Switching leftover capacity into tenure or term under 24 CFR 206.26 until little unused line remains. Due-and-payable status under 24 CFR 206.27(c). Death of the last borrower, unless an Eligible Non-Borrowing Spouse starts deferral — and even then heirs do not inherit unused line as cash. Occupancy failure. A refinance replaces this line. It does not gift last year’s growth onto a new case number.
If Fionn’s heirs later keep the El Cajon house, 24 CFR 206.125(a)(2)(i) still names the outstanding balance. Growth that was never drawn is not an estate account.
California still inserts seven days after counseling before a complete application; growth math does not start on that pause. Arizona Show Low skips the Civil Code and still cannot treat last year’s index as a HUD constant. Mortgagee Letter 2025-22 still sets the 2026 cap at $1,249,125. Initial MIP is still 2.00% of claim amount (Mortgagee Letter 2017-12). Origination is still capped at $6,000 under 24 CFR 206.31. Annual MIP is 0.50% of outstanding balance, not a slogan about unused line.
A refinance that actually completes in about 30 days replaces this line; it does not gift last year’s growth onto a new case. Expected rate — 10-year CMT plus margin, rounded to 0.125% under 24 CFR 206.3 — already sized leftover cash at origination. Mixing EAMIR with growth is how people invent a HUD CD. Proprietary notes Jay closes — HomeSafe, Longbridge Platinum, Finance of America, Mutual of Omaha Secure Equity — are not FHA-insured and do not use this HECM growth formula.
Drawing unused line to zero stops growth on empty capacity. Switching leftover capacity into tenure or term under 24 CFR 206.26 until little unused line remains also stops growth on that slice. Due-and-payable status under 24 CFR 206.27(c) ends the feature. Death of the last borrower does not turn unused line into inherited cash. I will not quote a live combined growth percentage on this page. 1-month CMT moves. Margins differ.
What I will not invent: a live combined growth percentage, a HUD CD, or a guarantee unused line will outrun a savings account. Fionn still has to occupy. Property charges still have to be paid. Growth is unused capacity getting larger on an adjustable line. Empty is not unused capacity. A closed-end fixed lump sum does not keep this feature. Read the note. Compare a Loan Estimate. Skip origination if leftover cash after 2.00% of claim amount is decorative.
Who should not originate just to watch a projection to age 90?
This path does not help a household that wanted a chart more than leftover cash after 2.00% of claim amount. Occupancy is still 24 CFR 206.39. I work with multiple lenders. I will originate a line when optionality is the point. I will turn away a growth-as-investment plan whose only thesis is a seminar slide.
If leftover cash after costs is decorative, growth will not rescue the file. Skip the HECM. When the math works, treat growth as unused capacity getting larger — not as a yield you can spend without drawing.