Total reverse mortgage closing costs on a HECM are the origination stack you can actually add: 2.00% initial MIP of maximum claim amount, the 24 CFR 206.31 origination fee, and third-party title, escrow, recording, and appraisal. Jay Zayer, CRMP, is a reverse mortgage specialist at reversemortgage.coach. On a $750,000 home below the 2026 cap, that stack is $15,000 + $6,000 + about $4,000 = $25,000. Existing liens and a LESA change leftover cash. They are not a fourth “fee” with the same name.
Here’s a case that shows this: Nell, 64, occupies a house in Encinitas, California, and asked for “the total” as one number she could text a sibling. The $25,000 stack is the addable piece. A $180,000 first mortgage is a payoff, not a closing cost. See closing-cost comparison for HECM versus HELOC. Stay here for what sits in the HECM total.
A HECM remains FHA-insured. The stack is not a public surcharge lottery.
What dollars sit in the $25,000 stack on a $750,000 claim amount?
Initial MIP: 2.00% of $750,000 = $15,000, per Mortgagee Letter 2017-12. Origination: the 24 CFR 206.31 formula hits the $6,000 cap. Third-party: a $3,000–$5,000 band; the site uses a $4,000 midpoint. Sum: $25,000, about 3.3% of that price. On $500,000 the same method prints $20,000. On $800,000 it prints $26,000. At the $1,249,125 cap in Mortgagee Letter 2025-22, initial MIP alone is $24,982.50.
Nell’s leftover cash still lands in a mid-30s to low-50s percent of appraised value, depending on age and expected rate, after this stack. Run the leftover-cash worksheet. Do not interpolate HUD rows.
Counseling still costs $125–$175. California still requires the Civil Code 1923.2(k) seven-day wait before a complete application. Counseling is usually paid to the agency, not buried in the $25,000 stack.
What is not in that stack, and why do people dump it in anyway?
Payoff of a first mortgage. Payoff of a HELOC. A LESA set-aside for taxes and insurance. Those dollars reduce leftover cash. They are not origination. Annual MIP of 0.50% of outstanding balance starts after closing. It is not a closing cost. An unused line is not a credit against the stack.
A second geography: a 71-year-old in Apache Junction whose Arizona house is paid off. Same $25,000-style stack on a $750,000 value. No payoff. Leftover cash is the useful number, not the stack by itself.
If residual income requires a LESA, that set-aside is origination-only. Jay confirmed it cannot be modified after closing. Adding a LESA after you already quoted “$25,000 total” is how families feel baited. Quote the LESA as its own line.
When a refinance pays off the old HECM, I still mention ~30 days as my average close after the file is complete — not as a fee holiday. A refinance pays off the old HECM inside leftover-cash math. That payoff is not a new “closing cost” with a new nickname.
How should you read a Loan Estimate so the total is not a slogan?
Initial MIP, origination, and third-party itemized. Then liens. Then any LESA. Then leftover cash. An adjustable HECM still accrues at 1-month CMT plus lender margin. Expected rate still rounds to 0.125% under 24 CFR 206.3. Proprietary quotes skip HECM MIP and may raise origination. Compare leftover cash, not the loudest fee name.
If Nell’s heirs later keep the Encinitas house, 24 CFR 206.125(a)(2)(i) still names the outstanding balance. Closing costs already in that balance are not rebated. See financing closing costs for how the stack is usually rolled in.
How do repair set-asides change the total you should quote?
24 CFR 206.47 repairs withheld at closing are not the $25,000 stack. They are additional dollars subtracted from leftover cash until work is done. Nell’s Encinitas file can quote $25,000 of MIP plus origination plus third-party and still surprise a sibling if a roof escrow sits on top. Quote the repair line. Quote the LESA line. Quote the first-mortgage payoff. Then quote leftover cash.
On a $500,000 value the same method prints about $20,000 of stack. On $800,000 it prints about $26,000. At the $1,249,125 cap, initial MIP alone is $24,982.50. Those are addable closing costs. They are not the unused line. They are not annual MIP. A Loan Estimate that hides MIP inside a junk total is a Loan Estimate I will not let a family text as “the number.”
Who should not compare only origination and call that “total cost”?
This path does not help a household that wanted a $6,000 headline and ignored $15,000 of initial MIP. Occupancy is still 24 CFR 206.39. I work with multiple lenders. I will originate when leftover cash after the full stack is worth the insurance. I will turn away a “cheap origination” chase whose only thesis is one line.
If leftover cash after 2.00% of claim amount plus origination plus third-party is decorative, skip the HECM. Total closing costs are addable. They are not a reason to originate a thin file.
Nell can text $25,000 as the addable stack on a $750,000 Encinitas value only if she also names the first-mortgage payoff and any LESA. Those extra lines are not origination. They are why “total cost” as one number is a trap. Leftover cash after every subtraction is the number that should change a yes or no. Quote MIP, origination, and third-party as the addable stack. Then quote liens and any LESA as separate subtractions. Nell’s leftover cash is what remains. A sibling who only hears “$6,000 origination” has not heard the total.