Reverse Mortgage Line of Credit Calculator
The HECM line of credit has a unique feature: the unused portion grows over time at the accrual rate — a benefit no HELOC can match.
About this tool
A HECM line of credit starts at the net available proceeds and grows at the accrual rate (expected interest rate + 0.5% MIP) as long as it remains undrawn. This calculator shows the LOC balance at any future point — demonstrating why many advisors prefer the LOC strategy over immediate draws.
How to use it
Quick steps to get the most out of this utility.
- 1
Calculate net HECM proceeds
Enter home value, age, and existing mortgage.
- 2
Select line of credit payout
The full net proceeds become your initial LOC.
- 3
See LOC growth projection
How the available credit grows each year if left unused.
- 4
Plan your draw strategy
When and how much to draw to optimize your retirement income.
The HECM LOC Growth Feature: Why It Matters
The unused HECM line of credit grows at the loan's accrual rate — the same rate at which the loan balance grows when drawn. At 6.5% accrual, a $170,000 LOC grows to about $235,000 in 5 years and $325,000 in 10 years. This growth occurs regardless of home value changes. It is not taxable income — it is simply increased borrowing capacity. This feature has no equivalent in the conventional HELOC market.
Frequently asked questions
Does the HECM LOC growth rate change over time?+
Yes — the LOC grows at the accrual rate, which equals the expected interest rate plus 0.5% ongoing MIP. If interest rates rise, the LOC grows faster. If rates fall, it grows more slowly. But the LOC can never be frozen or reduced by the lender as long as you remain in the home and meet loan obligations — unlike a HELOC, which lenders can freeze.
Can I use the HECM LOC as an emergency fund?+
Yes — many financial planners recommend establishing a HECM LOC early in retirement (even before you need the money) and letting it grow. It becomes a tax-free emergency fund that grows over time. If you never need it, the unused portion is just not drawn. This 'stand-by HECM LOC' strategy is increasingly recommended in academic retirement research.
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