Reverse mortgage analysts weigh in on HECM limit for 2025

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The Federal Housing Administration (FHA) announced this week that the Home Equity Conversion Mortgage ( HECM ) limit for 2025 will be $1,209,750 . But reverse mortgage industry analysts who regularly cover developments in the space are split on whether the increase will make a material difference in the trajectory of the business in the new year.

The HECM limit is unique when compared to FHA limits that govern Title II forward mortgage lending programs . In the reverse space, there is a single, national limit, as opposed to regional limits in place on the forward side, which are more representative of local property values.

But seniors hold onto a large portion of the nation’s housing wealth. Recent data estimates that U.S. homeowners are sitting on a record level of about $35 trillion in home equity . And older homeowners, who have been paying their mortgages for longer, are part of a select group that owns their homes outright.

This cohort “represents almost 40% of American homeowners and includes anyone wealthy enough to not need home financing at all, as well as people who have lived in their property long enough to have paid down most of their mortgage or cleared it entirely,” according to recent reporting by the The Wall Street Journal .

This means that people with higher-value homes and more freedom from making forward mortgage payments can see more direct benefits from a higher HECM limit, according to John Lunde, president of Reverse Market Insight (RMI).

“In light of the more muted home-price appreciation in 2024 compared to the past few years, this increase seems reasonable to me,” Lunde told HousingWire’s Reverse Mortgage Daily (RMD). “Any increase in the limit makes HECM more suitable for more higher home-value households.”

But the difference will not be pronounced, he added.

I don’t think it’s a dramatic difference maker in terms of 2025 volume but also don’t believe it’s intended to be that,” Lunde said. “The annual loan limit review just keeps pace with what is happening in home values nationwide.”

But Michael McCully, a partner at New View Advisors , takes a more critical view of the increased limit. McCully referred RMD to a recent blog post from his company about the … Read More