Previous Limits

• Before the "Great Recession," which began in 2007, reverse mortgage loan limits were set at near the median home value in each of more than 100 regions in the country. In the most expensive areas, the maximum was $417,000 in early 2008. Later that year, the regional differences were eliminated, and the $417,000 cap was applied nationwide.
  
  

Limit During the Economic Recovery

• The American Recovery and Reinvestment Act of 2009 increased the national cap to $625,500 through 2010. This figure was extended through 2011 by congressional action. This much higher cap allows owners of more expensive homes to realize larger loan amounts.
  
  

Limit Related to Home Value

• While the national limit for reverse mortgages is $625,500, the actual maximum loan amount any given borrower will be eligible for will be based on the lesser of his home's value or the national cap. According to the National Association of Realtors, the leading national real estate trade organization, the median price of a home nationally was $177,000 in late 2010. Of the country's major metropolitan areas, only Honolulu, San Francisco, San Jose and surrounding Silicon Valley cities surpassed a median value of $600,000 in late 2010, although many smaller subareas, like Manhattan, would be classified in this price range as well.
  
  

Other Factors Affecting Loan Amount

• The set of variables that, together, determine the maximum loan amount for every borrower are the borrower's age, the lesser of the home's value and the national cap, the loan type and the interest rate. The maximum loan amount generally ranges between 40 and 60 percent of the property's value. As a general rule, the older the borrower, the greater the loan amount.