These days, I hear a lot about reverse mortgages from those around me. However, there's always one question that follows: Should I wait until the end of the year when the limit is expected to increase?

To get straight to the point, not everyone needs to wait. The number of people for whom the limit increase is actually significant is narrower than you might think.

First, let's look at the numbers. The maximum claim amount for the 2026 HECM, which is the reverse mortgage insured by the FHA, is $1,249,125.

This is an increase from $1,209,750 in 2025, as announced by HUD in the Mortgagee Letter on December 11, 2025. It applies to loans that received a case number after January 1.

This limit isn't set arbitrarily; there's a formula. It's 150% of the national conforming loan limit set by the FHFA.

Since the 2026 conforming limit is $832,750, multiplying it by 1.5 gives us exactly $1,249,125. Therefore, we can calculate the 2027 number as soon as the FHFA makes its announcement.

Looking at last year's schedule, the FHFA announced the conforming limit on November 25, and HUD finalized the HECM limit in December. It's likely that this year will follow a similar timeline.

Some large lenders have reportedly already raised their own conforming limits to $850,000 before the official announcement. However, this is their judgment, not a government announcement, so it shouldn't be taken at face value.

So, who should consider waiting? The key factor is whether the appraised value of the home exceeds the current limit.

The basis for loan calculations is the smaller of the appraised value and the limit. If the home value is $900,000, then no matter how much the limit increases, the basis remains $900,000.

On the other hand, if the home value is $1.5 million, the situation changes. Currently, only $1,249,125 is recognized, so as the limit increases, the basis amount will also rise accordingly.

In my neighborhood, the median sale price this year is just over $1 million. This means that for those who have owned homes in California for a long time, hitting the limit is not uncommon.

However, there are other significant factors that come into play: age and interest rates.

The actual amount you can receive, known as the principal limit, is determined by multiplying the basis amount by a ratio based on age and the expected rate. The older you are and the lower the interest rate, the higher this ratio becomes.

So, if you wait two or three months just to see a limit increase, but interest rates rise in the meantime, you could end up worse off. This is why you shouldn't make decisions based solely on one number.

A few years ago, I delayed refinancing because I believed interest rates would drop by the end of the year, only to end up locked into a higher rate. What I learned is that waiting can definitely come with costs.

We also need to discuss costs. The initial mortgage insurance premium is 2% of the smaller of the appraised value and the limit, plus an additional 0.5% of the loan balance each year.

If the limit increases and the basis amount grows, this 2% will also increase. If you're at the current limit, the initial insurance premium alone would be $24,982.50, which is not a small amount.

The origination fee is capped by HUD. It's the greater of $2,500 or 2% of the first $200,000 of the home value plus 1% of the amount over that, and it cannot exceed $6,000 in any case.

If you live in California, you'll need to calculate the timeline separately. State law requires that you receive HUD-certified counseling, and the lender cannot accept the final application until seven days have passed.

You must sign the reverse mortgage worksheet guide during the counseling session and submit it to the lender for approval. If you try to rush this process at the end of the year, that week can unexpectedly hold you back.

The limit application criteria are based on the date the FHA case number is assigned, not the date the documents are submitted. If you want the new year's limit, you need to coordinate with your lender to ensure it's assigned after January 1.

There are also basic conditions to check before considering anything else. The borrower must be at least 62 years old and must actually live in the home.

They will also assess your ability to continue paying property taxes, homeowners insurance, and HOA fees through a financial assessment. Remember that if you can't make these payments, the loan could become due, and you could lose your home.

The amount you can use in the first year is typically capped at 60% of the principal limit. If you need to pay off an existing mortgage, there are exceptions, so be sure to ask during your counseling session.

Many people worry about passing on debt to their children, but HECM is a non-recourse loan. To keep the home, heirs only need to pay the lesser of the loan balance or 95% of the appraised value.

The money received is not considered income, so it generally isn't taxable. However, benefits with asset limits, like Medicaid, or tax issues can vary, so it's advisable to check with a tax professional or HUD-certified counselor.

In summary, if the home value is currently below the limit, there's almost no reason to wait.

If the home value exceeds the limit, you're not in urgent need of cash, and interest rates aren't fluctuating significantly, it makes sense to wait for the December announcement and receive your case number in January.

I believe that my interest rate and living expense plans are more important than a few thousand dollars in limits. Don't get caught up in government announcement dates; first, assess your own home's numbers.