Reverse mortgage vs selling and downsizing calculator for 2026
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Staying with a HECM and selling to downsize both convert home equity into usable funds — they just do it in opposite directions. This tool compares cash released today and projected equity at your chosen horizon.
Get your Reverse Mortgage Estimate Summary.
Complete the short estimate form and we send back a full HECM summary: your estimated principal limit, complimentary home value estimate, payoff of any existing mortgage, and estimated proceeds available to you.
- Complimentary home value estimate
- Estimated principal limit for your age
- Existing mortgage payoff included
- Lump sum, line of credit, or monthly options
Illustration only, generated from the information you enter. Not a loan estimate, pre-qualification, commitment to lend, or approval. Subject to HUD counseling, appraisal, credit and income review, and final lender approval. You remain responsible for property taxes, insurance, and home maintenance.
Estimate summary
- Home value estimate
- $412,000
- Youngest borrower age
- 72
- Estimated principal limit
- $219,400
- Existing mortgage payoff
- $68,000
- Estimated proceeds available
- $151,400
Simply Approved Mortgages • NMLS #2620881 • Equal Housing Opportunity
Your assumptions
Assumes the replacement home is bought outright with sale proceeds.
Commissions, title and escrow, transfer charges, repairs and moving.
Sets the Principal Limit Factor used for the HECM side.
Sources: HUD — HECM Program; CFPB — Reverse Mortgages
After paying off $80,000 and $48,000 of selling costs.
After buying the replacement home outright.
After $23,000 of estimated closing costs and the existing payoff.
Home projected at $934,780.
Replacement home projected at $545,289 plus retained cash.
At these assumptions, selling and downsizing shows more projected equity at year 15. Small changes to appreciation, selling costs or the replacement price can reverse that result, so treat it as a scenario, not a recommendation.
What next with these numbers?
We only contact you if you give express written consent on the form before you submit it.
What is a the stay-or-sell decision?
Selling converts equity to cash in one transaction, then spends part of it on the next home. Its cost is visible and immediate: commissions, closing charges, repairs, and the disruption of a move. A HECM leaves the house where it is and converts equity gradually, with the cost hidden in an accruing balance rather than a check at closing.
Horizon usually decides it. Over a short horizon, HECM upfront costs are hard to spread out, and selling can be cleaner. Over a long horizon in a home the household genuinely wants to stay in, the HECM's lack of a required monthly principal-and-interest payment is the feature doing the work — provided property taxes, insurance, HOA dues and maintenance stay affordable.
Expert insight from Simply Approved Mortgages
The comparison people most often get wrong is treating sale proceeds as free cash. Once the replacement home is bought, the leftover figure is frequently much smaller than expected, and in markets where smaller homes have appreciated faster than large ones, downsizing can release surprisingly little.
On the other side, a HECM taken purely to avoid a move can turn into a hard problem if property charges are already straining the budget. A HECM does not pay taxes and insurance for you, and non-payment is a leading cause of HECM default. Be honest about that line item first.
Educational perspective from Simply Approved Mortgages LLC, a mortgage broker, NMLS #2620881.
Get my estimate before you decide to sell
A licensed loan officer can model staying versus downsizing with your real numbers, including HECM for Purchase — no obligation.
- • Personalized HECM estimate based on your actual age and home value
- • Complimentary home value estimate when you provide your address
- • Side-by-side comparison of HECM vs. HELOC vs. cash-out refinance vs. downsizing
- • Help scheduling independent HUD-approved counseling
Your numbers plus the 2026 Reverse Mortgage Guide.
Request your estimate and we include the 21-page plain-English guide: who qualifies at 62+, what a HECM costs, payout options, ongoing obligations, and the questions to ask before you sign.
- 21-page guide, no jargon
- HUD/FHA program rules explained
- Costs and fees broken down
- Questions to ask any loan officer
Illustration only, generated from the information you enter. Not a loan estimate, pre-qualification, commitment to lend, or approval. Subject to HUD counseling, appraisal, credit and income review, and final lender approval. You remain responsible for property taxes, insurance, and home maintenance.
Estimate summary
- Home value estimate
- $412,000
- Youngest borrower age
- 72
- Estimated principal limit
- $219,400
- Existing mortgage payoff
- $68,000
- Estimated proceeds available
- $151,400
Simply Approved Mortgages • NMLS #2620881 • Equal Housing Opportunity
Reverse mortgage vs selling — FAQ
- What costs are involved in selling instead of taking a reverse mortgage?
- Selling typically involves real estate commissions, title and escrow charges, transfer taxes where applicable, repairs and staging, and moving expenses. This tool lets you set a single selling-cost percentage because those charges vary widely by state and by transaction.
- Is downsizing usually cheaper than a HECM?
- It can be, because you avoid the initial FHA mortgage insurance premium and origination fee. But selling costs, the price of the replacement home, and moving costs are real too, and the comparison depends on whether the replacement home is materially cheaper than the current one.
- Can I use a reverse mortgage to buy the smaller home?
- Yes. HECM for Purchase lets a buyer 62 or older combine a required cash investment from documented, non-borrowed funds with HECM proceeds to buy a primary residence in one transaction. Our HECM for Purchase calculator estimates the required investment.
- Does the tool account for taxes on a sale?
- No. Capital gains treatment on the sale of a primary residence depends on your basis, ownership and use history, filing status, and the current exclusion rules. Ask a tax professional before relying on any sale-versus-stay comparison.
- What happens to my equity if I keep the home with a HECM?
- The loan balance grows as interest and mortgage insurance accrue, so equity declines unless appreciation outpaces the accrual rate. Because a HECM is non-recourse, you or your heirs never owe more than the home's value when the loan becomes due, and heirs may buy the home for 95% of appraised value.
- Which option is better for my heirs?
- Neither is automatically better. Selling converts equity to cash today; a HECM preserves occupancy while consuming equity over time. What matters is the horizon, the appreciation rate, and how much of the proceeds are actually spent.
- Are these projections a quote?
- No. They are educational estimates using assumptions you choose, including an interpolated Principal Limit Factor. Actual figures depend on appraisal, HUD's official factor table, lender rates, and market conditions.
- What is not factored into the projected equity figures?
- This tool does not model ongoing costs of renting or a mortgage on a replacement home, moving expenses beyond the selling-cost percentage, capital gains taxes, or changes in interest rates over the comparison horizon. Treat it as a starting scenario, not a financial plan.
- How sensitive is the result to the appreciation assumption?
- Very. Because both the home you keep and any replacement home are projected to grow at the same appreciation rate you set, small changes to that single assumption can shift which option shows more equity at your horizon. Try a few different appreciation rates before drawing conclusions.
- Why does selling show cash today but a HECM shows less?
- Selling converts all your equity to cash in one transaction, minus payoff and selling costs. A HECM releases only a portion of your equity — the principal limit, less mandatory obligations and closing costs — because it is designed to leave you owning the home and living in it.
- Does this calculator include HECM for Purchase math?
- No. This tool compares staying with a HECM against selling and buying a smaller home outright with sale proceeds. Use the separate HECM for Purchase calculator to model financing part of the replacement home's price with a new reverse mortgage.
Keep learning about reverse mortgages
- Alternatives to a reverse mortgage
Downsizing and other options compared.
- HECM for Purchase
Buy the next home with a reverse mortgage.
- HECM for Purchase calculator
Estimate the required cash investment.
- Loan balance calculator
Project balance and remaining equity.
- Heirs and non-recourse
What happens to the home later.
- Get my estimate
Talk to a licensed loan officer.
References & sources
Every statistic, program rule, and regulatory claim on this page is sourced from the primary U.S. government agencies and industry bodies listed below. We never source program facts from competing brokers, blogs, or unverified secondary sources.
Source links are maintained by Simply Approved Mortgages and verified periodically. Federal program rules can change — always confirm current-year specifics with HUD, the CFPB, or a HUD-approved counselor before acting on any information on this page.
Keep reading: the next steps most people take
Related reverse mortgage articles, rate updates & HECM guides
New reverse mortgage articles are publishing soon. In the meantime, browse upcoming categories:
Documents required for a reverse mortgage
When you apply for a HECM reverse mortgage, your lender will request documents that verify your identity, property ownership, income, and assets. Gathering these in advance can speed up your estimate and application.
- Government-issued photo ID
Current driver’s license, passport, or state-issued ID.
- Social Security number verification
Social Security card or award letter showing your SSN.
- Current mortgage statement
Most recent statement if refinancing; purchase agreement if buying.
- Homeowner’s insurance declarations page
Shows current coverage, premium, and mortgagee clause.
- Property tax statement or receipt
Latest county tax bill showing taxes are current or payment history.
- Bank statements
Last 1-2 months to verify closing funds and residual reserves.
- Investment or retirement accounts
Recent statements for IRA, 401(k), brokerage, or other liquid assets.
- HOA or condo information
Homeowners association statement or condo questionnaire if applicable.
- Trust or title vesting documents
Required when the home is held in a living trust or entity.
- Flood insurance declaration
Current policy if the property is in a flood zone.
- HUD-approved counseling certificate
Required before loan application. Obtained from a HUD-approved reverse mortgage counselor.
Why we pull credit for your reverse mortgage pre-approval
HUD requires a Financial Assessment for every HECM reverse mortgage, including a review of your credit history and record of paying property taxes and homeowners insurance. As part of our standard broker/lender pre-approval process, we typically order a tri-merge credit report through a HUD-approved credit vendor to verify identity, review obligations, and confirm that you can continue paying property taxes, homeowners insurance, and maintenance after closing. Whether a tri-merge is required, and any fees, are set by the wholesale lender and credit vendor — not by HUD as a stand-alone rule.
Pay for your credit report — SmartPay
Simply Approved Mortgages uses SmartPay to securely collect the credit report fee for your reverse mortgage pre-approval. Payment goes directly to the credit vendor — not to us — and unlocks a tri-merge credit report (Equifax, Experian, TransUnion) that your loan officer uses to complete the broker/lender pre-approval file for HUD's Financial Assessment.
- Secure, PCI-compliant checkout hosted by SmartPay
- Standard step in our broker/lender pre-approval process (not a HUD stand-alone requirement)
- Optional — you can decline; your loan officer will explain any impact on your options
You'll be redirected to cic.cra.xedalink.net (SmartPay).
Check your credit first — $1 trial at MyITINCredit
Before you apply, it's smart to know exactly where your credit stands. MyITINCredit offers a $1 trial for 15 days that includes all three credit reports and scores (Equifax, Experian, TransUnion), plus ongoing credit monitoring so you can catch errors, dispute inaccuracies, and watch for identity theft.
- See all 3 bureau reports & scores before your lender does
- Ongoing monitoring alerts you to new accounts or score changes
- Fix errors early — cleaner credit can widen your reverse mortgage options
You'll be redirected to myitincredit.com. Third-party service — terms apply.
Credit report fees are paid directly to the credit vendor. Simply Approved Mortgages (NMLS #2620881) does not receive compensation from these credit services. MyITINCredit is an independent third-party service; pricing, terms, and features are set by that provider.
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Ready to See Your Reverse Mortgage Numbers?
Get your personalized HECM estimate from a Simply Approved Mortgages licensed loan officer, or run the numbers yourself with our calculator — free and with no obligation.