Reverse Mortgage Initial Principal Limit

See: Reverse Mortgage.

In a typical reverse mortgage, a senior citizen leverages the equity they've accumulated in their home in order to receive a monthly income. In a regular mortgage, you pay monthly payments to a bank, and at the end of the process, you own your house outright. In a reverse mortgage, the bank sends you the regular payments, and at the end of the process, they own the house.

The reverse mortgage initial principal limit sets the ceiling for how much money gets paid out in the deal. It's the total amount the homeowner can receive as part of the reverse mortgage.

Because these transactions usually involve older homeowners, the figure is, in part, related to the person's age at the time they applied for the reverse mortgage. The interest rate and the value of the home also play into the figure.