This is the question we are asked most often. And the answer is quite honestly – “it depends”.  But it is clear what it depends on. That is:

• The age of the youngest borrower on title to the home (and we need exact birth dates)
• The qualifying interest rate for the type of loan requested. The lesser of
• The value of the home based upon a current appraisal
• The national loan limit currently set by HUD at $625,500.

So specific information is needed to advise you how much you may qualify for - called the “Principal Limit”. But the principal limit will be the same for all lenders offering the exact same type of loan. (What separates the lender competition is flexibility around closing costs)

To determine funds available to you, we must also subtract any existing mortgages and liens which need to be cleared. And we must subtract loan closing costs, if any. So now, it is perhaps a bit clearer why we frequently say “it depends.

But here is an example: Elizabeth, who just celebrated her 75th birthday, and who owns a home valued in excess of the lending limit of $625,500, would be eligible for ~$411,000 “principal limit” under current (June 2010) loan programs. If she is connected to a lender who offers flexibility to cover all her closing costs, she will receive the full amount and can use the money any way she chooses.

How they work |  What are the steps? |  Buying a home?