A reverse mortgage statement arrives in the mail and the first number you look at is the loan balance. It is higher than it was last month. It will be higher next month. It will be higher every month for as long as you live in the house, because a reverse mortgage does not require monthly payments and the interest accrues onto the balance instead of being paid down. This is the defining feature of the loan, and it is the reason the statement looks backwards to anyone used to reading a traditional mortgage statement where the balance goes down.
A Home Equity Conversion Mortgage, or HECM, the federally insured reverse mortgage that accounts for the vast majority of reverse mortgages in the United States, sends a monthly or annual servicing statement that details the loan balance, the available credit line, the interest rate, the fees charged, and the property charges paid on your behalf. Reading it correctly tells you whether the loan is performing as expected, whether the servicer is charging the correct amounts, and how much equity remains in the home. The statement is not designed to be intuitive. It is designed to comply with federal disclosure requirements, and understanding it requires knowing which numbers matter and which ones are informational noise.
The Three Numbers That Actually Matter on a Reverse Mortgage Statement
The outstanding loan balance is the total amount you owe. It includes the initial loan disbursement, any additional draws you have taken, the accrued interest, the mortgage insurance premiums, the servicing fees, and any property charges the servicer paid on your behalf, such as property taxes or homeowners insurance that you did not pay yourself. This number grows every month. At a five percent interest rate, a two-hundred-thousand-dollar balance grows by about eight hundred and thirty dollars a month in interest alone, before fees and insurance premiums. The statement shows the current balance and the balance from the previous period so you can see the change.
The available credit line is the amount you can still borrow. If you took the loan as a lump sum, this number may be zero. If you took the loan as a line of credit, this number matters a great deal because an unused HECM line of credit grows at the same rate as the loan balance. A hundred-thousand-dollar unused credit line at five percent grows to about a hundred and five thousand after one year, even if you borrow nothing. This growth feature is unique to HECM reverse mortgages and is one of the most valuable characteristics of the loan. The statement shows the current available credit line and the amount of any draws you took during the statement period.
The interest rate on a HECM is adjustable and consists of two components: an index, typically the Constant Maturity Treasury rate or the Secured Overnight Financing Rate, plus a margin set by the lender at origination. The statement shows the current interest rate, the index value, and the margin. The rate can change monthly or annually depending on the loan terms. An annual adjustable-rate HECM has a rate cap of two percentage points per adjustment and a lifetime cap of five percentage points above the initial rate. A monthly adjustable-rate HECM has no periodic cap but is subject to a lifetime cap. The statement shows whether your rate changed during the period and, if so, what drove the change.
| Line item | What it means | Why it matters |
| Outstanding loan balance | Total amount owed, growing each month | Equity remaining = home value minus this |
| Available credit line | Amount you can still borrow | Grows at same rate as balance if unused |
| Current interest rate | Index + margin, may adjust | Drives how fast balance and credit line grow |
| Monthly MIP | 0.5% annual ÷ 12, added to balance | FHA insurance premium, non-negotiable |
| Servicing fee | Monthly fee, capped by HUD | Usually $25–$35/month |
| Property charges paid | Taxes/insurance paid on your behalf | Added to balance; avoid by paying them yourself |
The Fees and Charges That Add to Your Balance Every Month
Mortgage insurance premiums are the largest recurring charge on a HECM statement. The FHA charges an annual mortgage insurance premium of one-half of one percent of the outstanding loan balance, assessed monthly. On a two-hundred-thousand-dollar balance, the annual MIP is one thousand dollars, or about eighty-three dollars a month. This premium is not optional. It funds the FHA insurance that guarantees the lender will be paid even if the loan balance eventually exceeds the home’s value, and it guarantees that you can never owe more than the home is worth. The MIP is added to your loan balance each month. You do not write a check for it.
The servicing fee covers the cost of administering the loan: sending statements, answering questions, processing draws, and paying property charges. The servicing fee is set at origination and is capped by HUD regulations, typically between twenty-five and thirty-five dollars per month. It is added to the loan balance. Some lenders waive the servicing fee as a competitive feature, and if yours does, the statement should show a zero in the servicing fee line. A servicing fee that appears when your loan documents say it should not is an error that requires a call to the servicer.
Property charges are the wildcard on a reverse mortgage statement. If you fail to pay your property taxes or homeowners insurance, the servicer will pay them on your behalf to protect the lender’s security interest in the property. The amount the servicer pays is added to your loan balance, plus interest. A single missed property tax payment of four thousand dollars becomes a permanent addition to your loan balance that accrues interest at the loan’s rate for the rest of your life or until you sell the house. The statement shows any property charges the servicer paid during the period. A nonzero number in this section is a warning that you missed a payment and the servicer stepped in. The servicer paying your taxes is not a convenience. It is a financial penalty dressed as a service.
The Line of Credit Growth Feature — The Most Misunderstood Part of a HECM Statement
The available line of credit on a HECM reverse mortgage grows over time at the same interest rate that applies to the loan balance. If your loan charges five percent interest and you have an unused credit line of fifty thousand dollars, that credit line grows to about fifty-two thousand five hundred after one year without you taking any action. The growth is not interest paid to you. It is an increase in the amount you are eligible to borrow. You cannot withdraw the growth as cash. It simply expands your borrowing capacity.
The credit line growth rate appears on the statement as a note or a separate line item. It is calculated using the same formula as the interest accrual on the loan balance. If the interest rate adjusts upward, both the loan balance accrual rate and the credit line growth rate increase. If the rate adjusts downward, both decrease. The symmetry between the loan balance growth and the credit line growth is the defining mathematical feature of a HECM line of credit, and it is the reason financial planners sometimes recommend opening a HECM line of credit early in retirement and leaving it untouched as a growing emergency reserve.
The statement shows the credit line available at the beginning of the period, any draws taken, the growth accrued during the period, and the credit line available at the end of the period. Compare the beginning and ending numbers. If no draws were taken and the credit line grew by less than the expected amount based on the stated interest rate, call the servicer. A credit line that is not growing correctly is a servicing error that compounds over time.
How to Verify That the Numbers on Your Statement Are Correct
First, confirm the interest rate. The statement shows the index value and the margin. Add them together. The sum should equal the stated interest rate. If your loan uses the CMT index and the statement shows an index of four point two percent and a margin of two percent, the interest rate should be six point two percent. If it is not, call the servicer.
Second, approximate the monthly interest accrual. Multiply the previous month’s loan balance by the annual interest rate and divide by twelve. On a two-hundred-thousand-dollar balance at six percent, the monthly interest accrual is about one thousand dollars. The statement should show an interest charge close to this number. A significant discrepancy that cannot be explained by draws taken or property charges paid is a red flag.
Third, check the credit line growth. Multiply the beginning credit line balance by the annual interest rate, divide by twelve, and add any draws taken. The result should approximate the ending credit line balance. The growth rate on the credit line is the same as the accrual rate on the loan balance. If the numbers do not align, document the discrepancy and contact the servicer in writing. Servicing errors on reverse mortgages are not common, but they are also not rare, and they always favor the servicer. A borrower who never checks the math will never catch the error.
Fourth, review the property charges section. If the servicer paid a property tax bill or an insurance premium on your behalf, confirm that you actually missed that payment and that the amount the servicer paid matches the amount you owed. A servicer that pays a tax bill that you already paid creates a duplicate charge on your loan balance that requires a refund. Resolving a duplicate property charge requires documentation and persistence. The servicer will not discover the error on its own.
FAQ — Reverse Mortgage Statements
Why does my loan balance go up every month instead of down?
You are not making monthly mortgage payments. The interest that would normally be paid with each monthly payment is instead added to the loan balance. The mortgage insurance premium and the servicing fee are also added to the balance. The loan balance grows because the loan is designed to be repaid in a single balloon payment when you sell the house, move out permanently, or pass away. The growth is not a penalty. It is the mechanism that creates the cash flow you are receiving by not making payments.
How often should I receive a reverse mortgage statement?
HUD requires servicers to send a statement at least once per year for HECM reverse mortgages. Most servicers send monthly statements. If you have a line of credit and are not receiving monthly statements, you can request them. The annual statement must include a detailed breakdown of all charges, draws, and the interest rate history for the year. Keep every statement. The accumulated statements are the only record of how your loan balance grew from origination to payoff, and discrepancies with the servicer are resolved with documentation, not with memory.
What happens if my loan balance grows to more than my house is worth?
Nothing, as long as you continue to live in the house and meet the loan obligations. A HECM reverse mortgage is a non-recourse loan, which means the borrower and the borrower’s heirs can never owe more than the home is worth at the time the loan is repaid. If the loan balance exceeds the home’s value, the FHA insurance fund covers the difference. The statement will show a loan balance that is larger than the likely sale price of the home, but that number is the FHA’s problem, not yours. The non-recourse feature is the reason the mortgage insurance premium exists.
Last modified: June 12, 2026
