Last reviewed: 6 October 2026
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HECM fees and mortgage insurance: what HUD’s regulations cap
A Home Equity Conversion Mortgage has an origination fee, other closing charges, an insurance premium paid to the FHA, and servicing charges. This page sets out the limits in HUD’s regulations, not any lender’s prices.
What this term means: The maximum claim amount is the lesser of the appraised value of the home, the sales price of the home being purchased, or the national mortgage limit for a one-family residence as of loan closing.[3] The mortgage insurance premium (MIP) is, per the CFPB, an initial and annual amount charged by the lender and paid to the Federal Housing Administration, required in addition to homeowners insurance.[4] Interest and fees on a reverse mortgage are added to the loan balance each month.[5]
The limits, charge by charge
| Charge | What the regulation says |
|---|---|
| Loan origination fee | The limit is “the greater of $2,500 or two percent of the maximum claim amount of $200,000, plus one percent of any portion of the maximum claim amount that is greater than $200,000.” The total may not exceed $6,000, except HUD may adjust the limit through notice using the Consumer Price Index in increments of $500. A lender may accept a lower fee, and the fee may be fully financed with the mortgage.[1] The CFPB likewise says origination fees may not exceed $6,000.[4] |
| Other closing charges | Reasonable and customary amounts, not more than the lender actually paid, for recording fees and taxes, a credit report, a survey if required, title examination, the lender’s title insurance, the appraiser’s fee for the initial appraisal, flood certifications, and other charges HUD authorizes.[1] |
| Repair administration fee | If repairs are required after closing to meet FHA requirements, a fee of no more than the greater of 1.5 percent of the amount advanced for repairs or $50, collected by adding it to the loan balance.[1] |
| Initial mortgage insurance premium | The lender pays HUD “an initial MIP that does not exceed three percent of the maximum claim amount.” The regulation text describes the calculation as based on the funds the borrower elected to make available during the first 12-month disbursement period, excluding any servicing fee set aside. Because HUD may change premiums by notice under § 206.105(d), the amounts and basis actually in force are set by HUD’s current notice, which this page does not state.[2] |
| Monthly mortgage insurance premium | HUD “may establish and collect a monthly MIP, which will accrue daily from the closing date, at a rate not to exceed 1.50 percent of the remaining insured principal balance, or up to 1.55 percent for any mortgage involving an original principal obligation that is greater than 95 percent of appraised value of the property.” The lender may add it to the loan balance only when it is paid to HUD.[2] |
| Adjustments | HUD “may adjust the amount of any initial or monthly MIP through notice,” and the notice sets the effective date.[2] |
| Servicing charge | Either a charge included in the note rate that is authorized by HUD, selected by the lender, within a range HUD sets by notice of between 36 and 150 basis points (HUD may, through a Federal Register notice for comment, extend the range below 36 and above 150 basis points), and disclosed to the borrower at application; or a fixed monthly charge payable only from a servicing fee set aside that is disclosed at application.[6] |
Charges after closing
After insurance endorsement, § 206.207(a) allows the lender to collect only reasonable and customary charges, and only to the extent FHA does not reimburse it, for listed items. These include substituting a hazard insurance policy at other than its expiration, certain attorney and trustee fees and expenses, a trustee’s fee, certain legal-defense expenses, and property preservation expenses, added to the loan balance.[6] Other charges that HUD authorizes under paragraph (a)(2) “shall not include” charges for servicing activities of the lender or servicer, fees of independent tax service organizations, satisfaction, termination or reconveyance fees when the mortgage is paid in full (other than as provided in paragraph (a)(1)(iii)), or the fee for recording a satisfaction in states where recording is the mortgagee’s responsibility.[6]
What “ceiling” means here
The paragraphs above state upper limits and say who sets the rest. The regulation text does not state what any given loan charges. For the fees on a loan you are offered, ask the lender for an itemized list in writing and check it against the limits here. Our guide to what a reverse mortgage is covers the loan itself.
How to verify this yourself
Read 24 CFR § 206.31, § 206.105, § 206.3 and § 206.207 in the eCFR (references 1, 2, 3 and 6) and the CFPB key-terms page (reference 4). HUD adjusts premiums and some fee limits by notice, so check HUD’s current notices for the amounts in force on the date of your loan. To check the person you are working with, use our guide to verifying a loan officer’s NMLS license. Our published standard covers how we check loan originators, and the Register shows that method; neither reviews a lender’s or servicer’s handling of your loan.
What this page does not cover
This page is general information, not legal advice. It lists regulatory limits and does not state the premium rates or fees currently in force, calculate a cost for any loan, or compare reverse mortgages with other products. It does not cover proprietary reverse mortgages. The regulation text was checked through the eCFR’s 2 October 2026 issue date. This page was last reviewed 6 October 2026.
Your next step
If you are offered a HECM, ask for the origination fee, other closing charges, the mortgage insurance premium and the servicing charge as separate written amounts. Then return to the Mortgage help library for related guides.