A HECM’s unused line of credit doesn’t just sit still — it grows on its own, compounding monthly at the same rate the loan balance accrues interest.
How it works
Adding the note rate and the annual MIP rate, then dividing by 12, gives the monthly growth rate. Compounding the current unused line of credit at that rate over the chosen number of months gives the future balance.
What this does not include
This does not include the fact that growth stops the moment funds are drawn from the line — it applies only to the untouched, unused portion, and any draw reduces future growth proportionally.
How to use this calculator
- Enter the current unused line of credit, note rate, annual MIP rate, and months of growth.
Frequently asked questions
Why does the line of credit grow regardless of home value?
The growth rate is tied to the loan’s interest rate and mortgage insurance rate, not the home’s market value — it continues even if the home’s value declines.
Is this growth the same as investment returns?
No — it’s simply access to more borrowing capacity over time, not investment growth, though it’s often cited as a planning advantage of opening a HECM line early and leaving it untouched.
Does the line of credit ever stop growing?
Generally it continues growing for as long as the loan remains open and the line stays unused, though the borrower’s total draw capacity is still governed by the original principal limit calculation.
