How the Reverse-Mortgage Suitability Index is built

The State Reverse-Mortgage Suitability Index scores all 50 states and the District of Columbia on a 0–100 scale. This page is the full build: the four public inputs and their sources, the weighted formula, how the inputs are normalized, and the vintage of the data behind each. It also sets out what the index deliberately does not measure. Every score on the suitability hub and the per-state pages traces back to the formula described here.

What is the index?

The index is an informational 0–100 score for how well the standard FHA-insured Home Equity Conversion Mortgage (HECM) lines up against state-level conditions for a typical homeowner. It is a comparison built from public averages.

It is not financial advice and not a recommendation for any individual. A high score does not mean a reverse mortgage is a sound choice for a given household, and a low score does not rule one out. The score reflects state-level structural factors — the size of the HECM-eligible population, how typical home values sit against the federal lending limit, the state tax on the mortgage instrument, and the supply of HUD-approved counseling agencies — and nothing about a specific home, age, or financial situation. The band labels are deliberately neutral; there is no "best" state.

The four inputs

The index combines four factors. Each is drawn from a public source and given a fixed weight.

| Input | Weight | Public source | Why it matters | |---|---|---|---| | Senior population share | 30% | U.S. Census Bureau, ACS 5-Year Estimates, table B01001 (census.gov) | A HECM is only available to homeowners aged 62 and older. A larger 65-and-older share means more residents are in the eligibility band the program is built for. | | Home value against the HECM cap | 30% | U.S. Census Bureau, ACS 5-Year Estimates, table B25077 (census.gov) | The HECM principal limit is capped at the FHA HECM lending limit. Where median home values sit relative to that cap shapes how much equity a standard HECM can reach. | | State tax on the mortgage instrument | 20% | State recording / transfer / mortgage-tax statutes, modeled on a representative $400,000 HECM | Some states levy a recording, transfer, or mortgage tax on the loan instrument. That tax is a closing cost a HECM borrower carries in that state. | | HUD counselor access | 20% | HUD Housing Counselor API, data.hud.gov | Every HECM borrower must complete a HUD-approved counseling session. The count of in-state HUD-approved HECM counseling agencies measures local access to that required step. |

The formula

Each input is turned into a sub-score between 0 and 1, and the four sub-scores are combined with the weights above:

suitabilityIndex = round(100 × (
    0.30 × seniorShareNorm
  + 0.30 × homeValueVsCapSubscore
  + 0.20 × (1 − taxBurdenNorm)
  + 0.20 × counselorAccessNorm
))

Three of the four sub-scores are min-max normalizations (described in the next section). The home-value sub-score is the exception — it is a piecewise curve rather than a straight min-max:

homeValueVsCapSubscore =
    clamp(medianHomeValue / 600000, 0, 1)
  × clamp((1249125 − medianHomeValue) / 1249125 + 0.4, 0.4, 1.0)

The first term rewards higher home values up to roughly $600,000, because more equity gives a HECM more to draw against. The second term applies a gentle reduction as median values climb toward the 2026 FHA HECM lending limit of $1,249,125, because at high values a standard HECM increasingly leaves equity above the cap unreachable. The two terms multiplied together produce a curve that peaks in the mid-value range and tapers at both ends — low-equity states and very-high-value states both score below the middle.

The tax sub-score enters the composite as 1 − taxBurdenNorm: a higher modeled tax produces a higher taxBurdenNorm, so subtracting it from 1 means a heavier tax lowers the composite.

Normalization

The senior-share, tax, and counselor sub-scores are each min-max normalized across all 51 jurisdictions. For an input value x, the normalized sub-score is (x − min) / (max − min), so the jurisdiction with the lowest raw value scores 0 on that input and the highest scores 1. This makes the four inputs comparable on a common scale before they are weighted.

The anchor jurisdictions for each min-max input, in the current data:

• Senior population share — Maine sits at the high anchor (21.9% of residents aged 65+); Utah at the low anchor (11.6%).
• State tax on the mortgage instrument — New York sits at the high anchor (about 0.75% of a representative $400,000 HECM); Wyoming and several other states sit at the low anchor with no state tax on the instrument.
• HUD counselor access — Florida sits at the high anchor (19 in-state HUD-approved HECM counseling agencies); Vermont at the low anchor with none.

The home-value sub-score is not min-max normalized; it uses the fixed piecewise curve above so the result is stable year to year and does not shift just because one state's median moved.

What the score does not measure

The index is built from state-level averages. It deliberately does not account for:

• An individual home's value. The score uses the state median; a specific home can be worth far more or far less.
• An individual borrower's age. The HECM principal limit factor rises sharply with the age of the youngest borrower, and the index does not model any particular age.
• An individual's financial situation, existing mortgage balance, or other goals.
• The lender's margin, which feeds the expected rate and moves the principal limit factor.

For a number tied to a specific age and home value, use the reverse mortgage calculator. The suitability index is a starting point for comparing states, not a substitute for running the math on a real home.

Data vintage

The index is regenerated when its inputs refresh; the current build draws on these editions:

• Senior population share and median home value — U.S. Census Bureau, American Community Survey 5-Year Estimates, 2023 vintage (tables B01001 and B25077). The ACS 5-Year file updates annually, typically in December.
• State tax on the mortgage instrument — state recording, transfer, and mortgage-tax statutes current as of May 2026, modeled against a representative $400,000 HECM principal limit.
• HUD counselor access — HUD Housing Counselor roster, pulled 2026-05-22. The roster is live and updates continuously.
• FHA HECM lending limit — $1,249,125, set by HUD Mortgagee Letter 2025-22 for FHA case numbers assigned on or after January 1, 2026.

Last reviewed 2026-05-22

Limitations and honesty

The index is a structural comparison, and it has real limits a reader should keep in view.

HUD-approved counseling is available nationwide by telephone. The counselor-access input counts agencies physically based in a state, so a state with few in-state agencies scores low on that input even though its residents can complete the required session by phone with an out-of-state agency. The input measures local presence, not whether counseling can be obtained — it always can.

Jumbo, non-FHA reverse-mortgage programs change the picture for high-value homes. The index scores the standard HECM only. In states where median home values run well above the FHA cap, a jumbo program may reach equity a HECM cannot, which the home-value sub-score does not credit.

The tax input models a single representative $400,000 HECM. Actual recording and transfer taxes vary with the loan amount and sometimes with the county, so the modeled figure is an estimate of the state's tax posture rather than a quote for any specific loan.

The index is a starting point for comparing states. It is not advice, and it is not a verdict on whether a reverse mortgage suits any individual.