source:
  type: guide
  id: hud-4000-1-ii-g-disbursement-limits
  authority: FHA Single Family Housing Policy Handbook 4000.1, Part II — g. Disbursement
    Limits (04/29/2024)
  description: FHA Single Family Housing Policy Handbook 4000.1, Part II — g. Disbursement
    Limits (04/29/2024).
  coverage_tier: operative
obligations:
- id: hud-4000-1-ii-g-disbursement-limits-full
  canonical_id: hud-4000-1-ii-g-disbursement-limits-full
  section: FHA Single Family Housing Policy Handbook 4000.1, Part II — g. Disbursement
    Limits (04/29/2024)
  type: do
  tags:
  - regulator-direct
  - fha
  - hud-handbook
  - corpus-expansion
  - tier-operative
  primary_source:
    tier: 1
    authority: FHA Single Family Housing Policy Handbook 4000.1, Part II — g. Disbursement
      Limits (04/29/2024)
    source_class: hud-handbook
    source_url: https://www.hud.gov/hud-partners/single-family-handbook-4000-1
    snapshot_id: 8c03836f77f317e1
    fetched_at: '2026-05-23T00:28:40Z'
    content_hash: sha256:411430f29b13f9b54a2ebb0e6f6e7087ecd2b90d0da22eb0c8c792eaa2d7d0df
    paragraph_quote: 'g. Disbursement Limits (04/29/2024) i. Definitions First 12-Month
      Disbursement Period refers to the period beginning on the day of closing and
      ending on the day before the anniversary date of closing. When the day before
      the anniversary date of closing falls on a federally observed holiday, Saturday,
      or Sunday, the end period will be on the next business day. Initial Disbursement
      Limit refers to the maximum amount of funds that can be advanced to the Borrower
      of an adjustable rate HECM at closing and during the First 12-Month Disbursement
      Period. Borrower’s Advance refers to the funds advanced to the Borrower at the
      closing of a fixed rate HECM. Net Principal Limit (NPL) refers to the amount
      of HECM funds available to, or to be paid on behalf of, the Borrower after deducting
      all fees and charges that are required as a condition of the Mortgage and prior
      disbursements from the Principal Limit. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT
      B. Title II Insured Housing Programs Reverse Mortgages 3. Allowable Mortgage
      Parameters Handbook 4000.1 597 Last Revised: 11/26/2025 Mandatory Obligations
      refer to fees and/or charges incurred in connection with the origination of
      the HECM that are requirements for loan approval and which will be paid at closing
      or during the First 12-Month Disbursement Period. ii. Standard The Mortgagee
      must determine the Borrower’s Initial Disbursement Limit or Borrower’s Advance
      at closing. The Initial Disbursement Limit, Borrower’s Advance, or the amount
      disbursed to the Borrower at any point in time may not exceed the Principal
      Limit. The following items must be included in the Initial Disbursement Limit
      and Borrower’s Advance. Adjustable rate HECMs must include: • the amount of
      Mandatory Obligations; • the amount disbursed to the Borrower at closing; and
      • the amount of the available Initial Disbursement Limit not taken by the Borrower
      at closing. Fixed rate HECMs must include: • the amount of Mandatory Obligations;
      and • the amount disbursed to the Borrower at closing. (A) Initial Disbursement
      Limit Calculation The Initial Disbursement Limit during the First 12-Month Disbursement
      Period is the lesser of (1) or (2) below: 1. the greater of: • 60 percent of
      the Principal Limit; or • the sum of Mandatory Obligations plus 10 percent of
      the Principal Limit, if applicable; or 2. the Principal Limit less the sum of
      the funds in the Life Expectancy Set-Aside (LESA) for payment beyond the First
      12-Month Disbursement Period and the Servicing Fee Set-Aside. The Borrower must
      notify the Mortgagee of the amount of the additional percentage of the Principal
      Limit beyond Mandatory Obligations that will be drawn or the amount that will
      remain available to be drawn during the First 12-Month Disbursement Period.
      The Borrower may not increase or decrease this election after closing. (B) Borrower’s
      Advance Calculation The Mortgagee must determine the Borrower’s Advance at closing.
      The Borrower’s Advance must not exceed the lesser of (1) or (2) below: II. ORIGINATION
      THROUGH POST-CLOSING/ENDORSEMENT B. Title II Insured Housing Programs Reverse
      Mortgages 3. Allowable Mortgage Parameters Handbook 4000.1 598 Last Revised:
      11/26/2025 1. the greater of: • 60 percent of the Principal Limit; or • the
      sum of Mandatory Obligations plus 10 percent of the Principal Limit, if applicable;
      or 2. the Principal Limit less the sum of the funds in the LESA for payment
      beyond the First 12-Month Disbursement Period and the Servicing Fee Set-Aside.
      The Borrower must notify the Mortgagee of the amount of the additional percentage
      of the Principal Limit beyond Mandatory Obligations that will be drawn. iii.
      Eligibility for an Additional 10 Percent of the Principal Limit The Borrower
      is eligible for up to an additional 10 percent of the Principal Limit when Mandatory
      Obligations exceed 50 percent of the Principal Limit. The Borrower must notify
      the Mortgagee of the amount of the additional 10 percent of the Principal Limit
      that they intend to draw at the time of closing or during the First 12-Month
      Disbursement Period. iv. Net Principal Limit Calculation The Mortgagee must
      determine the NPL by subtracting from the Principal Limit any initial payments
      to or on behalf of the Borrower, such as the IMIP, closing costs, or cash payment
      to the Borrower, and if applicable, any funds set aside from the Principal Limit
      for monthly servicing fees, repairs to be completed after closing, a LESA, or
      first-year Property Charges.'
  judgment: false
