How Much Money Can You Get From a Reverse Mortgage in South Dakota?
By Jeff Buum, Certified Reverse Mortgage Specialist | Fairway Heartland | Sioux Falls, SD | NMLS #400290
jeffbuummortgage.com · 9 min read · Published June, 2026
"How much would I actually get?" is almost always the first question South Dakota homeowners ask me when they start exploring a reverse mortgage. It's the right question, and it deserves a real answer rather than a vague "it depends."
The truth is, it does depend on several factors. But those factors are specific, understandable, and calculable. This article explains exactly what determines your HECM loan amount and gives you a realistic sense of what a reverse mortgage might look like for a South Dakota homeowner.
The Three Factors That Determine Your Loan Amount
The amount you can borrow through a HECM reverse mortgage is determined by three primary factors:
Your age (or your younger spouse’s age)
The older you are, the more you can borrow as a percentage of your home’s value. This is because older borrowers have a shorter expected loan term; the lender assumes the loan will be repaid sooner.
Your home’s appraised value
A licensed FHA appraiser will assess your home’s current market value. The HECM loan amount is based on the lesser of the appraised value or the FHA lending limit, which in 2025 is $1,209,750 for all U.S. counties.
Current interest rates
Lower interest rates generally mean a higher loan amount. Higher rates reduce the amount available. This is because the loan amount is calculated based on how much can be borrowed while ensuring it can be repaid from the home’s future value.
The combined effect
These three factors feed into a formula that produces what’s called the Principal Limit, the total amount you’re eligible to borrow. You then receive a portion of that based on which payment option you chose.
What Is the Principal Limit Factor?
The HUD calculates a “Principal Limit Factor” (PLF) based on your age and current interest rates. This factor, expressed as a percentage, is multiplied by your home’s appraised value (up to the lending limit) to produce your total loan eligibility.
As a general reference point for South Dakota homeowners: borrowers in their late 60s to early 70s typically qualify for approximately 30%-40% of their home’s appraised value. Borrowers in their late 70s to early 80s and beyond may qualify for 40%-50% or more. These percentages shift with interest rates.
Important: These are general reference ranges only. Your actual Principal Limit Factor is calculated precisely based on your specific age and current market interest rates at the time of application. I calculate exact numbers for every client in consultation, at no cost and no obligation.
Illustrative Examples for South Dakota Homeowners
The following examples are illustrative only and based on approximate figures. Actual loan amounts depend on your specific age, current interest rates, appraised home value, and any existing mortgage balance.
Example A - Age 68, Home Value $280,000
Estimated principal limit $100,000-$110,000
If existing mortgage: $0
Available proceeds: $85,000-$95,000
Monthly payment option: $500-$700/month for life.
Example C - Age 70, Home Value $450,000
Estimated principal limit $165,000-$175,000
If existing mortgage: $80,000 paid off first
Available proceeds: $65,000-$75,000
Combination lump sum + growing line of credit
Example B - Age 74, Home Value $350,000
Estimated principal limit $138,000-$148,000
if existing mortgage: $60,000 paid off first
Available proceeds: $60,000-$70,000
Line of credit option: grows overtime if unused
Example D - HECM for Purchase, Age 72, Purchase Price $325,000
Estimated required down payment $190,000 - $200,000
HECM covers the rest
Monthly mortgage payment $0
Remaining savings preserved for retirement
What Reduces the Amount You Receive?
Several things reduce the net proceeds you receive at closing:
Existing mortgage balance: If you have an outstanding mortgage, the reverse mortgage pays it off first. The remaining proceeds come to you.
Upfront costs: The FHA mortgage insurance premium (2% of home value), origination fee, appraisal, and closing costs are typically financed into the loan rather than paid out of pocket, but they do reduce the net amount available to you.
Initial disbursement limits: In the first year, HUD limits how much of the principal limit you can draw, typically 60% in the first 12 months. This rule is designed to protect borrowers from exhausting their equity too quickly.
How Payment Options Affect What You Receive
How you choose to receive your proceeds also affects the total value you get over time:
Lump sum: You receive the maximum amount upfront as a fixed disbursement. The entire loan draws immediately and begins accruing interest from day one. Best for paying off large debts or making significant purchases
Monthly payments (term): You receive payments for a fixed period you choose. Payments are higher than tenure payments for the same reason you’d receive more monthly from a 10-year annuity than a lifetime one.
Line of credit: Funds are available to draw as needed. The unused portion grows at the loan’s interest rate, meaning the longer you leave it unused, the more is available. This is the most flexible and often most valuable option for long-term planning.
Combination: Any mix of the above. Many South Dakota clients take a modest lump sum to pay off an existing mortgage and establish a growing line of credit for future use.
The Best Way to Find Out Your Number
Online HECM calculators can give you a rough estimate, but they cannot account for the nuances of your specific situation, your exact age, your home’s actual condition and appraised value, current interest rates at the time of application, and how any existing mortgage balance affects your net proceeds.
The most accurate way to find out how much you could get from a reverse mortgage is a free consultation with me. I’ll run the numbers for your home, your age, and your goals, and walk you through every option in plain language so you can make a confident, informed decision.
Ready to see your actual numbers? Let’s run them together.
Jeff Buum | (605) 321-7303 | jeff.buum@fairwaymc.com | jeffbuummortgage.com/reverse-mortgage
Jeff Buum, NMLS #400290. Fairway Independent Mortgage Corporation NMLS #2289. 4750 S. Biltmore Lane, Madison, WI 53718. Reverse mortgage borrowers are required to obtain an eligibility certificate by receiving counseling sessions with a HUD-approved agency. The youngest borrower must be at least 62 years old. Monthly reverse mortgage advances may affect eligibility for some other programs. These materials are not from HUD or FHA and were not approved by HUD or a government agency. This is not an offer to enter into an agreement. Not all customers will qualify. Information, rates and programs are subject to change without notice. All products are subject to credit and property approval. Other restrictions and limitations may apply. Licensed in South Dakota. Equal Housing Opportunity.