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Reverse mortgage guide
The TALC, or Total Annual Loan Cost, is a federal disclosure that rolls all of a reverse mortgage's costs into a single average yearly rate. It shows that rate over several time periods and several home value scenarios, so you can see how the cost changes the longer you keep the loan. Short time periods usually look expensive, because the upfront costs are spread over just a few years. Long time periods look much better. That's the clearest proof there is that a reverse mortgage is built for people who plan to stay in their home.
When you apply for a reverse mortgage, you'll sign a stack of disclosures. Somewhere in that pile is one called the TALC, short for Total Annual Loan Cost.
Most people skim right past it. I'd rather you didn't. The TALC is the one page that shows what your loan really costs over time, and it's the best argument I know for why a reverse mortgage is a long-term tool, not a short-term fix.
The TALC is a disclosure required by federal law, under Regulation Z, for every reverse mortgage. Simply put, it combines all of a reverse mortgage's costs into a single average yearly rate.
The lender must give it to you at least 3 business days before closing. The disclosure also says, in plain words, that you aren't obligated to go through with the loan just because you received it.
The TALC is laid out as a grid. Down one side are time periods. Across the top are home value scenarios. Each box is the average yearly cost if the loan ends at that time, with the home growing at that rate.
Federal rules set them:
The TALC shows what happens if your home grows by 0, 4, or 8 percent a year. These aren't predictions. They're three what-ifs, so you can see how home values change the picture.
All the costs you pay: interest, mortgage insurance, origination, and closing costs. Everything that comes out of your pocket or your equity to the lender.
This is the part that shocks people the first time they see it.
In the first couple of years, the upfront costs are a big share of what you owe. If you've borrowed a modest amount and paid a full set of closing costs, those costs dominate the math. So the two-year TALC rate is usually high.
As time passes, the upfront costs become a smaller and smaller part of the total balance. The yearly cost drops.
That's not a trick. That's just math. It's also the reason I tell people that if they may move in a few years, a reverse mortgage probably isn't the right tool. See Reverse Mortgage Pros and Cons.
There's a second reason TALC rates drop over time, and it surprises people.
A HECM is non-recourse. When the loan comes due, the most that can be repaid is what the home is worth. If the balance grows larger than the home's value, the shortfall isn't yours or your heirs' to pay. FHA insurance covers it.
The TALC accounts for that. In the long time periods, especially with low home appreciation, the balance may run up against the home's value. Since repayment is limited to that value, the average yearly cost in those boxes can come out lower.
Here's something that throws people. Two loans with the exact same rate and fees can show different TALC rates. Why?
Because of how the money comes out. The TALC treats your upfront costs as a share of the money you've received. If you take a big lump sum at closing, the costs are a small share. If you take very little at first, they're a big share.
For a line of credit, the rules assume you draw half of your available money at closing. With monthly payments, the TALC uses that payment schedule. So a lump sum, a line of credit, and monthly payments will each show a different TALC, even on the same loan.
This is the most interesting part of the TALC, in my opinion. Three of the biggest factors in your true cost have nothing to do with the lender:
The lender sets the rate and the fees. You control the rest, by how you use the loan.
For a full breakdown of each cost, see Reverse Mortgage Costs. For how the rate itself works, see Today's Reverse Mortgage Rates.
Because it's the most honest page in the whole stack. It shows you, in black and white, that a reverse mortgage costs a lot if you keep it a short time and a lot less if you keep it a long time.
If you plan to move soon, the TALC is telling you something. Listen to it. If you plan to stay, it's telling you something too.
Total Annual Loan Cost. It's a disclosure required on every reverse mortgage.
At least 3 business days before closing. Many lenders provide it earlier, with your application.
Because the upfront costs are spread over just two years. That's normal, and it's why a reverse mortgage is a long-term tool.
No. The APR is a yearly cost figure used on many loans. The TALC is built for reverse mortgages, using several time periods and home value scenarios, and it accounts for the non-recourse limit.
Not always. A loan with a slightly higher TALC may give you more money available or a line of credit that fits your plan better. Compare the TALC alongside the principal limit and your goals.
Yes. Your real cost depends on how you actually use the loan, how long you stay, and what your home does in value.
If you have a TALC in hand and want help reading it, I'm happy to go through it with you, even if it's from another company. Get My Estimate or call us at 530-888-6000.
ZYNG Mortgage, Inc., NMLS #76801. A reverse mortgage has no required monthly mortgage payments and uses your home's equity. Fees, mortgage insurance and other costs can be added to the loan balance, and the balance grows over time as interest is added, so your equity typically decreases. When the loan becomes due, the home may need to be sold, or the loan repaid from other funds. Interest is not tax-deductible until it is paid, in part or in full. You keep title to your home and must keep paying property taxes, homeowners insurance and upkeep, and meet the other loan terms; not doing so can make the loan due and could lead to foreclosure.
This material is not from HUD or FHA and was not approved by HUD or a government agency.
HECM count at the top of this page: HUD data through September 2026 (source, opens in a new tab).
