Lender's Margin

Reverse Mortgage FAQ>>> Lender's Margin Explained

Banks make money by borrowing money cheaply, and then lending it out for a profit. A bank might pay you 3% interest on your savings account, and then loan the money to another customer at 5%. The 2% difference is their profit. In the banking industry, that difference is called the "lender's margin", or "yield spread".

The FHA guaranteed Home Equity Conversion Mortgage (HECM) indicates which markup rate is used, in the name of the loan. So, a HECM 175 means a 1.75% markup, and a HECM 200 means a 2.00% markup.