HUD's LESA Formula Is a 1.2x-Cushioned Annuity-Due at Expected-Rate-Plus-MIP Over a 1979-81 Mortality Table — and at Market-Average Florida Insurance Rates Under Assumed Coverage It Runs 85-124% of the Entire Principal Limit

Research for a decision. Not financial, tax, or legal advice. Every figure below is a model output, not a lender quote.

The question

"What is HUD's actual LESA (Life Expectancy Set-Aside) calculation formula — discount basis, life-expectancy table, cushion — and what dollar set-aside does it produce for a 70-year-old at Florida property-charge levels on a $450k-$600k house?"

Context: [[2026-10-01-hecm-for-purchase-at-real-price-points]] called this "the single largest unquantified number in this brief," because its undiscounted 17-year bound on property charges came out roughly equal to the entire principal limit at a 7.25% expected rate. If a Required Fully-Funded LESA applies, a Home Equity Conversion Mortgage (HECM) for Purchase may be functionally unavailable rather than merely more expensive — a different answer that would settle the option without resolving any other open question.

What we already know (from the vault)

• [[2026-10-01-hecm-for-purchase-at-real-price-points]] re-priced HECM for Purchase (H4P) at an expected rate of 7.250% (verified 10-yr Constant Maturity Treasury (CMT) 5.29% + a labeled-guess 1.96% lender margin), giving a verified HUD principal limit factor (PLF) of 0.360 at youngest-borrower age 70 and principal limits of $162,000 / $189,000 / $216,000 at $450k / $525k / $600k. Base-case cash to close with no LESA: $307,000 / $356,500 / $406,000.
• That brief's property-charge assumptions were explicitly inherited labeled guesses, not independently sourced: property tax 1.2% of price and homeowners insurance (HOI) $4,200 / $4,800 / $5,400 per year, with no flood, no HOA, and no escalation applied.
• Its LESA treatment was an admitted placeholder: a flat, undiscounted 17-year multiplication producing $163,200 / $188,700 / $214,200. It named no mortality table and cited no source for "17 years." Its own non-verification log reads: "HUD's LESA calculation formula was not located; Step 6 is an undiscounted upper bound, explicitly not HUD's method."
• [[2026-08-19-asset-depletion-mortgage-qualification]] is the origin of the 1.2%/HOI assumption set (its assumption A8) and of the competing conventional-gift paths that H4P is being measured against.
• [[01-projects/home-rebuild-2027/README]] (Home Rebuild 2027 + Parents' Retirement Home) still carries a line, flagged CONTESTED on 2026-10-01, claiming H4P is cheaper in cash than the conventional gift path. This brief makes that line worse, not better.

What the web says

• The formula is published verbatim by HUD. HECM Financial Assessment and Property Charge Guide (attachment to Mortgagee Letter 2016-10, page dated 7-13-16), Section 5.3: Projected Life Expectancy Property Charge Cost = (1.2 x PC ÷ 12) × {(1+c)^(m+1) − (1+c)} ÷ {c × (1+c)^m}. That bracketed term is algebraically identical to a monthly annuity-due present-value factor, (1+c)·[1 − (1+c)^(−m)] ÷ c. So the LESA is the present value, paid at the start of each month, of the inflated monthly property charge over the borrower's life expectancy. SOURCED (HUD-authored text, retrieved from two independent mirrors of the ML 2016-10 attachment that match byte-for-byte; hud.gov returns 404, see Convergences).
• The cushion is a flat 1.2x, applied once — not a compounding escalator. Guide §5.3: "The PC÷12 is multiplied by 1.2 to take into account expected increases in property taxes and hazard and flood insurance over the life expectancy of the youngest mortgagor." HUD's own FHA Connection data-entry field is literally named Monthly Property Charges Subtotal x 1.2 (entp.hud.gov, HECM Financial Assessment help, retrieved 2026-10-04). SOURCED. This is a 20% flat uplift on year-one charges. Measured at the end point of a 15-year horizon it is materially less protective than a compounded 3-4%/yr inflation path; measured as an average over the term it is close to a 3%/yr path (see Convergences for both figures).
• PC is narrow: property taxes + homeowners insurance + flood insurance only. Guide §5.2 and HUD's FHA Connection field definitions both separate Monthly Property Charges Subtotal (taxes + hazard + flood) from Total Monthly Property Charges (which adds HOA / planned unit development (PUD) / condo fees and "other"). Only the subtotal is multiplied by 1.2 and annuitized. Guide §5.4: under a Fully-Funded LESA "the mortgagor remains responsible for all other property charges." SOURCED. HOA and condo fees therefore hurt the residual-income test but do not inflate the LESA.
• The discount basis is the expected rate plus annual MIP, compounded monthly. Guide §5.3: "c is the monthly compounding rate which is defined as the expected rate plus the annual Mortgage Insurance Premium (MIP) rate ÷12." Annual MIP has been 0.50% for case numbers assigned on or after 2017-10-02 (verified as primary in the parent brief), so today c = (expected rate + 0.50%) / 12. SOURCED, with one caveat: HUD's FHA Connection help text still carries the pre-2017 "1.25%" as its illustrative MIP, and the Guide PDF is dated 7-13-16. The field label is rate-agnostic ("Expected Rate + Annual MIP Rate"), so 0.50% is the correct current addend; see Convergences below for the size of the error if that is wrong.
• The life-expectancy table is named exactly. Guide §5.8: "The figure used for life expectancy is taken from the U.S. Decennial Life Tables for 1979-1981 females found at Title 12, Appendix L... the fourth column titled Loan Period 2 (life expectancy) (in years)." That is 12 CFR Part 1026 (Regulation Z), Appendix L — Assumed Loan Periods for Computations of Total Annual Loan Cost Rates, whose own text confirms "life expectancy... as shown in the U.S. Decennial Life Tables for 1979-1981 for females, rounded to the nearest whole year." SOURCED (eCFR, current as of 2026-10-01). This is a 45-year-old female-only mortality table — it understates modern longevity, which reduces the LESA relative to current mortality.
  • From that table: age 70 → 15 years → m = 180 months. Age 62 → 21 (= the 252-month maximum HUD's own system enforces), 65 → 18, 67 → 17, 71 → 14, 72 → 13, 75 → 12.
  • Age roll-up rule: ML 2016-10 revised §5.2/§5.3 so the youngest mortgagor's age is rounded up to the next whole year if the next birthday is less than 183 days after the estimated closing date. A "70-year-old" closing within six months of turning 71 is read at 71, i.e. 14 years, not 15 — a ~3.7% reduction.
• A Required-Fully-Funded LESA is NOT a default. It is strictly a failed-assessment trigger. Guide §5.1: "Where the mortgagee determines, after considering any documented Extenuating Circumstances and Compensating Factors, that the mortgagor has demonstrated the willingness and the capacity to meet his or her obligations, a LESA is not required." §5.9 enumerates the only three triggers: unacceptable credit history → Fully Funded; unacceptable property charge payment history → Fully Funded; insufficient residual income → Partially Funded, escalating to Fully Funded only where the partial would exceed 75% of the projected cost (§5.7). ML 2014-21 says the same at policy level: the set-aside "may be fully-funded, partially-funded, or not required, depending upon the results of the Financial Assessment." SOURCED.
• The Partially-Funded LESA is sized off the income gap, not off property charges. Guide §5.6: Partially Funded LESA = (1.2 x MRIS) × {same annuity-due factor}, where MRIS is the Monthly Residual Income Shortfall against the §3.100 table. It is available on adjustable-rate HECMs only (24 CFR 206.205(b)(1)). The applicable residual-income standard for Florida (South region), family size 2, is $886/month (Guide §3.100-3.101). SOURCED.
• Florida property charges, independently sourced (the parent brief did not source these):
  • Homeowners insurance. Insurance.com / Quadrant Information Services rate-filing data, last updated 2026-09-15: Florida average annual premium $8,471 at $300,000 dwelling coverage, $11,161 at $400,000, $16,690 at $600,000 (good credit, $300k liability, $1,000 deductible, 2% hurricane deductible). That is a consistent ~$27.90 per $1,000 of dwelling coverage — roughly 2.95x / 3.12x / 3.36x the national average at the $300k / $400k / $600k coverage tiers respectively ($2,872 / $3,579 / $4,960 at the same tiers). The commonly-quoted "~3.4x" multiple holds only at the $600k tier. SOURCED (commercial aggregator over carrier rate filings, not a regulator filing).
  • Property tax. Tax Foundation / Census American Community Survey (ACS) 5-year 2024, via PropertyTaxExplorer: Florida statewide average effective rate 0.78% of market value; highest counties Alachua 0.99%, Broward 0.96%, St. Lucie 0.95%; Collier 0.59%. SOURCED. But this is the effective rate on the existing owner-occupied stock, depressed by the Save Our Homes 3% assessment cap across long-tenured owners. A fresh purchase resets assessed value to market, so year-one bills land above the county's ACS effective rate.

Convergences and contradictions

• The parent brief's intuition was right in direction and wrong in magnitude — and then wrong again in the other direction on inputs. Its guess that "HUD discounts, so the real LESA is smaller" holds: applying HUD's actual method to the parent brief's own charge assumptions cuts the $214,200 undiscounted bound at $600k to $134,725, a 37% reduction. But the parent brief's homeowners-insurance assumption ($5,400/yr on a $600k Florida house) is roughly one-third of the 2026 Florida market level for comparable dwelling coverage. Correcting the input more than undoes the discounting correction. Net: the parent brief's bound of ~100%-of-principal-limit was, by accident, close to the honest answer — it just got there by two offsetting errors.
• The two most load-bearing numbers in the formula pull in opposite directions, and both favour the borrower. HUD uses a 1979-81 female mortality table (shorter life expectancy than today's) and a flat 1.2x cushion instead of 15 years of compounded inflation. At 3%/yr compounded over 15 years, charges would end ~56% higher, averaging ~24% above year one — the 1.2x is close to that average, so the cushion is roughly fair at 3% inflation measured as an average over the term, and under-protective measured at the end point, where it covers 20% against ~56%. The mortality table is a straightforward borrower subsidy.
• The MIP ambiguity is real but not decisive. HUD's live FHA Connection help text still illustrates with 1.25% annual MIP. If a lender's system used 1.25% instead of 0.50%, the discount rate rises and the LESA falls by about 4% ($268,809 → $257,104 in the high case at $600k). This cannot flip any conclusion below.
• One thing I could not verify and am not going to launder: HUD's HECM content has been progressively folded into Handbook 4000.1, and I could not retrieve a 4000.1 HECM section that supersedes the 7-13-16 Guide. I treat the Guide as operative because HUD's own live FHA Connection help pages, retrieved 2026-10-04, still point mortgagees to "HECM Financial Assessment and Property Charge Guide, Sections 5.2 and 5.3" for this exact calculation. The Guide text itself was retrieved from two independent mirrors of the ML 2016-10 attachment after hud.gov returned 404 on every direct path. The two mirrors were downloaded separately and diffed against each other: their extracted text is identical byte for byte across all 3,748 lines, so neither mirror has altered the HUD-authored content. The regulation-level backstop (24 CFR 206.205(c), eCFR current) and ML 2014-21 (retrieved via Internet Archive from hud.gov's own PDF) both corroborate the structure. Flagged: the formula text is HUD-authored and confirmed consistent across two matching mirrors, but was not retrieved from a live hud.gov URL.

Synthesis for RDCO

The formula, stated once and auditably. Let PC be annual property taxes + homeowners insurance + flood insurance (no HOA, no condo, no "other"). Let m be the Regulation Z Appendix L Loan Period 2 life expectancy in years for the youngest mortgagor (age rounded up if the next birthday is within 183 days of closing), times 12. Let c = (expected average mortgage interest rate + annual MIP rate) / 12. Then the Fully-Funded LESA equals (1.2 × PC / 12) × (1+c) × [1 − (1+c)^(−m)] / c. I validated this implementation to the cent against HUD's own worked example as reproduced in the National Reverse Mortgage Lenders Association (NRMLA) deck "The Math Behind HECMs" (which cites FA Guide §§5.3 and 5.6, pp. 76-77): PC = $4,000, m = 144, c = 5.25%/12 → $42,854.18, and the partial case MRIS = $100 → $12,856.25. Both match exactly. For the case at hand — age 70, expected rate 7.250%, annual MIP 0.50%, so c = 7.75%/12 and m = 180 — the annuity-due factor is 106.9249, which collapses to a usable rule of thumb: LESA ≈ 10.69 × annual property charges.

The worked dollars, at the parent brief's three price points. Three clearly-separated charge scenarios, all at age 70 / expected rate (ER) 7.250%, compared against the parent brief's verified principal limits of $162,000 / $189,000 / $216,000:

Worked step by step at $600,000, Scenario C: property tax $600,000 × 1.40% = $8,400; homeowners insurance $600,000 × $27.90/$1,000 = $16,740; flood $0. PC = $25,140. Cushioned: $25,140 × 1.2 = $30,168. Monthly: ÷ 12 = $2,514.00. Annuity-due factor at c = 0.0775/12 = 0.00645833 and m = 180: (1 + c) × [1 − (1+c)^−180] / c = 106.9249. LESA = $2,514.00 × 106.9249 = $268,809. Against a principal limit of $600,000 × 0.360 = $216,000, that is a shortfall of $52,809 — the set-aside alone exceeds every dollar the loan would advance.

Headline range: roughly $103k-$202k at $450k, $119k-$235k at $525k, $135k-$269k at $600k. That width is not an observed market range. It is set by the dwelling-coverage ratio I had to assume (70% of purchase price in the low bracket, 100% in the high bracket), which is a labelled assumption and not a sourced input; see Labelled assumptions at the end of this brief. The spread is driven almost entirely by Florida homeowners insurance — it is 43% of total property charges on the parent brief's assumptions, 68.5% in the low bracket and 66.6% in the high bracket, and the gap between the parent brief's $5,400 and the market's $16,690 at $600k is worth about $121,000 of LESA by itself. Property tax rate is the second driver, worth about $32k of spread at $600k across my 0.90-1.40% bracket. Borrower age is third: the 183-day roll-up from 70 to 71 cuts the factor from 106.92 to 103.00, about -3.7%. Expected rate is a weak lever and cuts the wrong way for H4P — a lower rate shrinks the LESA but grows the principal limit faster, so the net improves, but never enough in Scenario C: even at a 5.500% expected rate (PLF 0.439, PL $263,400 at $600k) the Scenario-C LESA is $299,407 and still exceeds the principal limit by $36,007. Flood insurance is in PC and the parent brief zeroed it: every $1,000/yr of flood premium adds $10,692 to the LESA, so a coastal Florida property in a Special Flood Hazard Area at $2,500/yr carries a $26,700 LESA surcharge on top of the table above.

The clean structural result, which is the most portable thing in this brief: because both the principal limit and the property charges scale with price, the LESA-to-principal-limit ratio is independent of the price point. At age 70 and a 7.250% expected rate, the break-even is PLF ÷ (0.1 × 106.9249) = 0.360 ÷ 10.69 = 3.37% of purchase price in annual property charges wipes out the entire principal limit — $15,151 at $450k, $17,676 at $525k, $20,201 at $600k. Florida taxes-plus-insurance on a fresh purchase run 2.1% of price on the parent brief's assumptions, 2.85% in the low bracket, and 4.19% in the high bracket. Both brackets rest on the assumed dwelling-coverage ratio documented under Labelled assumptions, so neither is a quoted premium. That single comparison is the whole decision. H4P does not fail or survive by price point; it fails or survives on whether Florida insurance comes in near the market average or well under it.

Now the decision question, head-on: a Required Fully-Funded LESA is NOT the default. Guide §5.1 is unambiguous — a borrower who demonstrates both willingness and capacity gets no LESA. §5.9 names the only three doors into one: (1) credit history unacceptable after extenuating circumstances → Fully Funded; (2) property charge payment history unacceptable after extenuating circumstances → Fully Funded; (3) residual income insufficient after compensating factors → Partially Funded, escalating to Fully Funded only if the partial exceeds 75% of the projected cost. Doors (1) and (2) are about the parents' payment track record and have nothing to do with Florida insurance. Door (3) is sized off the income gap, not off property charges — if the shortfall is $200/month, the partial LESA is $200 × 1.2 × 106.9249 = $25,662, not $268,809. So the correct verdict is "worse, with a conditional cliff," not "unavailable." The backlog note's worry, that a Required Fully-Funded LESA would settle H4P outright, is a live risk but a contingent one, and it is contingent on facts about the parents we have not gathered, not on arithmetic.

But the financial assessment has a second, quieter kill switch that nobody has priced, and it is the real finding here. Residual income is computed as total monthly income minus monthly debt payments minus Total Monthly Property Charges (actual, un-cushioned, and this one does include HOA) minus a maintenance-and-utility allowance of $0.14 per square foot of gross living area above grade (Model HECM Financial Assessment Worksheet, Section E). It must clear $886/month for a two-person household in Florida. On Scenario C at $600k that is $886 + $2,095 + ~$350 = $3,331/month of income before a single other debt payment; on Scenario B, $2,663; on the parent brief's assumptions, $2,286. Parents on Social Security alone are plausibly inside that band and plausibly outside it. §5.9 does give relief — HUD explicitly allows the mortgagee to re-test residual income after a Fully-Funded LESA removes the charges from out-of-pocket — but it also warns that where the borrower "will still fall significantly short of the residual income standard, the approval of a HECM, even with a Fully Funded LESA, may not represent a sustainable solution." That is a soft denial, and at Scenario-C charge levels it is reachable. The thing to go verify is not the LESA formula any more; it is the parents' credit and property-charge payment history, their actual monthly income, and one real Florida insurance quote.

What this does to the parent brief's bottom line. Scenario A is the apples-to-apples comparison: carrying the parent brief's own assumptions forward, cash to close rises from $307,000 / $356,500 / $406,000 to $409,648 / $475,187 / $540,725 — an H4P purchase at 90-91% cash down. The parent brief's finding that H4P already loses to the conventional gift path at $450k and wins only modestly at $600k does not survive that: with a Fully-Funded LESA in Scenario A, H4P is beaten by the sized-cash-gift path at every modelled price, and in Scenario C the required set-aside exceeds the principal limit by $52,809; I found no HUD text permitting a LESA larger than available proceeds, and whether that is a hard ineligibility or a lender denial is unresolved (see Open follow-ups). One honest counterweight: a LESA is a withholding, not a charge — it is added to the loan balance only as payments are actually made, and any unused balance is never owed, so a LESA makes the terminal-equity comparison in the parent brief less bad, not worse. It is a cash-at-closing problem, and cash at closing is exactly the axis on which the founder was evaluating H4P. The correction already flagged in [[01-projects/home-rebuild-2027/README]] stands and gets stronger.

Why this is in the vault

This closes the one number [[2026-10-01-hecm-for-purchase-at-real-price-points]] named as its largest unquantified gap, and it changes the Q1 2027 decision gate in [[01-projects/home-rebuild-2027/milestones]]: the H4P branch of the Parents' Retirement Home decision can no longer be evaluated without a Florida homeowners-insurance quote, because that single input moves the required set-aside by ~$121,000 at $600k and can push it past the principal limit entirely, at which point originability itself becomes an open question (see Open follow-ups). It also retires a research question rather than deferring it — the formula is now pinned to HUD-authored text from two matching mirrors of the ML 2016-10 attachment; the live hud.gov copy is still unretrieved. No further research is needed on the mechanism, only on three facts about the borrowers.

Open follow-ups

• Has Handbook 4000.1 superseded the 7-13-16 HECM Financial Assessment and Property Charge Guide, and did the LESA formula, the 1.2 factor, or the Appendix L mortality table change in the transfer? Every hud.gov direct path to both documents 404'd; the Guide text used here came from two independent mirrors of the ML 2016-10 attachment whose extracted text is identical byte for byte. HUD's live FHA Connection help still cites the Guide, which is strong but indirect evidence it remains operative.
• Does the HECM Fully-Funded LESA use the hazard-insurance premium for replacement-cost dwelling coverage, or whatever premium the borrower actually binds? The entire Scenario B / Scenario C spread is the dwelling-coverage ratio I had to assume (70% vs 100% of purchase price). HUD's text says only "homeowners insurance premiums." If a borrower can bind a lower-coverage or high-deductible Florida policy and have the LESA sized off that premium, the set-aside falls proportionally — and so does the answer.
• What is the actual year-one Florida property tax bill on a newly-reassessed purchase, by county, as a percentage of purchase price? The 0.78-0.99% ACS effective rates are depressed by Save Our Homes across the existing stock and are the wrong basis for a fresh purchase; I bounded the top at 1.40% as my own assumption rather than deriving it from county millage and the homestead exemption schedule.
• Does HUD or FHA publish any mechanism when the Projected Life Expectancy Property Charge Cost exceeds the principal limit? §5.7 caps the partial LESA at 75% of the projected cost and ML 2014-21 bars funding a LESA "in excess of the projected cost," but neither text addresses the reverse — a projected cost larger than the available proceeds. Whether that is a hard ineligibility or a lender-discretion denial is unresolved.
• How sensitive is the §3.100 residual-income standard to the maintenance-and-utility allowance? The $0.14/sqft figure appears on the Model Worksheet but I did not locate its indexation rule or whether it has been updated since 2015; on a 2,500 sqft Florida house it is $350/month against an $886 standard, which is not a rounding error.
• Is a Required Fully-Funded LESA re-triggerable after closing — e.g. if the annual LESA sufficiency analysis finds the set-aside exhausted early because Florida insurance outran the 1.2x cushion, what is the borrower's actual exposure? ML 2014-21 contemplates exhaustion and requires notice, but the downstream consequence for the borrower is not quantified here.

Related

• [[2026-10-01-hecm-for-purchase-at-real-price-points]]
• [[2026-08-19-asset-depletion-mortgage-qualification]]
• [[01-projects/home-rebuild-2027/README]]
• [[01-projects/home-rebuild-2027/milestones]]
• [[2026-08-25-florida-intra-family-purchase-money-note]]
• [[2026-08-14-construction-to-permanent-loans-florida]]
• [[2026-06-04-home-affordability-build-vs-buy]]
• [[2026-10-04-fha-4000-1-h4p-gift-and-interested-party-contributions]] — sibling research filed the same night on FHA Handbook 4000.1 gift-eligibility as the H4P monetary investment; either that question or this one could close out the H4P branch on its own.

Sources

HUD / federal primary

• HUD, HECM Financial Assessment and Property Charge Guide, attachment to Mortgagee Letter 2016-10, pages dated 7-13-16 — §§5.1-5.9 (LESA definition, formula, triggers, 75% rule, life-expectancy table), §3.100-3.101 (Table of Residual Incomes by Region). Retrieved 2026-10-04 from two independent mirrors of the HUD attachment: https://reverse.mortgage/wordpress/wp-content/uploads/2025/12/16-10ML-ATCH.pdf and https://www.nrmlaonline.org/wp-content/uploads/2016/07/Revised-FA-Property-Charge-Guide.pdf. Both were downloaded separately and diffed; their extracted text is identical byte for byte across all 3,748 lines. All hud.gov direct paths to this PDF returned 404 on 2026-10-04.
• HUD, Mortgagee Letter 2016-10, Home Equity Conversion Mortgage Program — Financial Assessment and Property Charge Requirements — https://www.hud.gov/sites/documents/16-10ml.pdf (live; summarizes the §5.2 183-day age roll-up and the §5.9 revision)
• HUD, Mortgagee Letter 2014-21, Financial Assessment and Property Charge Requirements — LESA structure, the four-input calculation basis, and "depending upon the results of the Financial Assessment." Retrieved via Internet Archive of hud.gov/sites/documents/14-21ML.PDF (hud.gov 404 on 2026-10-04)
• HUD, Mortgagee Letter 2015-06 — delay of the effective date to case numbers on/after 2015-04-27. Retrieved via Internet Archive of hud.gov/sites/documents/15-06ML.PDF
• HUD FHA Connection, HECM Financial Assessment processing help and HECM Financial Assessment Update Page field descriptions — https://entp.hud.gov/sfohlp/f17hfaprhlp.cfm and https://entp.hud.gov/sfohlp/f17hfafdhlp.cfm?page=u (live, retrieved 2026-10-04; the x 1.2 field, the 252-month maximum, the "Expected Rate + Annual MIP Rate" compounding field, the taxes/hazard/flood subtotal vs. HOA split, and the 75% partial cap)
• HUD, Model HECM Financial Assessment Worksheet (rev. 2015-03-27) — https://www.hud.gov/sites/dfiles/SFH/documents/Model_FA_Worksheet.pdf (live; Section E $0.14/sqft maintenance-and-utility allowance; the three binary assessment results that gate the LESA)
• 12 CFR Part 1026 (Regulation Z), Appendix L — Assumed Loan Periods for Computations of Total Annual Loan Cost Rates — https://www.ecfr.gov/current/title-12/chapter-X/part-1026/appendix-Appendix%20L%20to%20Part%201026 (eCFR current as of 2026-10-01; the "1979-1981 females" sourcing statement and the age-by-age Loan Period 2 table, age 70 = 15 years)
• 12 CFR 1026.33(c)(6) — assumed loan period definition pointing to Appendix L
• 24 CFR 206.205(c) — Life Expectancy Set Aside servicing requirements, fully- and partially-funded — https://www.ecfr.gov/current/title-24/subtitle-B/chapter-II/subchapter-B/part-206/subpart-D/section-206.205

Secondary / validation

• NRMLA, The Math Behind HECMs (2016-03-28), slide "LESA – Example," citing FA Guide §§5.3 and 5.6 pp. 76-77 — https://www.nrmlaonline.org/wp-content/uploads/2015/11/The-Math-Behind-HECMs-3-28-16-v2-NRMLA.pdf. Used only to validate my implementation of HUD's formula; reproduced to the cent ($42,854.18 fully funded, $12,856.25 partially funded). No policy claim in this brief rests on it.

Market inputs (commercial aggregators, not regulators — labelled SOURCED but not primary)

• Insurance.com / Quadrant Information Services, Average homeowners insurance rates by state, last updated 2026-09-15 — Florida $8,471 / $11,161 / $16,690 at $300k / $400k / $600k dwelling coverage — https://www.insurance.com/home-and-renters-insurance/home-insurance-basics/average-homeowners-insurance-rates-by-state
• PropertyTaxExplorer (Tax Foundation / Census ACS 5-year 2024), Florida county effective property tax rates — https://propertytaxexplorer.com/us/florida/

Vault

• ~/rdco-vault/06-reference/research/2026-10-01-hecm-for-purchase-at-real-price-points.md
• ~/rdco-vault/06-reference/research/2026-08-19-asset-depletion-mortgage-qualification.md
• ~/rdco-vault/01-projects/home-rebuild-2027/readme.md
• ~/rdco-vault/01-projects/home-rebuild-2027/milestones.md

Labelled assumptions (mine, not sourced)

• Dwelling coverage = 70% of purchase price (Scenario B) and 100% (Scenario C). Reasoning: hazard coverage is replacement cost of the structure and excludes land; Florida land share on a $450-600k house plausibly runs 25-35%, so the true figure sits inside this bracket. This is the single widest assumption in the brief.
• Property tax 1.40% of purchase price as the Scenario C ceiling. Reasoning: a fresh purchase resets assessed value to market, defeating the Save Our Homes cap that depresses the 0.78-0.99% ACS figures; 1.40% approximates a high-millage Florida county on a fully-reassessed purchase net of the standard homestead exemptions. Not derived from a millage schedule.
• Property tax 0.90% as the Scenario B floor — midpoint of the statewide 0.78% and the highest-county 0.99% ACS effective rates.
• Maintenance-and-utility allowance of ~$350/month, implying ~2,500 sqft of gross living area above grade at HUD's $0.14/sqft. Square footage is mine; the $0.14 rate is sourced.
• Flood insurance = $0 in all three scenarios, carried forward from the parent brief. Flagged explicitly as a live risk with its own sensitivity ($10,692 of LESA per $1,000/yr of premium).
• Expected rate 7.250%, PLF 0.360, principal limits, upfront MIP (UFMIP) 2%, origination $6,000, third-party $4,000 — all carried forward unchanged from [[2026-10-01-hecm-for-purchase-at-real-price-points]] for comparability. Its lender-margin component (1.96%) remains a labeled guess there.