The optimum processor and its accuracy limit for radar altimetry for geodetic use over the sea are studied with a model accounting for random surface reflectivity, sea height variation, additive noise, and pointing errors, and allowing for arbitrary antenna patterns, signal modulations, and other system parameters. The ?threshold? case solution (which can have any specified accuracy) dictates a signal modulation bandwidth just shy of resolving the sea height variation and/or illuminated sea area (as scaled into time delay and ?smeared? by pointing errors). For such a modulation a relatively complete solution is obtained. These results are used to determine practical radar altimeter designs, additionally accounting for antenna size, stability, and peak power restraints. Conditions allowing neglecting of limiting or complicating effects due to temporally varying reflectivity, sea height, and vehicle position are given and shown to be satisfied for a typical satellite.