Key Takeaways
- A HECM may be the better choice if you want standardized rules and federally backed borrower protections.
- A jumbo reverse mortgage may make more sense if your home value is high and you want access to more equity.
- Jumbo reverse mortgages require closer review because terms and protections vary by lender.
A reverse mortgage allows homeowners age 62 and older to tap into their home equity while eliminating their monthly mortgage payments. But not all reverse mortgages work the same way.
The most common option is a Home Equity Conversion Mortgage (HECM), which is insured by the Federal Housing Administration (FHA). For homeowners with higher-value properties, some lenders also offer jumbo reverse mortgages. Understanding how these two options differ can help you choose the best fit for your situation.
HECM vs. jumbo reverse mortgage: Comparison table
| Feature | HECM (Home Equity Conversion Mortgage) | Jumbo Reverse Mortgage (Proprietary) |
|---|---|---|
| Insured by | Federal Housing Administration (FHA) | Private lenders |
| Maximum loan amount | Subject to a national lending limit ($1,249,125 for most areas in 2026) | Can be significantly higher, often up to $4 million or more |
| Best suited for | Homes at or below the FHA lending limit | High-value homes that exceed FHA limits |
| Minimum borrower age | 62 for all borrowers | Often as low as 55 (varies by lender and state) |
| Mortgage insurance | Required (upfront and annual premiums) | Not required |
| Interest rates | Generally lower | Typically slightly higher |
| Property eligibility | Condos must be FHA-approved | More flexible; non-FHA-approved condos may qualify |
| Access to funds | First-year draw limit (usually around 60%) | Often allows immediate access to full loan proceeds |
| Borrower protections | Standardized federal protections, including non-recourse | Non-recourse protection usually included, but other protections vary by lender |
What is a HECM?
A HECM is the only reverse mortgage program insured by the federal government. It’s backed by the FHA and comes with certain borrower protections. To qualify for a HECM, borrowers must be at least 62 years old, live in the home as their primary residence, and have sufficient equity in the home. Before closing, borrowers must also complete counseling with a HUD-approved counselor.
HECM loan amounts are based on several factors, including the borrower’s age, current interest rates, and the home’s appraised value up to the FHA lending limit. If a home is worth more than the limit, the excess value is not factored into the calculation.
One of the biggest advantages of a HECM is FHA insurance. This insurance ensures that borrowers or their heirs will never owe more than the home’s value when the loan becomes due, even as the loan balance grows larger over time.
See if you qualify for a reverse mortgage. Start hereWhat is a jumbo reverse mortgage?
A jumbo reverse mortgage is a reverse mortgage offered by private lenders. Unlike HECMs, jumbo reverse mortgages are not insured by the FHA and are not subject to the HUD’s rules.
These loans are typically designed for homeowners with high-value properties that exceed the FHA’s lending limits. Because they are private lending products, the eligibility requirements, interest rates, fees, and payout options vary by lender.
Jumbo reverse mortgages may allow borrowers to access a larger amount of equity than a HECM, especially if the home’s value is well above the FHA limit. However, borrower protections depend on the lender’s terms.
Who a HECM may be best for
A HECM can be a good option for homeowners who fall within the FHA’s lending limits and want a reverse mortgage with built-in safeguards. It may be best for:
- Borrowers who value government backing and standardized consumer protections.
- Homeowners who want flexible payout options, including a growing line of credit.
- Those who prefer predictable rules and disclosures governed by the HUD.
Fast Fact
Home value is the biggest deciding factor. If your home value falls at or below the FHA lending limit, a HECM often offers lower rates and stronger consumer protections. Higher-value homes may benefit more from a jumbo reverse mortgage.
Who a jumbo reverse mortgage may be best for
Jumbo reverse mortgages are often targeted toward homeowners with substantial equity who may not be able to access as much through a HECM. This option may appeal to:
- High-equity homeowners with property values well above the FHA lending limit.
- Borrowers who want access to a larger amount of equity upfront.
- Homeowners who are comfortable comparing lender-specific terms and weighing trade-offs.
How to choose the best fit for you
Both HECMs and jumbo reverse mortgages can play a role in retirement planning, but they’re designed for different types of homeowners. Choosing between a HECM and a jumbo reverse mortgage starts with understanding your home’s value and how much equity you want to access. From there, consider how you plan to use the funds and how long you expect to stay in the home.
It can also be helpful to compare loan estimates side by side and speak with a HUD-approved counselor, even if you’re considering a jumbo reverse mortgage. A qualified professional can help explain how each option works and what trade-offs may apply to your situation.
Time to make a move? Let us find the right mortgage for you
