3 Types of Reverse Mortgages Explained: Which One Is Right for You?

September 1, 2025

If you’re exploring ways to use your home’s equity to improve your financial security in retirement, it’s helpful to know that there are three main types of reverse mortgages—each designed for different needs.

In this article, we’ll explain:

Home Equity Conversion Mortgages (HECM): The most popular, federally insured option.
Proprietary Reverse Mortgages: Also known as “jumbo” reverse mortgages, these are ideal for homes with higher values.
Single-Purpose Reverse Mortgages: A cost-effective choice for specific financial goals.

We’ll break down the key features of each, highlight how they can support your financial needs, and guide you toward resources to make an informed decision.

Table of Contents

• Three Types of Reverse Mortgages: An Overview

• 1. Home Equity Conversion Mortgages (HECM)

• 2. Proprietary or Jumbo Reverse Mortgages

• 3. Single-Purpose Reverse Mortgages

• 2025 Reverse Mortgage Types: Which Suits You?

• Key Questions to Consider:

• Exploring Reverse Mortgage Options: Resources and Contacts

• Frequently Asked Questions

Three Types of Reverse Mortgages: An Overview

When considering a reverse mortgage, it’s essential to understand the three main types available. Each serves different needs and offers unique advantages:

Home Equity Conversion Mortgages (HECM):
These federally insured loans are the most popular choice for homeowners aged 62 and older. HECM loans offer flexibility and can be used for a variety of purposes, from covering daily expenses to funding major home improvement projects.
Proprietary Reverse Mortgages:
Often referred to as “jumbo” reverse mortgages, these are specifically designed for homes with higher values. They are not federally insured but can provide larger loan amounts, making them popular in areas with expensive real estate.
Single-Purpose Reverse Mortgages:
These are less common but may be a cost-effective option if you need help covering specific expenses, such as home repairs or property taxes. While availability is limited, they can be a practical solution for targeted needs.

Understanding these types can help you decide which option best aligns with your financial goals and circumstances.

1. Home Equity Conversion Mortgages (HECM)

Home Equity Conversion Mortgages (HECM) are the most popular type of reverse mortgage, accounting for the majority of loans in the market. These loans are insured by the U.S. Department of Housing and Urban Development (HUD) under the Federal Housing Administration (FHA), offering homeowners valuable peace of mind.

Key benefits of HECM loans include:

Flexible Payout Options: Borrowers can choose a lump sum, monthly payments, or a line of credit to meet their financial needs.
Lifetime Non-Recourse Protection: You’ll never owe more than your home’s value when it’s sold, no matter how long you live or market conditions.
Versatility: Funds can be used for virtually anything, from covering daily expenses to paying off an existing mortgage or funding in-home care.

With its flexibility and protections, the HECM is a reliable choice for those seeking financial security in retirement.

Did you know? Over 95% of all reverse mortgages in the U.S. are HECMs, insured by HUD and FHA insurance.

2. Proprietary or Jumbo Reverse Mortgages

Proprietary reverse mortgages, often referred to as “jumbo reverse mortgages“, are designed for homeowners with properties valued above the federal limit of . Unlike HECM loans, these private loans are not federally insured, which allows for greater flexibility in some cases.

Key features of proprietary reverse mortgages include:

Higher Loan Limits: Ideal for high-value homes, these loans often provide significantly larger payouts than HECM loans.
Flexible Eligibility: Some lenders allow younger homeowners (under age 62) to qualify and may accept a wider range of property types, including high-value condominiums.
Lower Closing Costs: Because these loans don’t require upfront mortgage insurance premiums, borrowers can save thousands—up to $24,195 in some cases.

Proprietary reverse mortgages are particularly popular in areas with high real estate values. They offer a practical solution for homeowners looking to access more of their equity without the additional costs associated with HECM loans.

Pro Tip: If your home value is above the $1,209,750 federal HECM limit, a jumbo reverse mortgage may unlock significantly more equity—up to $4 million.

3. Single-Purpose Reverse Mortgages

Single-purpose reverse mortgages are a unique type of loan offered by non-profit organizations and government agencies. Unlike other reverse mortgages, these loans are intended for a specific use, as determined by the lender.

Examples of eligible uses include:

Home Modifications: Enhancing your home’s accessibility or safety by installing ramps or railings.
Property Taxes: Covering overdue property taxes to help you avoid financial penalties or liens.

These loans are typically aimed at lower-income homeowners. Eligibility often depends on meeting specific income requirements set by the organization or agency offering the program.

While less common than other types of reverse mortgages, single-purpose loans can be a cost-effective solution for homeowners who need targeted financial assistance.

Caution: Single-purpose reverse mortgages are only available in certain states and through select agencies. Always confirm local availability before planning around this option.

Choosing the right reverse mortgage depends on your financial goals, the value of your home, and your eligibility. Here’s a quick comparison of the three main types to help you decide:

2025 Reverse Mortgage Types: Which Suits You?

Feature	HECM	Jumbo (Proprietary)	Single-Purpose
Government-Insured?	Yes	No	No
Loan Limit	$1,209,750	$4,000,000	Low—varies by purpose
Minimum Age	62	55	Usually 62 (varies)
Home Types	Single-family, FHA condos	Broader range (e.g., high-value condos)	Primary residence only
Use of Funds	Anything you want	Anything you want	Specific (e.g., repairs, taxes)
Counseling Needed?	Yes (HUD-approved)	Yes (HUD-approved)	Sometimes
Mortgage Insurance?	Yes	No	No

Key Questions to Consider:

Do you want flexible loan terms and federal protections? A HECM might be the best choice.
Do you own a high-value home or need more equity than the HECM limits allow? Explore a proprietary reverse mortgage.
Do you need help with a specific expense? A single-purpose reverse mortgage could fit your needs.

By understanding these distinctions, you can make an informed choice that aligns with your financial goals.

Exploring Reverse Mortgage Options: Resources and Contacts

When it comes to choosing the right reverse mortgage, having reliable resources is essential. Here’s where you can find helpful information:

For HECM Loans: The Department of Housing and Urban Development (HUD) provides a wealth of online resources, including program rules, reverse mortgage counseling agencies, and a directory of HUD-approved lenders. Visit HUD.gov or call 800-CALL-FHA for personalized assistance.
For Proprietary and Jumbo Reverse Mortgages: Proprietary reverse mortgages are offered directly by private lenders. To explore these options, contact a trusted provider like All Reverse Mortgage, Inc. for personalized quotes and guidance tailored to your home’s value and financial goals.
For Single-Purpose Reverse Mortgages: These loans are offered through local housing agencies or non-profits. Contact your local housing authority to inquire about availability and eligibility requirements in your area.

Utilizing these resources can help you make informed decisions and identify the reverse mortgage option that best suits your needs.

Pro Tip: Always use a HUD-approved counselor before moving forward. This ensures you understand the loan terms and protects you from scams.

Frequently Asked Questions

What is the most common type of reverse mortgage in 2025?

The most common type of reverse mortgage in 2025 is the HECM (Home Equity Conversion Mortgage). The federal government insures this reverse mortgage program through HUD/FHA.

What type of reverse mortgage has the lowest cost?

The type of reverse mortgage with the lowest costs currently known is the Proprietary (Jumbo) reverse mortgage program. HUD does not insure these programs; therefore, they do not have mortgage insurance premiums.

What is the most commonly used reverse mortgage?

The HECM (Home Equity Conversion Mortgage) is the most commonly used reverse mortgage. Moreover, the line of credit option is the most commonly used HECM loan due to the loan’s line of credit growth feature.

What is the difference between HECM and reverse mortgages?

The difference between a HECM (Home Equity Conversion Mortgage) and a reverse mortgage is that a HECM is a specific type of reverse mortgage loan, while a reverse mortgage encompasses both HECM and proprietary loan programs.

What lenders offer proprietary reverse mortgages?

Many different lenders offer proprietary reverse mortgages in some capacity. All Reverse Mortgage, Inc. offers a variety of proprietary reverse mortgage options.

Still unsure which type is right for you? Call us Toll-Free at (800) 565-1722 or click here for your free quote —simple, trusted, 100% secure!

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Have a Question About Reverse Mortgages?

Look no further. Michael G. Branson, our CEO, brings a wealth of knowledge directly to you. With a robust 45-year tenure in mortgage banking and 20 years dedicated solely to reverse mortgages, he's the expert you want on your side.

Post your question in the comments below and anticipate a personalized response from Mr. Branson himself, typically within one business day. He's here to illuminate all angles of reverse mortgages, ensuring you're equipped with the knowledge to make informed decisions. Take this opportunity to gain insights from a seasoned professional.

5 Comments on this Article

Ann
May 21st, 2024

Thank you for all the information Need to go home from library and read all Very well laid out Lots of answered questions I'm just living on SS not enough to pay bills Handicap now cant work anymore Gonna loss my home only owe 7,500 Struggled all my life Its not Hugh Lost it in Hurricane Katrine had to remortgage again Now old and not enough to live on anywhere

Thanks
Reply to Ann
- Michael Branson
  May 22nd, 2024
  
  Hello Marilyn,
  I can't see how your loan would be affected without analyzing your current circumstances compared to how you would fare with a loan at today's rates, but I am fairly certain I would not advise refinancing at this time. Interest rates are higher now. Your current rate is probably not at the capped rate you listed, but is likely comparable to rates for a new loan. Since your loan is capped at 8.641%, refinancing now would set your cap based on today's rates, which would be much higher (though this would only affect you if interest rates were to rise above your current rate cap).
  If you are interested in possibly refinancing to get more money, it might be a good reason to check if you could benefit from a refinance based on an increase in your property value if your home has become more valuable. In that case, you would compare what you have left in your line to what you would get at today's rates to see if a refinance is advantageous for you. But since your motivation is for a lower rate, I would advise against it.
  There are other things to consider. If you have a high margin on your loan, you may want to watch the rates over the next several months. If rates start to come down as many predict, due to it being an election year and the expectation of inflation starting to subside, there is a possibility that interest rates will drop, making refinancing more attractive. In that case, you may benefit from both better rates and possibly more money available to you. I suggest you keep watching our site at https://reverse.mortgage/rates and scroll down a little to see the current rates. This is an easy way to see when rates are dropping and when it might be a good time to start inquiring about a refinance.
  Reply to Michael
Marilyn S.
May 16th, 2024

Hello Michael,

I am currently in a reverse mortgage, and at 77 years of age and in good health. Under the terms of the mortgage, I have another 5 years to draw on my equity line (approximately $80K). I am capped at an interest rate of 8.641%; the interest rate may not increase beyond this amount. However, originally the loan was tied to the LIBOR 3-month US rate, which has now switched over to the SOFR index. Would this be a good time to look into refinancing the existing reverse mortgage to achieve a lower interest rate?
Reply to Marilyn
Jim T.
March 14th, 2024

We have two main reasons for considering a reverse mortgage. First and foremost, we wish to remain in our home for the rest of our lives. I am 86, my wife is 85, and we are both healthy. Second, we are looking for the maximum cash out to supplement our retirement finances. Our townhome is valued at $300K, with a loan balance of $200K. HECM is not an option. Thank you for your comments or suggestions.
Reply to Jim
- Michael Branson
  March 15th, 2024
  
  Hello Jim,
  One factor that determines how much money you will receive with a reverse mortgage is interest rates. Current rates are not favorable for borrowers who want or need to maximize funds with their reverse mortgage. The question is, when will interest rates come down? Unfortunately, no one knows that for sure, but until inflation begins to fall meaningfully, most concur that interest rates will not drop significantly.
  I advise you to keep watching the rates, especially if you see advertisements that rates are dropping. At any rate, you're already at roughly 67% debt on the home now, so there won't be a tremendous amount of money available even if rates do come down. I think you need to ask yourself if it would be worth your while to complete the loan with the savings alone from not having to make a payment for the rest of your life.
  Otherwise, I am not a retirement planner and would not try to offer advice on specifics as they relate to your retirement situation. The only thing I can really do is explain the reverse mortgage program and what affects it, and I hope the information helps you make some decisions or at least know what to look for.
  Reply to Michael

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