2024 Jumbo Reverse Mortgage (Lenders, Rates & Loan Limits)
Michael G. Branson, CEO of All Reverse Mortgage, Inc., and moderator of ARLO™, has 45 years of experience in the mortgage banking industry. He has devoted the past 19 years to reverse mortgages exclusively. (License: NMLS# 14040) |
All Reverse Mortgage's editing process includes rigorous fact-checking led by industry experts to ensure all content is accurate and current. This article has been reviewed, edited, and fact-checked by Cliff Auerswald, President and co-creator of ARLO™. (License: NMLS# 14041) |
As we enter 2024, the landscape of reverse mortgages continues to evolve, with Jumbo Reverse Mortgages emerging as a significant component for homeowners with high-value properties.
In this article, we will dissect the critical differences between jumbo and traditional FHA-insured reverse mortgages, clarifying why and when a jumbo reverse mortgage could be the right choice for you. We dive into the key benefits alongside a balanced discussion of these loans’ potential risks and rewards.
Whether you are a homeowner, a financial advisor, or simply interested in the latest trends in mortgage finance, this article will equip you with the knowledge about the lenders, rates, and loan limits pertinent to the 2024 Jumbo Reverse Mortgage market.
In this article, you will learn:
- Differences between jumbo and FHA-insured reverse mortgages
- Key benefits of a jumbo reverse mortgage
- Risks and rewards of a jumbo reverse mortgage
- History and current market outlook for jumbo reverse mortgages
What is a Jumbo Reverse Mortgage?
While the HUD reverse mortgages are insured by the Federal Housing Administration (FHA) through its Home Equity Conversion Mortgage (HECM) program, there is also a rising number of Non-FHA reverse mortgages known as proprietary or jumbo reverse mortgages.
Among those non-FHA reverse mortgages, programs offering loan amounts higher than the FHA’s lending limit are typically called “jumbos.” Like high-dollar or jumbo programs in the forward mortgage market, reverse mortgage jumbos typically extend more borrowing potential to homeowners in that their lending limits exceed the current $1,149,825 lending limit set by the FHA.
Jumbo reverse mortgages are available to qualifying homeowners with higher home values than can be served with the average HECM loan amount. Many jumbo reverse mortgages are held by homeowners in California and other areas where home values tend to trend higher than the national average.
Differences Between Jumbo and FHA-Insured Reverse Mortgages
Several lenders are offering jumbo reverse mortgages, and their specific elements vary. Jumbo reverse mortgages are proprietary loans, meaning they do not need to adhere to Department of Housing and Urban Development program rules.
Some private reverse mortgage programs offer features that the FHA-insured Home Equity Conversion Mortgage (HECM) product does not.
These might include:
- A minimum borrower age that is below the HECM minimum age of 62 (when state lending laws allow)
- The ability to borrow using a Non-FHA-approved condo unit as collateral
- The ability to take out the full amount of a lump sum payment at closing with fewer restrictions than under the HECM program
Another significant difference is that jumbo reverse mortgages have no mortgage insurance premiums, as this cost applies only to FHA-insured loans.
However, jumbo reverse mortgages are very similar to HECMs in most respects. Jumbo programs typically require reverse mortgage counseling, may offer different disbursement options, such as lump sum and a jumbo line of credit, and allow borrowers to tap into their home equity while they live in the home.
Jumbo vs. HECM Product Comparison
Compare Features | Jumbo Reverse Mortgage | HECM Reverse Mortgage |
---|---|---|
Borrower Minimum Age | 55 | 62 |
Maximum Lending Limit | $4,000,000 | $1,149,825 |
Eligible Properties | Single Family (SRF), FNMA warrantable Condo, Townhome, 1-4 Units. | Single Family (SRF), HUD Approved Condo, Townhome, 1-4 Units. |
Lump Sum | 100% | Limited* |
Line of Credit | 10 Year Draw Period | Lifetime |
Line of Credit Growth Rate | Limited to 7 Years | Lifetime |
Tenure Payment Plan | No | Yes |
Low/No Closing Costs | Yes | No |
Younger Spouse Protection | No | Yes |
Use for Home Purchase | Yes | Yes |
Primary Advantage of a Jumbo Reverse Mortgage
The key benefit of a jumbo reverse mortgage is the ability to maximize loan proceeds for a home valued higher than the HUD maximum of $1,149,825. The exact percentages and figures will vary depending on several factors, including interest rates, borrowers’ ages, and home value.
Sometimes, homes valued slightly above the HUD limit will still benefit from the HECM program. However, many jumbos are available with a lending limit of $4 million or more — a significant increase over the HECM lending limit of $1,149,825.
2024 Jumbo Reverse Mortgage Loan-To-Value Chart (LTV)
Borrower Age | Loan-to-value (%) |
---|---|
55 | 31.5% |
56 | 31.8% |
57 | 32.0% |
58 | 32.3% |
59 | 32.7% |
60 | 33.0% |
61 | 33.3% |
62 | 33.6% |
63 | 33.9% |
64 | 34.2% |
65 | 34.7% |
66 | 35.2% |
67 | 35.8% |
68 | 36.3% |
69 | 36.9% |
70 | 37.6% |
71 | 38.4% |
72 | 39.2% |
73 | 40.0% |
74 | 41.1% |
75 | 42.1% |
76 | 43.1% |
77 | 44.2% |
78 | 44.5% |
79 | 45.8% |
80 | 47.0% |
81 | 48.4% |
82 | 49.8% |
83 | 51.2% |
84 | 51.8% |
85 | 52.8% |
86 | 52.8% |
87 - 100 | 53.4% |
Jumbo Reverse Mortgage Rates
Fixed Rate | Adjustable Rate | Lending Limit |
---|---|---|
9.490% (9.983% APR) | 11.795% (6.625 Margin) | $4,000,000 |
9.740% (10.268% APR) | 11.920% (6.750 Margin) | $4,000,000 |
10.375% (10.954% APR) | 12.045% (6.875 Margin) | $4,000,000 |
Jumbo APR Illustration: Assumes $1,000,000 loan amount, includes standard 3rd party closing costs.
Adjustable-Rate Payment Options: Lump Sum or Line of Credit
Index: 12-Mo. CMT
Lifetime Cap: 5% Over Start Rate
Weighing the Risks and Rewards
For those considering a jumbo reverse mortgage, there are some pros and cons – most of which apply to all reverse mortgages.
History and Current Market Outlook
Like all mortgage products, the jumbo lending environment changes based on many factors. Historically, many Non-FHA reverse mortgages have been with different rates and terms.
After the 2008 housing crash, most jumbos disappeared from the market. However, several jumbo products have been launched in recent years, offering various rates, terms, and features based on low interest rates and changes to the FHA lending limit.
If you are interested in a jumbo reverse mortgage, it’s important to ask about the terms offered by your lender, such as the amount that can be borrowed, how proceeds can be obtained, and the types of protections regarding non-borrowing spouses (if applicable).
Jumbo Loan FAQs
What is a jumbo reverse mortgage?
What lenders offer jumbo reverse mortgages?
What are the interest rates on jumbo reverse mortgages?
How much can you get from a jumbo reverse mortgage?
Can you get a jumbo reverse mortgage line of credit?
What is the difference between jumbo and proprietary loans?
How long does it take to take out a jumbo reverse mortgage?
Will the lender pay the property tax and insurance with a jumbo reverse mortgage?
With a jumbo reverse mortgage, are the beneficiaries liable if the property is “underwater?”
Can you have more than one jumbo reverse mortgage?
Are jumbo reverse mortgage interest rates fixed for the life of the loan?
Can I rent rooms privately, with a rental company, or Airbnb if we have a jumbo reverse mortgage?
Additional Resources:
- Read my article published at Forbes.com, “The Evolution Of Jumbo Reverse Mortgages.”
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