Return of Non-FHA Reverse Mortgages are Here!

November 2, 2023

If you’re in the market for a loan that can convert your home equity into cash flow or a line of credit in retirement, chances are you have explored the option of a reverse mortgage.

But the reverse mortgage is not one-size-fits-all. Many people don’t know that there are several products to choose from, both under the Federal Housing Administration’s popular Home Equity Conversion Mortgage (HECM) and private loan options.

For the last several years, the number of reverse mortgage products on the market has been limited to the government-insured HECM and a small handful of other loans for people with homes valued at around $600,000 or more.

Recent changes to the Federal Housing Administration’s HECM send some lenders to revisit the opportunity for new Non-FHA and jumbo reverse mortgages that will give borrowers even more options when tapping their home equity in retirement.

Table of Contents

• Non-FHA reverse mortgages in 2024

• What’s the difference?

• When will the new loans be available?

• Non-FHA vs. HECM Product Comparison

• Top FAQs

Non-FHA reverse mortgages in 2024

FHA may soon become less competitive relative to the private market because of loan limits set by the federal government. FHA limits how much its lender-partners can lend through its insurance programs. Historically, this level was set at a cap of $417,000 for reverse mortgages.

However, when lending was largely restricted across the private market during the housing crisis, the government raised that cap to $1,149,825. This made government home loans more desirable for homeowners of all different home values. It also made it harder for private lenders to compete.

The rise in the lending cap is temporary, however, and reverse mortgage lenders are seeing the point when loan limits retreat to their historical level as a chance to offer more products to borrowers whose homes are valued over the FHA lending limit.

What’s the difference?

As with any FHA-insured loan, a HECM reverse mortgage falls under the government’s requirements when it comes to making the loan and then providing service to the borrower throughout the life of the loan.

FHA only insures certain property types, for example. If you live in a manufactured home before 1976 or a co-op, you likely won’t qualify for an FHA reverse mortgage. A private loan can offer more options to the borrower since it isn’t tied to the government’s rules.

It also creates more competition in the market, allowing borrowers even more choices.

When will the new loans be available?

Borrowers with high home values can access at least one non-FHA reverse mortgage option. Several additional lenders, however, have said they will be offering private reverse mortgage products in 2014.

If you are seeking a reverse mortgage, remember that the HECM is just one of the 3 types of reverse mortgages. It can help retirees boost cash flow, protect against market risk, or provide a line of credit for emergency uses in retirement. But other options are also worth exploring.

Non-FHA vs. HECM Product Comparison

Compare Features	Non-FHA	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

*HECM initial lump sum limits at loan closing, and within the first 12 months of closing, cannot exceed the greater of 60% of the Principal Limit, or, Mandatory obligations plus 10% of the Principal Limit. Jumbo loans may take a 100% lump sum disbursement.

Top FAQs

Are there non-FHA reverse mortgages?

Yes, there are. They are typically called Jumbo, private or proprietary reverse mortgages, and sometimes have different guidelines than the HUD HECM. They can have loan amounts as high as $ 4M-$5M for high property values. Additionally, they are not limited to the current HUD maximum claim of $1,149,825.

What are the rates for non-FHA reverse mortgages?

The rates on non-FHA reverse mortgages will vary with the market, as all loans will. There are fixed-rate loans and adjustable-rate loans available, similar to the HECM. While the rates are higher than the HECM on average, there is no insurance on non-FHA reverse mortgages.

How to find a non-FHA lender?

To find a non-FHA lender reverse mortgage, you should search the terms “Proprietary Reverse Mortgage,” “Jumbo Reverse Mortgage,” and “Private Reverse Mortgage.”

What is HUD’s involvement in reverse mortgages?

HUD is not a lender but insures the loans with a Mortgage Insurance premium that protects borrowers, lenders, and investors. HUD does not underwrite and close the loan. The lender does but must do so under HUD requirements to be eligible for Mortgage Insurance.

What are the different types of reverse mortgages?

There are the standard HUD or FHA-insured loans and the jumbo or proprietary reverse mortgages. Jumbo/Proprietary reverse mortgages are private programs that do not require mortgage insurance. HUD and private programs may be used for refinancing existing properties or purchasing new homes.

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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 19 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.

29 Comments on this Article

Randy M.
November 8th, 2023

How do mobile homes enter into the equation as far as non fha reverse mortgages?
Reply to Randy
- Michael Branson
  November 15th, 2023
  
  We cannot speak for all proprietary reverse mortgage programs, but I am not aware of any that will work with manufactured housing at this time. The property parameters and the private programs' minimum loan amounts/property values really don't lend themselves to the manufactured properties. And when you consider that the HUD maximum lending limit is $1,089,300, that usually would accommodate just about any manufactured home needs unless the property is extremely unique and most reverse mortgage programs (Including the HUD/FHA-insured loan) would require ample sales of similar homes to be eligible.
  
  The market for mortgage-backed securities has been contracting since the rising interest rates, and there are not as many private programs as there were a few years ago. I don't know exactly your concerns (why you want to consider a non-FHA loan), but typically, the FHA is the more promising option. I would say that is even more true today in our current environment.
  Reply to Michael
Warren
May 28th, 2023

Are non-FHA loans non-recourse loans?
Reply to Warren
- Michael Branson
  May 28th, 2023
  
  We are not a legal firm, and that answer may vary from state to state and by loan type. You need to consult with a licensed attorney in the state where the loan exists to determine the rights, obligations, or possible remedies of borrowers and lenders in that state and for the loan type.
  Reply to Michael
Tony B.
June 16th, 2022

Hello Arlo,

I'm an owner in a small incorporated condominium community (24 villa style 2/2 units) in St. Petersburg, Florida. Median individual values run between $250 and $300k. (Not FHA approved). Several of our residents are quite elderly and a reverse mortgage could be the answer for them to remain in their homes. Are there any plans for proprietary mortgages for individual owners in non-FHA complexes valued under $500k each?

Reply to Tony
- Michael Branson
  June 21st, 2022
  
  Hello Tony,
  
  I can't speak for every proprietary program but we work with more than one and recently, one of the proprietary programs changed their guidelines in the other direction - they no longer accept loans in projects that would be within the HUD limits which means no loans for properties valued under the current HUD $1,089,300.
  Given this change, I do not expect an overall move of other proprietary programs to lower their minimum loan amounts however, we do not work with all programs and it never hurts to put in the leg work to check with lenders to see if they have a program that will meet your needs or the needs of others in your complex.
  
  Don't forget also that if the project is "approvable", in other words it has not been rejected by HUD and it meets their criteria, just because it is not currently approved by HUD that does not mean it cannot be approved.
  It might benefit the entire project to contact a company that specializes in HUD approvals and get the project approved. This helps not only seniors, but also opens up the project to more purchasers for sellers in the project when the project is FHA approved.
  You can find companies that specialize in condo approvals online with a quick Google search and we have listed companies with whom we have had good experiences such as https://fhacondosapproval.com/ and there is typically no cost if they cannot get an approval. You can find others; this is just one of the many that appear with the search of "FHA condo Approval Companies".
  Reply to Michael
Don Fielding
December 18th, 2019

Does the minimum appraised value of $500,000 apply to the condominium complex or to an individual unit in the complex?
Reply to Don
- Michael Branson
  December 20th, 2019
  
  Hello Don,
  
  When you are referring to Proprietary guidelines and minimum/maximum values, they pertain to the home the loan is to be placed on, not the project.
  Reply to Michael
  - Margaret M.
    October 9th, 2021
    
    I am looking for a reverse mortgage on Condo unit that is not FHA approved. Having been dealing with HOA and it's taking forever for them to figure out how to get approval so they say. I'm running out of patience. Can you help me?
    Reply to Margaret
    - Michael Branson
      October 14th, 2021
      
      Hello Margaret,
      
      Jumbo or proprietary programs will also accept condominiums but some also require the project to be approved with FHA while others will impose similar criteria and minimum values. The best bet is to check to see if your property would meet the requirements of a private program in addition to the FHA program but there are also companies that specialize in FHA condominium approvals.
      
      You may also want to check with them to see if they can help you get the project approved. I cannot speak for them and I do not know what their fee is, but the ones I have seen do not charge anything if they cannot get the project approved and they can usually tell you right away if the project even can be approved. I don't know if your problem is that your project is not approvable, if the HOA just doesn't know how to get it done, or if someone doesn't want the project approved and is stopping the progress.
      
      We have seen boards and individuals actually determine that they don't think FHA approval is a good thing and instruct the HOA to stonewall the process or purposely impede the process themselves. If you go through a company that specializes in FHA approval, they can tell you the full story and at least you will know.
      
      One company with whom we have worked in the past is "The FHA Condos Approval Company" at fhacondosapproval.com. We are not affiliated with them though so I cannot tell you what their fees are or even how they compare to others who perform this service in the industry.
      
      I can only say that Bob Netterfield did a good job for some customers of ours and if you do an internet search, you may want to add them to your comparison. But a company like this can let you know if your project will meet HUD requirements and there is no charge if they cannot get the project approved.
      
      The cost savings over the life of the loan between a jumbo or proprietary loan and a HUD HECM loan will more than likely cover any cost but I would always recommend you do your best to compare all costs and charges.
      Reply to Michael
Loretta B.
August 25th, 2019

I live in a community I would like a non-fha reverse mortgage on my condo is that possible?
Reply to Loretta
- Michael Branson
  August 25th, 2019
  
  Hi Loretta,
  The project would have to meet the minimum requirements but starting in October HUD is reinstating a single unit approval program that does not require a complete project approval.
  Reply to Michael
George Ross
July 24th, 2019

I have a Underground house made mostly of concrete that I live in and is paid off. I am looking to see if I can get a reverse mortgage without FHA loan as they do not provide loans for this kind of structure.
Reply to George
- Michael Branson
  July 29th, 2019
  
  Hello George,
  The problem with most lending is that unique homes are not usually eligible for conventional type loans. Reverse mortgage lenders know that if you keep the loan to its highest and best use, that is, you keep it until you pass, it would be up to your heirs or the lender to sell the home to pay off the loan balance.
  Lenders do not want the risk of a unique home that may have little to know market that they would have to try to sell at that time.
  Other examples of homes that most lenders would not consider for reverse mortgage purposes would be geodesic dome homes, yurts and homes off the grid with no permanent power or water sources, etc.
  I even once had an inquiry for a home built into a cave that was an extremely well-appointed property, but there was no real way to value the home and no way to know the market for it.
  The homes may be very nice and well made, but it takes a certain type of buyer to buy them and could remain on the market for excessive periods before ever being sold.
  Also, without the ability to compare to many other similar homes that have sold in the area recently, there is no way to establish an actual value or the acceptability of the property to other buyers. I'm sorry, you may have a fantastic property, but I don't know a source for a reverse mortgage for it.
  Reply to Michael
Robert Crawbuck
April 21st, 2017

I live in a condo in Florida. The appraised value appears to be just under $300K. I doubt that my HOA will apply for HUD approval. If that stays true, would I be able to apply for a non-FHA reverse mortgage?
-Robert
Reply to Robert
- Michael Branson
  April 21st, 2017
  
  Hi Robert,
  I am not aware of a non-FHA reverse program for condos at this time but HUD has announced that they will be re-instituting a program that allowed lending on some condominiums without having to get the entire project approved first. We don't have an exact date or all the parameters but keep watching our site and send us your information and we will let you know as soon as HUD makes the announcement that the program has been implemented.
  Reply to Michael
  - Janet L.
    July 23rd, 2020
    
    Hi, I purchased a newly built condo appraised at $250,000. I owe $123,000.
    Can I get a non-FHA reverse mortgage on it? I am 71. FHA will not approve condos in this community because they did not like "language" of rental that allows association final approval on a rental. I am not renting, and never will as this be my primary home (not that I have a 2nd one somewhere else!) other proprietary loans say my loan is too small. Single family Homes in this development qualify for FHA reverse but not my condo. I live in Florida. Is my only recourse being to sell this unit and go back into a house?
    I like where I live!
    Reply to Janet
    - Michael Branson
      July 24th, 2020
      
      Hello Janet,
      HUD will not approve a unit in a condo project that limits their ability to mitigate any losses since they may well end up owning the unit if you or your heirs decide you no longer want the home at the end of the term.
      Therefore, they would not approve a project that limited to whom the unit could be sold, rented, etc. Such limitations could represent additional losses until a property could be sold.
      As for the proprietary programs, the lowest value acceptable I am aware of for these programs is $450,000.
      They are intended to be used for jumbo loans and are sometimes used as a HUD alternative but the investors who offer this product do not seek homes that are within HUD lending limits but just do not meet HUD requirements.
      I am sorry, I do not have any specific recommendations for condominium projects that will not meet the HUD requirements or alternatives to HUD reverse mortgage programs for properties in this value range.
      Reply to Michael
  - Joie D.
    July 29th, 2021
    
    I live in a condo, and the HOA says obtaining HUD approval is too expensive. I desperately need to access the equity in my condo which is completely paid off. The worth is approximately $200K. Please keep me informed of non-FHA reverse mortgages.
    
    Also, please explain why I'm (and many others) are being punished because I/we live in a condo? I have a credit score of 832, which is much better than most people living in houses. Seems discriminatory!
    
    Thank you,
    Joie
    Reply to Joie
    - Michael Branson
      August 2nd, 2021
      
      Hello Joie,
      
      Who is telling you that the approval is too expensive? The HOA? HUD does not charge to approve the project and so it is just a matter of supplying all the documentation that they require which the HOA should have. There are some companies who will gather and submit the information to HUD on behalf of homeowners who must do it on their own and no longer have all the CC&R's, by-laws, budgets, etc., but the HOA should have all the HUD required documentation at hand and it would just be a matter of following the HUD checklist to submit for approval.
      If they wanted to hire a company to do it for them, most companies like FHA Condo Approvals (fhacondosapproval.com) guarantee approval or there is no fee. They can do this because they know exactly what HUD requires and they know if HUD will approve the project just by gathering the necessary information. After they see the information, they know it is just a matter of submission and waiting for the approval. I have not checked for quite some time on their pricing, but it did not seem high to have the project approved.
      
      I am afraid you have been misled by either an HOA that is not experienced and does not want to go to through the work of getting the project approved or they have been advised by the board that they do not want FHA/HUD approval because many people have the mistaken opinion that once a project is FHA approved, it lets the "wrong kind" of people buy in the project. Not only is that discriminatory, but it is incorrect.
      Most of the time that is a disservice to current owners who could benefit from the programs FHA has to offer like the reverse mortgage program, but it also would help all current owners by opening up a broader buying market when they try to sell. Many potential buyers now are shut out of buying the units in your project because they use FHA financing. That hurts everyone when they go to sell (and potentially values).
      
      With regard to the question of discrimination because HUD requires the project to be approved and they will not approve all projects, it absolutely is not discriminatory as the approval process is based on the strength, the viability and the marketability of the project and not anything to do with the demographics of the owners, the ages or any other feature that would be discriminatory to underwrite.
      For example, HUD verifies that the project does not have a majority of rentals in the project to be approved HUD can support through thousands of loans in thousands of projects that projects that fail most often are those that are mainly used for rental and are not unit owner occupied. The dues fall behind and the project becomes rundown which hurts the units' marketability. Projects with insufficient budgets or insurance are at risk of failure.
      Projects currently in litigation for something that they have no insurance coverage that would protect them should they lose are at risk. These are just some of the things that HUD reviews the documents to check for. Condominiums already lose their value faster than single family residences when markets do soften, HUD just wants to be sure there are not other layers of risk that would cause an entire project to fail before they begin to insure loans in various projects. That's why they require that projects must be reapproved every 2 years. Circumstances change and they do not want to take on too much exposure in a project that has experienced changes that create unacceptable risks.
      
      There are many circumstances with single family homes that render the homes uninsurable for the HUD programs as well. It doesn't mean that the home is not a nice property or that the borrower is not a good borrower. It just means that the property does not meet HUD's risk guidelines and therefore cannot be used to secure a home for HUD/FHA insurance. A condominium unit located in an unapproved project is just such a circumstance.
      In your case though, I would check again with the HOA to find out why they think it is too expensive and then maybe contact the company from the link above or do an internet search for any of the other companies who offer the same services and see if they believed your project would qualify (especially if you still have all the documents they need).
      Reply to Michael
Steven Bolin
April 15th, 2017

I own a home in Seattle, WA United States and I am younger then age 62 all reverse mortgages I know that are government related one needs to be age 62 or older though I was wondering if a non government related reverse mortgage could legally exist for one under the age 62 years old? If yes I would also like to find a lawyer who could write up a reverse mortgage contract and deal with such legal affairs if you are such a lawyer please email me to let me know with your name and address/ phone number, okay?
Reply to Steven
- Michael Branson
  April 17th, 2017
  
  Hi Steven,
  Before the market crash in 2009 - 2010, there were some programs I knew of that were private programs went down to age 60 but I am not aware of any at this time. I do know that there are/were also other non-reverse mortgage options available that many do not find as palatable that include equity sharing and other similar methods. Many times the reverse mortgages are less expensive than some of the alternatives and the payments required on some do not achieve the goals of the borrowers, but if you search out alternatives you may find something that will work for you rather than just seeking a reverse mortgage that allows for younger borrowers.
  Reply to Michael
Richard Rudolph
August 18th, 2015

I have a manufactured home that has been moved, set on a foundation, up to strict city codes, etc. Is there any chance of finding a reverse mortgage? (I am purchasing the 1/3 acre lot it is sitting on.)
Reply to Richard
- Michael Branson
  August 18th, 2015
  
  Hi Richard,
  Moving a manufactured home that was previously installed in another location can really wreak havoc on the structural integrity of the home. For this reason, HUD will not insure a loan on a manufactured home that was previously installed at another location. In 2009, HUD issued Mortgagee Letter 2009-16 in which they updated their manufactured homes requirements. They specifically exclude eligibility for homes that have been move or previously occupied at another location in that Mortgagee Letter with the following verbiage:
  A. Relocation [of Eligible Manufactured Homes] - To be eligible for FHA Title II insurance, the manufactured unit must not have been previously installed or occupied at any other site or location. Manufactured units may be moved only from the manufacturer's or dealer's lot to the site on which the unit will be insured. If a permanent foundation is to be constructed under an existing eligible unit, the unit may be jacked-up or under pinned in order to install a new foundation.
  
  What they are saying is that the home may be jacked up to install the permanent foundation and they do not consider this a "move", but any unit that was previously installed or occupied at any other site, is not eligible. These are HUD's rules so all lenders would have to follow the same rules for the HUD HECM reverse mortgage program. Unless they had a private or proprietary program that allowed for a difference or HUD changed their rules, I am afraid there are no lenders that would be able to place a reverse mortgage on such a unit. At any rate, I do know of any such programs that exist today.
  Reply to Michael
John massey
November 22nd, 2014

Where can I look to get a non fha reverse mortgage?
Reply to John
- Barbara Plenn
  September 7th, 2016
  
  I have a condo and condo association will not get FHA Approval. I am interested in a Proprietary Reverse Mortgage.
  Reply to Barbara
  - Michael Branson
    September 7th, 2016
    
    Hello Barbara,
    Currently the proprietary jumbo reverse mortgage program will accept a non-FHA approved condominium with a minimum appraised value of $500,000. If you meet that requirement please feel free to request a quote from our website or call toll-free 800-565-1722.
    Reply to Michael
- Robert H.
  October 10th, 2022
  
  I'm looking for a non FHA reverse mortgage on my condo that is valued somewhere around $550,000.
  Reply to Robert
  - Michael Branson
    October 13th, 2022
    
    Hello Robert,
    
    There are non-FHA programs available for condominiums valued at or above $450,000 available in the marketplace. As you are aware, the rates have been higher due to the rising inflation over the last 9 months but that doesn't mean you can't still take advantage of the programs now.
    You will not get as much money because of the higher rates, but it's still your equity in the home so not accessing all of it now may still be to your benefit in the long run. You may be able to access enough of the equity to keep from having to make a more expensive move in a less advantageous market or possibly selling stocks in a down stock market. The costs for proprietary reverse mortgages are typically much lower since there is no FHA insurance.
    
    Like all reverse mortgages, there is never a prepayment penalty so the loan can always be repaid with a sale or refinance should you later decide to sell the condo or should lower rates become available later. The main thing to remember is that the programs are available and as with any other financial decision, we recommend that you discuss with your trusted financial advisor.
    Reply to Michael

NON-FHA REVERSE MORTGAGES.

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