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.

Return of the Non-FHA Reverse Mortgages are Here!

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 FeaturesNon-FHAHECM Reverse Mortgage
Borrower Minimum Age5562
Maximum Lending Limit$4,000,000$1,149,825
Eligible PropertiesSingle Family (SRF), FNMA warrantable Condo, Townhome, 1-4 Units.Single Family (SRF), HUD Approved Condo, Townhome, 1-4 Units.
Lump Sum100%Limited*
Line of Credit 10 Year Draw Period Lifetime
Line of Credit Growth RateLimited to 7 YearsLifetime
Tenure Payment Plan NoYes
Low/No Closing CostsYesNo
Younger Spouse ProtectionNoYes
Use for Home PurchaseYesYes
*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.