Are you considering a reverse mortgage, and perhaps you’re curious about the distinctions between a “HECM” and a proprietary reverse mortgage?

In this overview, you’ll learn about the following:

  • What is a proprietary reverse mortgage?
  • When is it better than a Home Equity Conversion Mortgage (HECM)
  • What are the qualifications?
  • How do the costs compare to a HECM?

ARLO teaching proprietary reverse mortgage

Types of Reverse Mortgage Products

  • ‘Regular’ reverse mortgage (HECM)
  • Proprietary reverse mortgages (Non-FHA)
  • Jumbo reverse mortgages – explicitly designed for high-value homes

What is a proprietary reverse mortgage?

When looking over the options to tap into your home’s equity through a reverse mortgage, some companies may offer “proprietary” reverse mortgages.  Naturally, this could lead you to ask yourself the fundamental differences between this and the regular reverse mortgages you hear about online and see in TV commercials.

The proprietary reverse mortgage provides the same basic concept of tapping into your home’s equity in several ways.  This can be either good or bad, depending on your situation.  Still, it takes the government out of the equation.

For instance, while the money you could receive in loan proceeds could be much higher than a regular reverse mortgage offer, the loan also lacks government protection.  It instead solely relies on the rules of the lender.

What is a “HECM” reverse mortgage?

The traditional reverse mortgage, known as a Home Equity Conversion Mortgage (HECM), allows a senior homeowner at least 62 years of age to borrow against the value of their home.  Receiving that loan proceeds through regular payments, a single lump sum, a home equity line of credit, or sometimes a combination of more than one.

The United States government federally insures these regular reverse mortgages and acts as non-recourse loans.  The amount a borrower will owe when the loan comes due can never exceed the home’s value at the time of sale.

Because these reverse mortgages are government-insured, the government places certain restrictions on the loan’s conditions that must be met if the loan is to be approved by the agency that oversees it, in this case, the Federal Housing Administration (FHA).

One of those limits is the amount of money that can be loaned through a HECM reverse mortgage, which, as of 2024, is capped by the agency at $1,149,825.

Government-insured reverse mortgages are regulated by the Department of Housing and Urban Development, which sets boundaries on how much money a borrower can receive from the loan proceeds while also requiring potential borrowers to go through mandatory counseling so that they know all the facts surrounding this product before entering it.

What are the qualifications of proprietary reverse mortgages?

The qualifying amount of loan proceeds is still, like a regular reverse mortgage, based on the home’s appraised value. 

However, because these loans aren’t restricted by the limits on proceeds that the government places on regular reverse mortgages, proprietary reverse mortgages can have much higher limits that can stretch, for some homes, into millions of dollars.

Therefore, these reverse mortgage types are sometimes called jumbo reverse mortgages,” as most borrowers tend to be seniors with home values that can be worth more than the government’s limit and sometimes well beyond it.

Why bother with a HECM if I can get more money from a proprietary program?

Your decision should take several considerations into account.  For most people, the amount of money they can get from a loan is a primary factor.  For instance, since Mortgage Insurance is not required for a proprietary reverse mortgage, lenders can charge higher interest rates and typically offer lower loan-to-value ratios than HECMs.

It is likely a good idea for potential borrowers to learn as much as possible through the required counseling that often comes with traditional and proprietary reverse mortgages before entering into a transaction.  Counseling helps minimize the possibility of being fiscally blindsided later by something a borrower may have yet to consider in the planning phase.

While traditional HECM reverse mortgages require counseling by law, most proprietary options have chosen to mimic the HECM in requiring counseling even if lenders aren’t legally compelled to do it.



HECM vs. Proprietary

Government HECMProprietary
2024 Lending Limit$1,149,825$4,000,000
Payout OptionsLump Sum
Line of Credit
(Guaranteed for life)
Lump Sum
Line of Credit (Maximum 10 year draw period)
Lump Sum LimitationsYES - 60% of available proceeds within first 12 monthsNO
Mortgage InsuranceYes - 2% Upfront and .50% ongoing NO
Line of Credit Guaranteed Growth RateYESMax 7 Years
Non Recourse YESYES
Property Types Single Family Residence, FHA Approved Condo, PUD, 2-4 UnitsSingle Family Residence, FNMA Warrantable Condo, PUD, 2-4 Units
Special Approval for CondominiumYESNO


Jumbo Reverse Mortgage Rates

Fixed RateAdjustable RateLending Limit
9.375% (9.869% APR)11.745% (6.625 Margin)$4,000,000
9.740% (10.268% APR)11.870% (6.750 Margin)$4,000,000
9.990% (10.542% APR)11.995% (6.875 Margin)$4,000,000
Fixed Rate Payment Options: Lump Sum
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

Like any mortgage, compare!

Interest rates and fees for any reverse mortgage should be compared when shopping around.  Look at the rates and closing costs compared to those found in traditional reverse mortgage loans to increase the likelihood of entering a situation that most benefits you.

If you’re entertaining the idea of a reverse mortgage but are reasonably sure that your home’s value is under the HECM lending limit of $1,149,825, take a closer look at traditional government-insured options and all the other associated expenses.

You can also take advantage of our reverse mortgage calculator, which can help you shop for the best rates and products to find one that fits your financial situation best.

Talking with your trusted friends and family while deciding on a reverse mortgage is also a good idea.  Every individual borrower can have a very different situation.  Those closest to you can offer more personalized advice before signing the dotted line.

Top FAQs


What is a proprietary reverse mortgage?

A proprietary reverse mortgage is a type of loan product not insured by the Federal Housing Administration (FHA) and is offered by private lenders.  Unlike traditional reverse mortgages, which are designed for homeowners who are 62 years of age or older, proprietary reverse mortgages are often available to borrowers with high home values and are available to borrowers as young as 55.

When is a proprietary reverse mortgage better than a HECM?

Several instances exist when a proprietary reverse mortgage can be better for a borrower than a HECM loan.  Most often, it is due to the property value.  The current limit for 2024 for value on a HECM loan is $1,149,825, and there is no limit on the value for these loan programs.  Proprietary programs can have loan amounts as large as $4 or $5 million.  Other instances include property types not eligible for FHA and underwriting guidelines that differ from FHA.

Is there mortgage insurance on a proprietary reverse mortgage?

No.  The government does not insure these reverse mortgage types; therefore, no mortgage insurance premiums are required.

Do proprietary reverse mortgages have higher closing costs than a HECM?

In most instances, the answer is no because no mortgage insurance premiums exist.  While most proprietary loans have significantly lower costs than a HECM loan, there are rare instances where the costs would be higher.  Those instances only occur at very high property values.

Do proprietary reverse mortgages have higher interest rates than a HECM?

On average, yes.  As of January 2024, HECM programs have rates from the mid-6 % to low 7% range.  Proprietary programs have rates from 9% to the mid-11 % range.  The lower the rate, the lower the loan-to-value you can borrow.`

Is the proprietary reverse mortgage program available in Texas for borrowers under 62?

Proprietary programs are available in Texas, but Texas law requires borrowers to be at least 62 to be eligible for a reverse mortgage.

Is a proprietary reverse mortgage Non-FHA?

Yes, a proprietary reverse mortgage is Non-FHA.  Unlike FHA-insured reverse mortgages, HUD does not insure jumbo or proprietary reverse mortgages.  However, they offer similar features, such as no mortgage payment requirements and a non-recourse clause, which means borrowers or their heirs will not owe more than the home is worth when the loan is repaid.

Can I rent rooms as an Airbnb if I have a proprietary reverse mortgage?

The documents for a jumbo or proprietary program are written by the investor who offers the program and, therefore, could be different.  You cannot use the property for transient purposes on the HECM program.  Therefore, I recommend you carefully review your documents to see what they say.  Remember, your lender only has the authority or power you granted them when you agreed to the loan terms and signed the documents.

Does a proprietary reverse mortgage need to have HUD approval for my condo?

You may apply for proprietary programs if your property value is $450,000 or higher.  These programs typically have more streamlined approval processes and require less documentation.  For example, the underwriting for the Platinum Reverse Mortgage only requires the condominium to meet FNMA warrantable guidelines.  However, an HOA questionnaire must still be completed and returned by the HOA as part of the process.