A jumbo or proprietary reverse mortgage is a private reverse mortgage program that is not insured by FHA.
These programs are usually designed for homeowners with higher-value properties or for borrowers who do not fit neatly into the traditional HECM program.
The biggest difference is that the lender sets its own guidelines.
That means age requirements, loan amounts, property values, available proceeds, and underwriting rules can all be different from one lender to another.
For the right homeowner, a proprietary reverse mortgage can provide more flexibility than a HECM.
For someone else, the FHA-insured HECM may still make more sense.
The important thing is comparing the actual programs and numbers.
Who Might Consider a Jumbo Reverse Mortgage?
A proprietary reverse mortgage may be worth looking at if:
- Your home value is higher than the HECM lending limit
- You want access to more equity than a HECM may provide
- You are younger than 62
- You own a property type that may not fit standard HECM guidelines
- You want a program with different payout options
- You are comparing several reverse mortgage strategies
These programs can be especially useful for homeowners with high-value homes.
For example, someone with a home worth $2 million may be limited by the amount of home value that can be used in the HECM calculation.
A proprietary program may be able to use more of that value.
That does not automatically mean it is the better loan.
It simply means there may be another option worth comparing.
How Old Do You Have to Be?
This is one of the biggest differences between HECM and proprietary reverse mortgages.
A traditional HECM generally starts at age 62.
Some proprietary reverse mortgage programs may be available starting as young as age 55, depending on the lender and the state.
That can create an option for homeowners who want to access home equity but are not yet old enough for a HECM.
Not every proprietary program starts at 55, and not every program is available in every state.
The age requirement needs to be checked for the specific lender and program.
How Much Can You Borrow?
There is no one answer.
The amount available can depend on:
- Age
- Home value
- Existing mortgage balance
- Interest rates
- Program guidelines
- Property type
- State
- Loan structure
One proprietary lender may offer more proceeds than another.
Another lender may have a lower minimum age.
Another may be more comfortable with a certain type of property.
That is why these loans really need to be compared side by side.
Why High-Value Homeowners Look at Proprietary Programs
The HECM program has a maximum claim amount.
If the home is worth significantly more than that amount, the full property value may not be used in the HECM calculation.
That is where proprietary programs can become interesting.
For example, suppose a homeowner owns a $2.5 million home.
A HECM may still be an option, but the calculation does not simply use the entire $2.5 million value.
A proprietary program may be designed specifically for homes in that value range and may allow access to more equity.
That can make a big difference in the amount of proceeds available.
Can You Have an Existing Mortgage?
Yes, potentially.
Just like with a HECM, an existing mortgage does not automatically prevent someone from qualifying.
The current mortgage generally needs to be paid off as part of the reverse mortgage transaction.
Whether that works depends on how much the proprietary program makes available.
For example, if the home is worth $1.8 million and the existing mortgage is $300,000, there may be enough proceeds to pay off the mortgage and still leave additional funds available.
If the mortgage balance is much larger, the numbers may not work.
The actual calculation matters.
Do You Still Own the Home?
Yes.
The homeowner still owns the property.
The reverse mortgage is simply a loan secured by the home.
The lender does not become the owner of the property.
The homeowner remains responsible for:
- Property taxes
- Homeowners insurance
- HOA dues if applicable
- Maintenance
- Any other required property charges
That part is similar to a HECM.
Are Monthly Mortgage Payments Required?
Proprietary reverse mortgage programs are generally designed so there is no required monthly principal and interest mortgage payment.
However, the exact structure depends on the lender and program.
The borrower still needs to pay the ongoing costs of owning the property.
That includes taxes, insurance, maintenance, and other required charges.
How Are the Proceeds Received?
This varies by lender.
Depending on the program, proceeds may be available as:
- Lump sum
- Line of credit
- Monthly payments
- Combination of options
Some proprietary lenders offer more flexibility than others.
One lender may have a strong line-of-credit option.
Another may be better for a borrower who wants a larger amount at closing.
This is another reason I like to compare several programs rather than look at just one.
Proprietary Reverse Mortgage Line of Credit
Some proprietary reverse mortgage programs offer a line-of-credit option.
This can be useful for a homeowner who wants access to equity but does not need all of the money immediately.
The homeowner may be able to leave funds available and draw them later.
The specific growth features, access rules, and interest structure depend on the lender.
You should not assume that every proprietary line of credit works the same way as a HECM line of credit.
They are different products.
What Property Types May Qualify?
Property guidelines can vary quite a bit.
Depending on the lender, a proprietary reverse mortgage may be available for certain:
- Single-family homes
- Condominiums
- Townhomes
- High-value homes
- Properties that may not fit HECM guidelines
Some lenders may also be more flexible with certain property characteristics.
That said, every lender has its own rules.
If you have an unusual property, I would rather check the actual program than assume it will or will not qualify.
Are Condos Easier With Proprietary Reverse Mortgages?
Sometimes.
Certain proprietary programs may have different condo requirements than the HECM program.
That can be helpful if a condo project does not meet FHA requirements.
It does not mean every condo will qualify.
The lender will still review the property and the project.
But proprietary programs can sometimes create options that are not available through a traditional HECM.
What About Manufactured Homes?
This is more complicated.
Some proprietary lenders may allow certain manufactured homes, while others may not.
The age of the home, foundation, title, land ownership, and other property details may matter.
If the property is a manufactured home, I would always check the specific lender requirements before making any assumptions.
How Is a Proprietary Reverse Mortgage Different From a HECM?
There are several important differences.
Insurance
A HECM is insured by FHA.
A proprietary reverse mortgage is not.
Age
HECM generally starts at age 62.
Some proprietary programs may start at age 55.
Home Value
HECM calculations are limited by the FHA maximum claim amount.
Proprietary programs may be designed for much higher-value homes.
Guidelines
HECM follows FHA rules.
Proprietary lenders create their own underwriting and property guidelines.
Costs
Costs can be different.
Some proprietary programs may have lower upfront mortgage-insurance costs because there is no FHA mortgage insurance.
However, the interest rate and other fees may be higher.
The only way to know which loan is better is to compare the full transaction.
Is a Jumbo Reverse Mortgage More Expensive?
It can be.
Proprietary loans may have different interest rates and fees than HECMs.
A HECM includes FHA mortgage insurance.
A proprietary loan does not have FHA mortgage insurance, but that does not automatically make it less expensive.
The lender may price the loan differently.
I would never compare the two based on one fee.
You need to look at:
- Amount available
- Interest rate
- Closing costs
- Ongoing costs
- Loan structure
- How long you expect to keep the loan
- What you are trying to accomplish
Can Bad Credit Prevent You From Qualifying?
Possibly, but credit is not necessarily evaluated the same way as a traditional mortgage.
Proprietary reverse mortgage lenders have their own financial assessment and underwriting standards.
Some may be more flexible than others.
The lender may look at:
- Credit history
- Income
- Property tax history
- Existing debt
- Ability to pay property charges
- Overall financial situation
There is no single credit score requirement that applies to every proprietary reverse mortgage program.
Is Counseling Required?
That depends on the program and state.
HECM counseling is required for FHA-insured HECMs.
Proprietary reverse mortgage programs may have different counseling requirements.
Some lenders may still require counseling.
Others may require it depending on state law or borrower circumstances.
The exact requirement needs to be checked for the specific program.
What Happens When the Borrower Dies?
The loan generally becomes due when the last borrower dies, sells the property, or permanently leaves the home.
The heirs may have options.
They may be able to:
- Pay off the loan and keep the property
- Refinance the balance
- Sell the property
- Use another available option under the loan terms
Because proprietary loans are private programs, the exact non-recourse and heir protections can differ from HECM rules.
That is something I would want the borrower and family to understand before closing.
Can a Proprietary Reverse Mortgage Be Used to Purchase a Home?
Some proprietary programs may allow purchase transactions.
The structure can be similar to a HECM for Purchase.
The borrower brings in part of the purchase price and the reverse mortgage provides the rest.
Availability depends on the lender, age, property, state, and program guidelines.
Who Is a Proprietary Reverse Mortgage Best For?
It may make sense for someone who:
- Owns a high-value home
- Is between 55 and 61
- Wants access to more equity
- Does not fit the HECM property guidelines
- Wants to compare several reverse mortgage structures
- Has a larger existing mortgage that a HECM may not fully pay off
It can also be useful for a homeowner who simply wants to compare all available options before deciding.
When Might a HECM Be Better?
A HECM may still make more sense if:
- You qualify for enough proceeds
- You value FHA insurance
- You want a HECM line-of-credit structure
- The costs are more favorable
- Your property fits FHA guidelines
- You prefer a federally standardized program
There is no reason to assume proprietary is automatically better just because the home is valuable.
Sometimes the HECM still wins.
Sometimes the proprietary loan does.
The answer comes from comparing the numbers.
Simple Jumbo Reverse Mortgage Example
Suppose a homeowner is 67 years old.
The home is worth approximately $2 million.
There is a $250,000 existing mortgage.
The homeowner wants to eliminate the mortgage payment and have additional money available.
A HECM may provide one option.
A proprietary reverse mortgage may provide another.
Because the property value is well above the HECM maximum claim amount, a proprietary lender may be able to use more of the home’s value in the calculation.
That could result in more available proceeds.
Whether that makes it the better loan depends on the rate, costs, loan structure, and the homeowner’s goals.
Simple Age-55 Example
Suppose a homeowner is 58 years old.
The home is worth $900,000.
There is a $150,000 existing mortgage.
The homeowner is not old enough for a HECM.
However, depending on the state and available programs, a proprietary reverse mortgage may be available.
That could potentially allow the existing mortgage to be paid off without waiting until age 62.
Again, the actual numbers depend on the lender and program.
What Information Do I Need to See What Might Work?
You really only need a few basic pieces of information to get started:
- Age of the youngest borrower
- Approximate home value
- Current mortgage balance
- Property type
- State where the property is located
- What you are trying to accomplish
From there, I can compare whether a HECM, proprietary reverse mortgage, or another option may make sense.
Want to Compare Jumbo & Proprietary Reverse Mortgage Options?
If you own a higher-value home or are between ages 55 and 61, it may be worth looking at proprietary reverse mortgage programs.
You do not need to know which lender or program you want.
That is part of what I help with.
Tell me your age, approximate home value, current mortgage balance, and what you are trying to accomplish.
Then we can look at the available options and see whether a proprietary reverse mortgage makes sense.
Call or text Shawn at (714) 271-8524 or email Info@TheBroker.Finance to discuss your reverse mortgage options.
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This information is for educational purposes only and is not a commitment to lend. Proprietary reverse mortgage programs are private loan programs and may vary significantly by lender, state, age, property type, rates, costs, and current program availability.