HECM vs. Proprietary Reverse Mortgages: Which Is Right for You?

Two Paths to Home Equity Access

If you're exploring reverse mortgages, you'll quickly encounter two primary product types: the HECM (Home Equity Conversion Mortgage) and proprietary reverse mortgages. Understanding the differences is essential to making the right choice for your situation.

HECM: The Government-Backed Standard

The HECM is the only reverse mortgage insured by the Federal Housing Administration (FHA). It accounts for the vast majority of reverse mortgages originated in the United States and comes with significant consumer protections.

Key HECM features:

• Minimum age: 62 years
• Loan limit: $1,209,750 (2024)
• Upfront MIP: 2% of home value
• Annual MIP: 0.5% of loan balance
• Required HUD counseling
• Non-recourse protection backed by FHA

The HECM is ideal for homeowners with homes valued at or below the FHA lending limit who want the security of government backing and the full suite of FHA consumer protections.

Proprietary Reverse Mortgages: For High-Value Homes

Proprietary reverse mortgages are private products offered by individual lenders. They're designed primarily for homeowners with high-value properties that exceed the HECM lending limit.

Key proprietary features:

• Minimum age: 55 in California (varies by lender)
• Loan amounts: up to $4 million or more
• No mortgage insurance premium
• Higher loan-to-value ratios for some programs
• Faster closing process in some cases

For homeowners with properties valued above $1.5 million, a proprietary program often provides significantly higher proceeds than a HECM.

Which Should You Choose?

The right choice depends on several factors:

In many cases, the decision is straightforward: if your home is worth more than $1.5 million, a proprietary program likely provides better value. If you're between 55 and 61, a proprietary program is your only option.

For homes in the $700K–$1.5M range, a detailed comparison of both options is warranted.

Get a Personalized Comparison

Every situation is unique. Contact us for a side-by-side comparison of HECM and proprietary programs based on your specific home value, age, and financial goals.