HECM vs Proprietary Reverse Mortgage

A HECM is the FHA-insured federal reverse mortgage capped at the 2026 lending limit of $1,249,125 (HUD ML 2025-22); a proprietary (jumbo) reverse mortgage is a privately designed loan with no FHA insurance, built mainly to lend against home value above that limit. The two reach home equity through different structures: one federal and statutory, the other private and contractual.

A HECM is the federally insured Home Equity Conversion Mortgage, governed by HUD and backed by FHA insurance. A proprietary reverse mortgage, often called a jumbo, is a private program designed by an individual lender, not FHA-insured, and built mainly to lend against home value above the FHA limit. The two reach home equity through different structures: one federal and statutory, the other private and contractual. The matrix sets them side by side.

Last reviewed 2026-06-01

What can you fairly compare between a HECM and a proprietary reverse mortgage?

The HECM's core terms are fixed by federal rule and apply uniformly across every HUD-approved lender (HUD Handbook 4000.1): the 62-year age floor, the lending limit of $1,249,125 for 2026 case numbers (HUD ML 2025-22), the 2% upfront and 0.5% annual MIP, mandatory counseling, and a statutory non-recourse cap (12 USC §1715z-20). A proprietary program is designed by its lender, so its terms, age floor, loan cap, fees, and non-recourse provision, are set by that lender's contract and vary program to program. The figures below describe each structure in general terms; a specific proprietary program's parameters must be read from that program's own disclosure.

How do a HECM and a proprietary reverse mortgage compare side by side?

| Parameter | HECM (FHA-insured) | Proprietary (jumbo) reverse mortgage | |---|---|---| | Backed by | FHA insurance; governed by HUD (HUD Handbook 4000.1) | A private lender; not FHA-insured | | Minimum age | 62 for the youngest borrower (24 CFR §206.33) | Set by the lender's program; commonly lower, often 55, varies by state | | Lending limit | Maximum claim amount capped at $1,249,125 for 2026 (HUD ML 2025-22) | Lends against value above the FHA cap; some programs cap the loan around $4M | | Mortgage insurance | 2% upfront + 0.5% annual MIP funds the FHA guarantee (24 CFR §206.105) | No MIP; the insurance structure does not apply | | Non-recourse | Statutory; borrower/heirs owe the lesser of balance or 95% of value (24 CFR §206.125; 12 USC §1715z-20) | Contractual, under the lender's note; varies by program | | Counseling | HUD-approved counseling required before application (24 CFR §206.41) | Often required as a lender condition, not by federal statute | | Payout options | Lump sum, line of credit, tenure, term, combinations | Set by the program; many are lump sum or line of credit | | Line-of-credit growth feature | Yes; unused credit grows at the note rate plus 0.5% | Program-specific; not all proprietary programs offer it |

When does a HECM fit?

For a borrower whose home is at or below the FHA lending limit, the HECM is usually the stronger product. It carries statutory non-recourse, FHA-funded insurance that guarantees the credit line and payments even if the lender fails, mandatory counseling, and the line-of-credit growth feature, none of which a proprietary program is required to match. The cost is the MIP, but the MIP is what buys those protections. The full premium mechanics are in the MIP guide.

When does a proprietary program fit?

A proprietary reverse mortgage fits mainly when the HECM cannot reach enough of the home's value. On a home worth well above $1,249,125, the HECM ignores the value above the cap; a jumbo program can lend against it. A proprietary program may also admit a borrower younger than 62, where its program rules allow. The trade is that the federal protections, statutory non-recourse, MIP-funded insurance, the growth feature, are replaced by whatever the lender's contract provides, which must be read directly. The HECM vs jumbo guide covers which screen to start from.

When does neither a HECM nor a proprietary reverse mortgage fit?

A borrower who needs only a short-term draw, or who has monthly cash flow for a payment, may do better with a HELOC or a home equity loan. A borrower whose only pressure is the property-tax bill should look at a state deferral program. The alternatives guide covers the field.

How do you choose between a HECM and a proprietary reverse mortgage?

The row order is not a ranking. The rows that tend to decide the question are the lending-limit row and the non-recourse row: the limit decides whether the HECM can reach enough value, and the non-recourse row captures the difference between a statutory guarantee and a contractual one. Model the HECM side in the reverse mortgage calculator, and read any specific proprietary program's parameters from its own disclosure.

Related comparisons

Other reverse-mortgage comparisons that bear on the same decision:

• HECM vs jumbo reverse mortgage
• Fixed vs adjustable-rate reverse mortgage
• HECM vs HELOC

The full set is on the comparisons hub.

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