Jumbo Reverse Mortgage and Proprietary Reverse Mortgage Loans
JUMBO reverse mortgages – also known as proprietary reverse mortgages – are loans designed and offered by financial institutions that enable owners of high-value homes, who are 55 and older, to access greater amounts of their home equity than is available from the government insured HECM reverse mortgages. And, these proprietary offerings include some additional benefits that should be considered before deciding how to best access home equity.
Types of Reverse Mortgage Loans
Currently, the most widely available kind of reverse mortgage available is the Home Equity Conversion Mortgage (HECM) family of loans. These loans are regulated and insured by the federal government and managed by the Department of Housing and Urban Development (HUD). HECM reverse mortgages are available as a fixed rate or variable rate product, and can be accessed as a lump sum, monthly drawdown, or line of credit.
The availability of the JUMBO reverse mortgage has increased over recent years. Several lenders offer their own versions of the JUMBO reverse mortgage product, each with their own guidelines for loan values, costs and underwriting guidelines.
Loan Limits and Jumbo Reverse Mortgages
The maximum loan amount on a traditional HECM reverse mortgage used to be as low as $200,000. The loan limit was increased to $636,150 on January 1, 2017. Most recently, it was raised to $970,800, effective January 1, 2022.
The HECM product could not offer higher loan amounts because they were legislated with loan limits – they could not lend more than pre-specified amounts. In fact, the HECM product was originally designed specifically for low and medium value properties.
In the current market, homeowners aged 55 and above, with homes valued up to $8 million may be eligible to access their home equity with loan proceeds topping out near $6 million through a jumbo reverse mortgage.
Other options for owners of high-value homes seeking access to their home equity include home equity loans, home equity lines of credit, other personal loans secured by the home value, mortgage refinance and downsizing.
Please see these additional articles about Jumbo Reverse Mortgages