Reverse mortgages have become a bigger part of retirement planning lately. Total reverse mortgage loan volume rose 54%, from $6.25 billion in 2023 to $9.65 billion in 2025, according to NRMLA's market growth report. This guide breaks down HECMs, proprietary (jumbo) loans, and single-purpose reverse mortgages, plus how to choose between them.
Key Takeaways
- Choose among three main types: HECM, proprietary (jumbo), and single-purpose
- HECMs are federally insured and most common; proprietary loans fit higher-value homes
- Single-purpose loans cost the least but restrict how you spend the money
- Your best option depends on home value, age, and financial goals
- Compare all three options side by side with a loan officer before you decide
What Is a Reverse Mortgage?
A reverse mortgage flips the traditional mortgage relationship. Instead of paying a lender every month, the lender pays you — using your home's equity as collateral.
Repayment isn't due immediately. It's deferred until you sell the home, move out permanently, or pass away. At that point, the loan balance (plus accrued interest) gets settled, usually through the home's sale.
Not every reverse mortgage works the same way, though. They differ based on who backs the loan, how much you can borrow, and what you're allowed to use the money for.
Why Understanding Reverse Mortgage Types Matters
Choosing the wrong type isn't just a minor inconvenience. It can mean:
- Missing out on a larger payout you'd qualify for elsewhere
- Paying mortgage insurance premiums you didn't need to pay
- Locking your funds into a single approved use when you needed flexibility
Homeowners with high-value properties often default to a standard HECM without realizing it caps their available loan amount. A proprietary loan could unlock significantly more equity in that scenario.
A knowledgeable loan officer can walk through those tradeoffs before you commit. At Excel Mortgage Services, homeowners get guidance matched to home value, age, and goals so the loan type fits the outcome they need.
Types of Reverse Mortgages
Reverse mortgages aren't interchangeable. The right choice depends on your home's value, your age, and how you plan to use the funds.
Home Equity Conversion Mortgage (HECM)
The HECM is the FHA-insured, HUD-regulated reverse mortgage most homeowners picture when they hear "reverse mortgage." It's available to owners 62 and older with substantial home equity.
How disbursement works:
- Lump sum at closing
- Ongoing monthly payments
- A line of credit you draw from as needed
- Or a combination of the above
HECMs require HUD-approved counseling before closing, giving borrowers an independent review of their options.
What sets it apart: Federal backing includes a non-recourse clause, meaning you (or your heirs) never owe more than the home is worth at repayment. Lending limits are also standardized nationwide.
Best for: Most eligible homeowners 62+ whose home value falls within FHA limits and who want unrestricted use of funds.
Limitations: HECMs carry mortgage insurance premiums, and loan amounts are capped at the FHA's maximum claim amount, currently $1,209,750 for 2025, per HUD's HECM maximum claim amount table. Homeowners with equity beyond that cap may want to look at proprietary options instead.
Proprietary (Jumbo) Reverse Mortgages
Proprietary reverse mortgages are privately funded, with no FHA insurance involved. They're built for higher-value homes that exceed HECM limits.
Some lenders extend eligibility down to age 55, though minimum ages vary by state. Loan amounts can reach into the millions, depending on the lender and property value.
What sets it apart:
- No mortgage insurance premiums (lower closing costs)
- Higher borrowing limits than a HECM
- More flexible eligibility on age and property type
- Fewer federally standardized borrower protections
Best for: Homeowners with high-value properties above FHA limits, or younger homeowners not yet eligible for a HECM.
Limitations: Rates, terms, and protections vary by lender since there's no federal standardization. It pays to compare offers carefully rather than assume one proprietary product mirrors another.
Proprietary loan volume has grown fast, from $1.1 billion in 2023 to $3.8 billion in 2025, a 245% jump, per NRMLA's market data. More high-value homeowners are discovering this option exists.
Single-Purpose Reverse Mortgages
Single-purpose reverse mortgages come from nonprofits or state and local government agencies. They're the least common type, and for good reason: funds are restricted to one approved use.
Typical approved uses:
- Home repairs
- Accessibility upgrades
- Overdue property taxes
What sets it apart: This is the lowest-cost reverse mortgage option, but that savings comes with a tradeoff: you can't use the money for general expenses like a HECM or proprietary loan allows.
Best for: Lower-income homeowners facing a specific, defined expense who don't need broad access to their equity.
Limitations: Availability varies by state and agency, so not every homeowner will find a program near them. Funds also can't be repurposed once approved for their stated use.
How to Choose the Right Type of Reverse Mortgage
The "right" type isn't the most popular one. It's the one that matches your specific situation. Consider these factors:
- Home value relative to FHA limits — Above $1.2 million? A proprietary loan may unlock more equity.
- Age of the youngest borrower — 62+ for HECM; some proprietary products allow 55+.
- Purpose of funds — General use versus a specific expense like property taxes or repairs.
- Comfort with insurance premiums — HECM MIP versus private loan terms and fees.
- Long-term plans to stay in the home — This affects which payout structure makes sense.
These factors interact, so compare options against your real numbers—not a one-size-fits-all product ranking.
Chris Bonnema at Excel Mortgage Services helps homeowners across California, Arizona, Texas, Oregon, and Florida compare reverse mortgage options using your home value and goals, not generic assumptions.
What to Check Before Finalizing Your Reverse Mortgage
Before signing anything, run through this checklist:
- Don't default to a jumbo loan if a lower-cost HECM would meet the same needs. Bigger isn't automatically better
- Confirm non-recourse protections apply to your specific loan type; this detail matters for what your heirs might owe
- Compare total costs across lenders, including origination fees, servicing fees, and closing costs
- Complete HUD-approved counseling before finalizing, even for loan types where it isn't strictly required. It's a free second opinion on a major financial decision
Frequently Asked Questions
What are the three types of reverse mortgages?
The three main types are HECM (Home Equity Conversion Mortgage), proprietary (jumbo), and single-purpose reverse mortgages. Each serves different needs based on home value, age, and how funds will be used.
How much money do you actually get from a reverse mortgage?
Payout depends on your age, home value, current interest rates, and the loan type you choose. Getting a personalized estimate from a loan officer is the most reliable way to know your actual number.
What is a proprietary reverse mortgage?
It's a privately funded reverse mortgage for higher-value homes, not insured by the FHA. It's often called a jumbo reverse mortgage because of its higher borrowing limits.
Can I lose my home with a HECM loan?
You keep the title as long as you meet your loan obligations, including paying property taxes and homeowners insurance and maintaining the home.
Who is not eligible for a reverse mortgage?
Common disqualifiers include being under the program's minimum age, having insufficient home equity, or carrying delinquent federal debt like unpaid taxes or defaulted student loans.
What is the best age to take a reverse mortgage?
Older borrowers generally receive larger payouts because principal limits factor in age. The right timing still depends on your financial needs and long-term plans, not just payout size.
