Are There Different Types of Reverse Mortgages?

HUD confirms that HECM is the federally insured reverse mortgage program, while proprietary reverse mortgages follow private lender guidelines, which is why choosing the right type depends on age, home value, and planning goals.

Type 1: HECM - The FHA-Insured Reverse Mortgage

The Home Equity Conversion Mortgage (HECM) is the only reverse mortgage insured by the Federal Housing Administration (FHA). It is the most widely used reverse mortgage program in the country and comes with strong consumer protections.

Key HECM features:

� Minimum age: 62

� 2026 lending limit: $1,249,125

� Backed by FHA mortgage insurance

� Requires mandatory HUD-approved counseling

� Non-recourse: you never owe more than the home's appraised value

� Multiple payout options: lump sum, monthly payments, line of credit, or combination

� Unused line of credit grows over time

The HECM is the right fit for most borrowers 62 and older whose home value falls within the lending limit.

In my experience working with homeowners in San Diego, the type decision usually becomes clear when we compare proceeds and flexibility side by side instead of debating labels. A client I worked with in Carlsbad recently saw a projected difference of more than $120,000 between HECM and proprietary options and said that single comparison ended weeks of uncertainty. After 15 years of doing this in California and Arizona, I can tell you structure fit matters more than brand familiarity.

Type 2: Proprietary Reverse Mortgages

Proprietary reverse mortgages are private programs offered by individual lenders. They are not backed by FHA and are not subject to HECM limits - which makes them especially valuable for California homeowners.

Key proprietary features:

� Minimum age: 55 in California (varies by lender)

� No federal lending limit - can access equity on homes valued at $2M, $3M, or more

� Designed for high-value properties that exceed the HECM cap

� Regulated by California state law

� May have different fee structures than HECM

In California's high-value real estate markets - San Diego, Los Angeles, the Coachella Valley, and coastal communities - proprietary products are often the better fit, especially for homeowners with homes valued above $1,249,125.

HUD publishes the annual HECM maximum claim amount table, which is why homeowners above the program cap often evaluate proprietary options for higher accessible proceeds.

Separately from choosing HECM versus proprietary, homeowners who want to keep an existing low-rate first mortgage can sometimes use a Reverse 2nd recorded as a second lien instead of refinancing the whole loan.

HECM vs. Proprietary: Which Is Right for You?

The right choice depends on your age, home value, and goals:

� Age 62+ with a home valued under $1,249,125 ? HECM is often the stronger choice due to federal protections and competitive terms

� Age 55-61 ? HECM is not available; proprietary is your only reverse mortgage option

� Home value above $1,249,125 ? Proprietary can access significantly more equity than HECM

� California condo owner ? Proprietary often has more flexible eligibility requirements

What About Single-Purpose Reverse Mortgages?

A third, lesser-known type exists: single-purpose reverse mortgages, offered by some state and local government agencies and nonprofits. These are restricted to a specific use - typically home repairs or property tax payments - and are only available to low-to-moderate income homeowners. They are less common and more limited than HECM or proprietary options.

California-Specific Considerations

California is one of the best states in the country for reverse mortgage flexibility, primarily because:

� Proprietary programs start at age 55, giving early retirees access years earlier than the federal minimum

� High home values mean many California homeowners can access significantly more equity through proprietary programs

� California has strong state-level consumer protections for reverse mortgage borrowers

Frequently Asked Questions

Is a HECM safer than a proprietary reverse mortgage?

Both are regulated products. HECMs carry FHA insurance and federal consumer protections. Proprietary products are regulated by California state law. Working with a licensed specialist who represents multiple programs ensures you see the full picture.

Can I switch from a proprietary to a HECM later?

Once you reach age 62, you may have the option to refinance into a HECM if the terms are more favorable. This should be evaluated on a case-by-case basis.

This material is not from HUD or FHA and has not been approved by HUD or any government agency. All reverse mortgage loans are subject to credit and property approval. Terms and conditions may apply. This content is for educational purposes only and is not financial, tax, or legal advice.