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

When most people hear “reverse mortgage,” they think of one product. In reality, there are two distinct types — and choosing the wrong one can mean leaving significant money on the table, or not qualifying at all. The difference between an FHA HECM and a proprietary reverse mortgage matters enormously, especially for California homeowners where high property values and the age-55 eligibility window make the comparison particularly important.

This guide explains both options clearly so you can walk into any conversation with a lender knowing exactly which product fits your situation.

What is an FHA HECM?

A Home Equity Conversion Mortgage (HECM) is the federally insured reverse mortgage program backed by the U.S. Department of Housing and Urban Development (HUD). It is by far the most common reverse mortgage in the country, accounting for the vast majority of all reverse mortgage transactions nationally.

Because it is government-insured, the HECM comes with standardized terms, federally mandated consumer protections, and a non-recourse guarantee — meaning you and your heirs will never owe more than the home is worth. It requires mandatory HUD counseling before closing, which is genuinely useful and not just a formality.

The 2026 HECM lending limit is $1,249,125. If your home is worth more than that, a HECM can only use $1,249,125 as the basis for calculating how much you can borrow.

What is a proprietary reverse mortgage?

A proprietary reverse mortgage — sometimes called a jumbo reverse mortgage — is a private loan product offered by individual lenders rather than through the FHA. Because it is not government-insured, lenders set their own guidelines, which creates both more flexibility and more variability between products.

Proprietary products were originally designed for high-value homes that exceeded the HECM lending limit. They have evolved significantly in recent years and now serve two main groups: homeowners with high-value properties who need access to equity above the HECM cap, and younger homeowners who do not yet meet the HECM minimum age of 62.

In California, proprietary reverse mortgages are available to homeowners as young as 55 — a seven-year head start on the federal HECM program that makes a meaningful difference for early retirees planning ahead.

HECM vs. proprietary: side-by-side comparison

Note: The “which wins” column is intentionally left blank — neither product universally wins. The right choice depends entirely on your specific situation.

When the FHA HECM is the better choice

Your home is valued under $1,249,125

For the majority of California homeowners outside of the most expensive coastal markets, the HECM is perfectly sufficient. If your home is worth $600,000, $800,000, or even $1.1 million, the HECM will calculate your borrowing limit on the full home value. There is no benefit to pursuing a proprietary product simply because it exists.

You are 62 or older and want maximum consumer protections

The HECM’s government backing provides consumer protections that proprietary products are not required to match — including the non-recourse guarantee, mandatory independent counseling, and standardized fee structures. For borrowers who value regulatory oversight and predictability, the HECM delivers peace of mind that private products cannot fully replicate.

You want a growing line of credit

The HECM line of credit has a unique feature not available on most proprietary products: the unused portion grows over time at the same rate as the loan’s interest rate. A $200,000 line of credit today can grow to $280,000 or more over a decade simply by remaining unused. This makes the HECM line of credit one of the most powerful retirement planning tools available to homeowners who want a financial safety net that expands as they age.

When a proprietary reverse mortgage is the better choice

Your home is worth more than $1,249,125

This is the clearest case for a proprietary product. If your San Diego, Los Angeles, or Coachella Valley home is worth $1.5 million, $2 million, or more, a HECM can only borrow against $1,249,125 of that value. A proprietary jumbo reverse mortgage can use the full appraised value as the basis for your loan, unlocking substantially more equity — sometimes hundreds of thousands of dollars more.

You are between 55 and 61 years old

The federal HECM program requires borrowers to be at least 62. If you are 55, 58, or 60 and want to access equity now — or set up a line of credit before you need it — a proprietary reverse mortgage is your only option in California. This is one of the most underutilized advantages available to California homeowners and one that Jay helps clients navigate regularly.

Your condo is not HUD-approved

HECM loans require condos to be in HUD-approved projects. Many California condo developments — particularly newer buildings and smaller complexes — do not have HUD approval. Proprietary reverse mortgages have more flexible property requirements and can often work in situations where a HECM cannot. If you own a condo, this distinction may determine which product is even available to you.

Can you use both?

In most cases you will use one or the other — not both simultaneously. However, some homeowners in specific situations use a proprietary product to access equity early (at age 55–61), then refinance into a HECM once they reach 62 if it becomes the more favorable product at that time. This is a planning strategy worth discussing with a specialist if you are in that age window.

What California homeowners should know

California’s real estate market makes the HECM vs. proprietary decision particularly consequential. Home values across San Diego County, greater Los Angeles, and the Coachella Valley frequently exceed the HECM limit — meaning a significant portion of California homeowners are better served by proprietary products than they realize.

The age-55 proprietary program is also uniquely valuable in California. Homeowners who retire early, face unexpected medical costs, or simply want to establish a financial safety net before 62 have options that simply do not exist in most other states.

Jay Zayer (CA DRE #01456165, NMLS #307713) works with California and Arizona homeowners on both HECM and proprietary products. The reverse mortgage calculator at https://www.reversemortgage.coach/calculator gives you an initial estimate for either product type based on your age and home value.

Frequently asked questions

Is a proprietary reverse mortgage safe?

Yes, when obtained through a reputable licensed lender. While proprietary products lack FHA insurance, California state law regulates them and requires specific consumer disclosures. Working with a licensed specialist — rather than directly with a single lender — helps ensure you are comparing products fairly and understanding the terms.

Are interest rates higher on proprietary reverse mortgages?

They can be, but not always. Because proprietary lenders set their own rates and compete for business, the rate landscape varies. In some cases, proprietary rates are competitive with HECM rates — particularly on jumbo products where lenders are actively pursuing high-value borrowers. Always compare multiple products before deciding.

Can I switch from a proprietary reverse mortgage to a HECM later?

Yes. This is called a reverse mortgage refinance. If you took a proprietary product at age 57 and want to refinance into a HECM at 63, that is possible — subject to current eligibility requirements and whether the numbers make sense at that time. Jay can walk you through the refinance analysis if you are considering this path.

Which product does Jay recommend?

Neither universally. The right product depends on your age, home value, goals, and which programs you qualify for. Jay works with both HECM and proprietary products and has no financial incentive to recommend one over the other — the recommendation is always based on what fits the client’s specific situation best.

Ready to find out which product fits your situation?

The HECM vs. proprietary decision is one of the first things Jay works through with every new client. It takes about 10 minutes and completely changes the numbers you’re working with. A free 30-minute strategy call gives you a clear picture of which product you qualify for, what you can access, and which direction makes the most sense for your retirement.

About the author

Jay Zayer is a licensed reverse mortgage specialist serving homeowners 55+ throughout California and Arizona. Licensed with the California Department of Real Estate (DRE #01456165, #01450361), NMLS #307713, and Arizona (#1022722), Jay has guided hundreds of homeowners through HECM and proprietary reverse mortgage transactions. His approach is straightforward: clear answers, zero pressure, and a plan built around your retirement goals.

Learn more about Jay →

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 does not constitute financial or legal advice.