HECM vs. jumbo reverse mortgage
When the FHA limit isn't enough
JP Dauber, NMLS# 386298
Reverse Mortgage Specialist
Last updated March 15, 2026
Start with the HECM unless you can't
For the vast majority of reverse mortgage borrowers, the FHA-insured HECM is the better product. Lower rates, government-backed non-recourse protection, the growing line of credit feature, and a program that's been tested and refined since 1988.
The 2026 lending limit of $1,249,125 covers most homes nationwide. Even if your home is worth more, that cap amount is used in the calculation — and you still get significant proceeds.
Side-by-side comparison
| Feature | HECM | Proprietary / Jumbo |
|---|---|---|
| FHA insured | Yes | No |
| Max home value | $1,249,125 (2026) | $4–5 million+ |
| Interest rates | Mid-5% to low-6% | High 8% to 9% |
| Upfront FHA insurance | 2% of home value | None |
| Non-recourse | FHA-guaranteed | Contractual (varies) |
| Line of credit growth | Yes | Typically no |
| Monthly payments | None | None |
| Age requirement | 62+ | 62+ (some programs 55+) |
| HUD counseling | Required | Not always required |
When a jumbo program makes sense
High-value home
If your home is worth $2 million+, the HECM cap leaves substantial equity untapped. A jumbo calculates based on the full value.
Non-FHA property
Some luxury homes, unique constructions, or non-FHA-approved condos qualify for jumbo programs but not the HECM.
Lower upfront costs matter
No FHA insurance premium (2% upfront) means lower closing costs — even though the ongoing rate is higher.
Why the rate difference matters so much
The 3–4 percentage point gap in interest rates has a compounding effect. On a $500,000 balance, the difference between 6% and 9% means about $15,000 more in interest per year. Over 15 years, that rate gap alone can add $200,000+ to the balance on a jumbo loan.
Use the HECM if your property qualifies
The rate advantage is significant. Only consider a jumbo when the HECM's lending cap genuinely limits your access to the equity you need.
When jumbo makes sense — and when it doesn't
For most homeowners, the HECM is the right choice — lower rates, stronger protections, and a growing credit line. The jumbo fills a specific gap for high-value homes where the FHA cap leaves too much equity on the table.
If you have a high-value property and aren't sure which direction to go, schedule a conversation. I can run estimates for both programs and show you the numbers side by side.