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Jumbo Reverse Mortgages in 2023: Rates, Requirements, and Benefits

If you're considering a reverse mortgage, you may be wondering about the different types available. While the Federal Housing Administration's (FHA) Home Equity Conversion Mortgage (HECM) program is a popular choice, there are also non-FHA reverse mortgages known as proprietary or jumbo reverse mortgages.

What are jumbo reverse mortgages, you ask? Well, these programs offer loan amounts that exceed the FHA's lending limit, which is currently set at $1,089,300. This can be a great option for homeowners with high home values who need access to more funds.

Jumbo reverse mortgages are particularly popular in states like Florida, where home values tend to be higher than the national average. These programs offer more borrowing potential than the average HECM loan amount and can be a good fit for qualifying homeowners.

It's important to keep in mind that jumbo reverse mortgages aren't backed by the government like HECM loans, so you'll want to do your due diligence and research different options.

Speaking with a licensed reverse mortgage professional can also help you determine if a jumbo reverse mortgage is the right choice for you.

Jumbo vs FHA-Insured (HECM) Reverse Mortgages

One of the biggest benefits of jumbo reverse mortgages is that they can offer features not available through HECM loans. For example, some private reverse mortgage programs have a lower minimum borrower age than the HECM's minimum age of 62.

Additionally, jumbo reverse mortgages may allow borrowers to take out the full amount of a lump sum payment upfront with fewer restrictions than under the HECM program. They may also allow borrowers to borrow from a non-FHA-approved condo unit.

Another key difference between jumbo and HECM loans is that jumbo reverse mortgages do not require a mortgage insurance premium, which is a cost that applies to all HECM loans.

That said, jumbo reverse mortgages are very similar to HECM loans in many respects. They generally require reverse mortgage counseling, offer different disbursement options such as a lump sum or a jumbo line of credit, and allow borrowers to tap into their home equity while they continue to live in the home.

Jumbo vs HECM Product Comparison

When comparing jumbo reverse mortgages to HECM reverse mortgages, there are several key differences to consider. While HECM loans require borrowers to be at least 62 years old, jumbo reverse mortgages may be available to those as young as 55.

Additionally, the maximum lending limit for a jumbo reverse mortgage can be as high as $4 million, while HECM loans are limited to a maximum of $1,089,300.

Jumbo reverse mortgages may also be available for a wider range of property types, including single-family homes, FNMA warrantable condos, townhomes, and 1-4 unit properties.

When it comes to payment options, jumbo reverse mortgages offer a lump sum payment option of 100% of the loan amount, while HECM loans may have restrictions on the amount of a lump sum payment.

However, HECM loans offer a lifetime line of credit option, whereas jumbo reverse mortgages typically offer a 10-year draw period with a limited line of credit growth rate.

Other factors to consider include whether the loan offers a tenure payment plan, whether it has low or no closing costs, and whether it includes protection for a younger spouse. Both jumbo and HECM loans can be used for home purchases.

2023 Jumbo Reverse Mortgage Interest Rates

The information provided in this table is for illustrative purposes only and is subject to change without notice.

The actual interest rates and loan-to-values for jumbo reverse mortgages may vary based on several factors, including the borrower's age, creditworthiness, and the lender's policies.

It is essential to consult with a reputable lender or financial advisor to discuss the available options and determine the best fit for your specific financial situation.

Borrower Age Fixed Rate LTV Current Rates
62 29.6% 5.950% (6.125% APR)
65 32.6% 5.950% (6.125% APR)
70 35.9% 7.125% (7.250% APR)

Unique Benefits of Jumbo Reverse Mortgages

One of the most significant benefits of a jumbo reverse mortgage is the increased lending limit that allows homeowners to access a larger amount of their home equity.

This is especially helpful for those who live in areas where home values tend to be higher than the national average.

With a lending limit of $4 million or more, jumbo reverse mortgages can provide greater flexibility and enable homeowners to access more loan proceeds compared to the HECM program.

Of course, the exact amount will depend on various factors like the borrower’s age, interest rates, and home value.

Nevertheless, the ability to maximize loan proceeds can help homeowners achieve their financial goals and maintain a comfortable lifestyle in retirement.

The Risks and Rewards

Jumbo reverse mortgages offer a variety of rewards and risks to borrowers. One key benefit is the borrower protections that come with the loan, including the non-recourse feature and potential non-borrowing spouse protections.

Additionally, jumbos allow for immediate access to the full loan proceeds and higher loan amounts, making them an attractive option for those with significant home appreciation.

However, jumbo reverse mortgages do not carry the same borrower protections as HECMs since they lack FHA insurance. This lack of protection could put borrowers at risk, so it's crucial to understand the loan terms and protections offered by the lender.

Additionally, accessing home equity through a jumbo reverse mortgage could impact the amount of inheritance passed on to heirs, but any remaining equity after the loan is paid off can still be passed on to designated heirs.

As with any financial decision, it's essential to weigh the rewards and risks of a jumbo reverse mortgage carefully.

Reverse Mortgage text written on wooden blocks lying on a table

Frequently Asked Questions

We’ve compiled a list of our readers' most asked questions about jumbo reverse mortgages so you can make an informed decision about whether they make sense for your unique situation.

What is a jumbo reverse mortgage?

The jumbo reverse mortgage is a unique financial tool that can help retirees and older adults access the equity in their homes.

Compared to the federally insured HECM, the jumbo reverse mortgage offers larger loan amounts, making it a great option for those who have a high-valued home.

The HECM loan stops considering home values over the HUD lending limit of $1,089,300, while a jumbo reverse mortgage allows borrowers to consider home values up to $10 million, depending on the lender's terms and conditions.

By accessing the equity in their homes, older adults can receive a lump sum, line of credit, or monthly payments that can help improve their financial situation during retirement.

However, it's important to understand that jumbo reverse mortgages are not federally insured like HECM loans, and borrowers must carefully review the loan terms and protections offered by their lender.

What lenders offer jumbo reverse mortgages?

Jumbo reverse mortgages are becoming increasingly popular across the US, with a growing number of lenders and brokers offering jumbo loan options to borrowers.

At MakeFloridaYourHome, we recognize the importance of having a range of options available to meet the unique needs and circumstances of each individual borrower.

That's why we offer a wide variety of reverse mortgage options, including HECM, jumbo, and proprietary options.

Our team of experienced professionals is dedicated to helping you find the right loan program that best fits your financial situation and goals. We are committed to providing personalized service and guidance every step of the way.

How much can you get from a jumbo reverse mortgage?

Jumbo reverse mortgages provide homeowners with the opportunity to access a portion of their home equity based on their age and the current interest rate environment.

The loan amount available is calculated as a percentage of the home's value, with the percentage varying based on the age of the youngest borrower. In general, the older you are, the more you can receive from a jumbo reverse mortgage.

This is because these loans are based on actuarial tables that predict life expectancy, and the longer you are expected to live, the less risk the lender takes on.

It's important to note that the exact loan amount will also depend on other factors, such as the specific terms of the loan and any associated fees.

It's always a good idea to consult with a lender or financial advisor to determine how much you can expect to receive from a jumbo reverse mortgage.

Can you get a Jumbo reverse mortgage line of credit?

Certainly! As we look ahead to 2023, we can expect some exciting new developments in the jumbo reverse mortgage market.

Firstly, we can expect to see an increase in the lending limit for jumbo reverse mortgages, allowing eligible borrowers to access even more of their home equity.

Additionally, jumbo reverse mortgages will now offer an open line of credit option, which allows borrowers to access their available loan proceeds as needed, rather than being required to take a lump sum upfront.

This can provide borrowers with greater flexibility in managing their finances and accessing their home equity.

These expansions demonstrate the continued evolution and innovation of the jumbo reverse mortgage market to better meet the needs of eligible borrowers.

What is the difference between jumbo and proprietary loans?

The main difference between jumbo and proprietary loans lies in the loan amount offered. "Jumbo" simply means a large loan amount, whereas proprietary loans are specific to a particular lender. While jumbo reverse mortgages are always proprietary, not all proprietary loans are jumbo.

Proprietary loans can be offered for home values as low as $450,000, while jumbo loans are typically for high-value homes that exceed the HUD lending limit of $1,089,300.

It's important to note that both jumbo and proprietary loans have unique features and qualifications, so it's essential to consult with a trusted advisor to determine which option is best for your specific needs.

Are jumbo reverse mortgage rates fixed or adjustable?

Jumbo reverse mortgages come with two types of interest rates - fixed and adjustable. With fixed-rate loans, the interest rate stays the same throughout the life of the loan, providing borrowers with financial stability and peace of mind.

On the other hand, adjustable-rate loans have rates that can change according to the terms of the loan. This type of loan can be beneficial if the borrower doesn't need all the proceeds upfront and prefers to have a line of credit that they can draw from as needed.

It's essential to discuss with your lender which option is best for your unique financial situation and goals. Keep in mind that with adjustable-rate loans, there's always the possibility that the interest rate may increase, which can lead to higher monthly payments.

Bottom Line

Jumbo reverse mortgages offer a fantastic way for homeowners to access the equity in their high-value homes, allowing them to remain in their homes and maintain their financial security.

With the recent changes in 2023, jumbo reverse mortgages have become even more attractive, offering larger loan limits and the ability to utilize available proceeds as an open line of credit option.

Additionally, many jumbo reverse mortgages carry borrower protections similar to those offered under the HECM program, making them a safe and reliable option for those looking to access their home equity.

Ultimately, jumbo reverse mortgages are an excellent option for those with high-value homes who are looking to access their equity in retirement.

With the recent expansions in loan limits and line of credit options, jumbo reverse mortgages are an attractive choice for those looking to supplement their retirement income.

If you're considering a jumbo reverse mortgage, it's essential to do your research, consult with trusted advisors, and find a lender who can help guide you through the process like MakeFloridaYourHome.

With the right planning and support, a jumbo reverse mortgage can help you enjoy your retirement with greater financial security and peace of mind.

With over 50 years of mortgage industry experience, we are here to help you achieve the American dream of owning a home. We strive to provide the best education before, during, and after you buy a home. Our advice is based on experience with Phil Ganz and Team closing over One billion dollars and helping countless families.

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