Home Equity Conversion Mortgage (HECM)
A HECM (pronounced heck-um) is the most common type of reverse mortgage in the U.S. It was created by the federal government and is regulated by the U.S. Department of Housing and Urban Development (HUD).
A HECM is not a government loan. The loan comes from a private mortgage lender, but it is insured by the Federal Housing Administration (FHA), which is part of HUD.
At closing, borrowers pay a Mortgage Insurance Premium (MIP) equal to 2% of the home’s appraised value or the FHA lending limit ($1,249,125), whichever is less. There is also an annual insurance premium of 0.5% of the loan balance, which is added to the amount owed over time.
This insurance protects borrowers in two important ways:
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If the lender is ever unable to make scheduled payments, FHA steps in.
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If the home is sold and the value is not enough to repay the loan, FHA insurance covers the difference—borrowers or heirs never owe more than the home’s value.
Most reverse mortgages in the U.S. today are HECMs. These loans follow strict rules, including a requirement that borrowers complete independent, third-party counseling before moving forward.
Private-Label (Proprietary) Reverse Mortgages
Private-label reverse mortgages are offered and insured by private mortgage companies rather than the federal government. While they are not required to follow all HECM rules, most lenders voluntarily include similar consumer protections, such as mandatory counseling.
These loans can be a good option for homeowners whose properties do not qualify for FHA financing—such as certain condominiums or planned unit developments—or for those with higher-value homes, often above $1 million.
Because they may allow access to more home equity, these loans are sometimes called “jumbo” reverse mortgages.
Companies Offering Proprietary Reverse Mortgages
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Finance of America (Tulsa, OK) – 800-841-3723
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Longbridge Financial (Paramus, NJ) – 855-523-4326
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Smartfi Home Loans (San Diego, CA) – 877-816-6706
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Nationwide Equities (Park Ridge, NJ) – 866-807-0826