Loan option
Proprietary reverse mortgages
A reverse mortgage offered by a private lender rather than insured by FHA. These exist mainly to serve higher-value homes and, with some lenders, borrowers who do not meet HECM requirements.
How it works
How proprietary reverse mortgages work
The lender sets the terms rather than FHA. That is the whole of the difference, and it cuts both ways: the lending limit that constrains a HECM on an expensive home does not apply, and neither do the rules that come with FHA insurance.
Availability moves with investor appetite. Programs appear and disappear, and the terms on offer this quarter may not be the terms on offer next.
Because these are not FHA-insured, the protections attached to a HECM are not automatic. Some lenders match them voluntarily, in whole or in part. The only way to know is to ask, per product, in writing.
What to weigh up
- Ask specifically whether the loan is non-recourse. On a HECM that protection is guaranteed by FHA insurance. On a proprietary product it depends on the lender and the contract.
- Ask whether independent counseling is required. It is mandatory on a HECM. On a proprietary product it may not be, and having it anyway is sensible.
- Ask what protections exist for a non-borrowing spouse. The federal HECM rules do not govern here.
- Compare against a HECM even when the limit binds. A smaller loan with FHA protections is sometimes the better arrangement.
Set by the lender, not by us
These vary between lenders and change over time. Nothing on this page is a quote, an approval, or a commitment to lend.
- Minimum age, which some lenders set below the HECM requirement
- Whether the loan is non-recourse, and on what terms
- Whether counseling is required or merely offered
- Non-borrowing spouse treatment
- Property types, maximum loan amounts and geographic availability
- Fees and rate structure
Nothing on this page is a rate quote, an approval, or a commitment to lend. Figures and requirements change, and they depend on your file.
Terms used on this page
- Proprietary reverse mortgage
- A reverse mortgage offered by a private lender rather than insured by FHA. Terms are set by the lender, and these products sometimes serve higher-value homes or borrowers who do not meet HECM requirements.Not FHA-insured, so the HECM protections — including the non-recourse guarantee and the mandatory independent counseling — do not automatically apply. Ask specifically which protections your product carries.
- Reverse mortgage
- A loan that lets an eligible older homeowner convert part of their home equity into proceeds without a monthly principal and interest payment. The balance grows over time and is repaid when the loan becomes due.You keep title to the home — it is not a sale to the bank. But you remain responsible for property taxes, homeowners insurance, association dues and maintenance, and the home must remain your principal residence. Those obligations are where most reverse mortgage trouble actually starts.
- Non-recourse
- A feature of FHA-insured reverse mortgages: when the loan becomes due and the home is sold to repay it, neither you nor your heirs owe more than the home is worth at that point, even if the balance has grown beyond it.It protects against owing more than the house is worth. It does not mean the loan is free or that the balance stops growing — interest and insurance premiums accrue, and the equity left for heirs shrinks accordingly.
Questions about this program
- Why would I choose this over a HECM?
- Usually because the home is worth considerably more than the FHA lending limit allows a HECM to recognise, so a proprietary product can make more of the equity available. Sometimes because a lender's program accommodates a borrower or property that the FHA-insured product will not.
- Does it have the same protections?
- Not automatically. The non-recourse guarantee, mandatory independent counseling and the federal non-borrowing spouse rules come with FHA insurance. A proprietary product is governed by its contract. Some lenders match those protections; get the answer in writing rather than in conversation.
Official sources
Program rules are set by these organizations and are updated periodically. Where this page and an official source disagree, the official source is correct.
- Reverse mortgages: what you should know (opens in a new tab) — Consumer Financial Protection Bureau
- Reverse mortgages (opens in a new tab) — Federal Trade Commission
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Bring your situation, not your paperwork. A first conversation is about which programs actually fit and what the numbers look like — no documents, no credit pull, no commitment.