One of the first steps when choosing a reverse mortgage is to determine which type is best for your financial position and goals.
Reverse mortgages — or home loans that help older people tap the equity they've built from their homes for cash — come in three main forms: home equity conversion mortgages (HECMs), proprietary jumbo loan reverse mortgages and single-purpose reverse mortgages.
All three have one key thing in common: Borrowers don't owe any kind of repayment until they stop living in the house full time, fail to keep up with home insurance or property taxes, sell the house or die. Then, the entire sum, plus interest, is due.
Below, CNBC Select explains the difference between the options and how to determine which is right for you. Plus, we spotlight our favorite lenders.
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HECMs
HECMs — the most popular type of reverse mortgage — are backed by the U.S. Federal Housing Administration.
For that reason, these loans have federal requirements that proprietary jumbo mortgages don’t. For starters, borrowers must complete housing counseling with a U.S. Department of Housing and Urban Development (HUD)-approved counselor before they take out a HECM.
Borrowers must also be 62 years or older. Additionally, in 2026, the maximum amount a borrower can take out with a HECM loan is between $543,287 and $1,249,125, depending on the area where the house is located. That’s lower than the $4 million roof that most jumbo reverse mortgages have.
Unlike single-purpose reverse mortgages, HECMs can be used toward anything.
- HECMs are the most common type of reverse mortgages and meet the needs of most people looking for a reverse mortgage
- Homeowners who need a loan volume of $543,287 to $1,249,125 or lower, depending on location
- Homeowners who want to have the freedom to spend the proceeds of their reverse mortgage on whatever they chose
- Homeowners aged 62 and older
Jumbo reverse mortgages
Jumbo reverse mortgages are loans funded and backed entirely by a private financial institution instead of the government.
Most lenders offer jumbo reverse mortgages up to $4 million — nearly four times the amount a borrower can get with an HECM. Plus, the minimum age is typically 55, which is lower than other types of reverse mortgages.
Unlike a single-purpose reverse mortgage, you can use the funds for anything.
- Someone who is between ages 55 and 62 and is not eligible for a HECM due to the minimum age requirement
- Homeowners who need a larger loan than what a HECM can offer ($543,287 to $1,249,125, depending on location)
- Homeowners who want to have the freedom to spend the proceeds of their reverse mortgage on whatever they chose
Single-purpose reverse mortgages
Single-purpose reverse mortgages are the rarest form of reverse mortgages because they are not funded by traditional lenders. Instead, they are available from non-profits and local or state government.
Like with a HECM, borrowers must be at least 62 years old. But unlike a HECM and a jumbo reverse mortgage, you can only use a single-purpose reverse mortgage for a specific purpose.
This type of reverse mortgage is typically easier to qualify for and tends to have lower rates and fees.
- Someone who qualifies for these specialty products, typically funded by non-profits and local governments
- Someone who knows what they will use the proceeds of the reverse mortgage for and doesn't mind restrictions on where the money can be spent
Best reverse mortgage lenders
Here are CNBC Select’s top picks for reverse mortgage lenders. All offer a proprietary jumbo loan product and HECMs.
Longbridge Financial
If you’re seeking affordability, consider Longbridge. In addition to its low rates, it doesn’t charge a service fee, which is typically $35 per month.
At CNBC Select, we like that Longbridge is available in all 50 states and that military service members and veterans can get a $500 discount on closing costs.
Longbridge Financial Reverse Mortgage
Annual Percentage Rate (APR)
Apply for personalized rates
Types of reverse mortgages
HECM reverse, HECM for purchase, Platinum Mortgage (proprietary loan with larger limits and a low age requirement of over 55)
Minimum equity
No specific minimum equity listed, but generally 50%
Pros
- Proprietary loan allows those as young as 55 to access a reverse mortgage, lower than the 62 that HECM reverse mortgages require.
- Accredited by the BBB with an A+ rating
- Available in all 50 states
- Provides a "scenario calculator," on website that can help estimate the cost of a reverse mortgage
Cons
- Can't complete application online
Finance of America
If you’re looking for a stellar proprietary jumbo loan, we recommend Finance of America.
There are no origination fees or mortgage insurance premiums on its HomeSafe standard product, unlike every lender’s proprietary reverse mortgage.
Finance of America
Loan types
HECM, HomeSafe Standard, HomeSafe Second
Minimum equity
50%
Maximum loan
Up to $4 million (HomeSafe), $50,000 and $1 million (HomeSafe Second),
Age limit
62 for HECM, 55 for HomeSafe Second, 60 for EquityAvail, 55 for HomeSafe (60 in Massachusetts, New York and Washington, 62 in North Carolina and Texas),
Availability
Finance of America is a division of Finance of America Reverse which is licensed nationwide. In CA, NM, and OK, it does business as Finance of America Reverse. In NY, it does business as FAReverse, LLC
Pros
- Jumbo reverse mortgages are available up to $4 million
- Doesn't require mortgage insurance premiums or origination fees on HomeSafe
Cons
- No online application
- Not transparent about rates or fees
Mutual of Omaha
If you want to deal with your reverse mortgage in person, Mutual of Omaha is one of the only major reverse mortgage lenders with physical locations throughout the country.
It also has high customer service ratings and is available in all states besides New York and West Virginia.
Mutual of Omaha Reverse Mortgage
Loan types
HECM, HECM for purchase jumbo, SecureEquity+, refinancing
Minimum equity
50%
Maximum loan
Up to $4 million
Age requirement
62 for HECM, 55 for SecureEquity+
Availability
Mutual of Omaha offers reverse mortgages nationwide except for New York and West Virginia.
Pros
- Available in all states except New York and West Virginia
- High customer satisfaction ratings
- Provides an assortment of tools on its website
Cons
- Not transparent about rates and fees
Pros and cons of a reverse mortgage
- There is no credit score requirement or minimum income required to qualify
- You won't need to make monthly payments
- Allows older people to access extra income in retirement
- You need to have significant equity in your home to qualify
- Bank could repossess your home if you fail to repay on time
- Lump sum comes due all at once, when you stop living in the house full time for any reason
FAQs
What is the most common type of reverse mortgage?
Government-backed Home Equity Conversion Mortgages (HECMs) are the most popular type of reverse mortgage. You need to be age 62 years or older and have 50% equity in you home or more to apply.
What is the biggest problem with a reverse mortgage?
Reverse mortgages are risky products because they require a lump sum repayment when you stop living in the house full-time. If you fail to repay, the lender can force you into foreclosure.
Why trust CNBC Select?
At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed financial decisions. Every reverse mortgage article is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of the products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.
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