At Fairway, we are committed to helping you find the right home loan for your unique situation. If you are aged 62+* and are looking to take out a reverse mortgage on a high-value home (e.g., a home worth over a $1 million), a jumbo reverse mortgage offers some distinct advantages over a traditional Home Equity Conversion Mortgage (HECM), the most common type of reverse mortgage. (*Some proprietary products may be available as early as 55 years of age.)
What is a Jumbo Reverse Mortgage?
What are key advantages of a Jumbo Reverse Mortgage
(over a Traditional HECM Reverse Mortgage)?
Access more equity
Your age, the lending limits, the interest rate, and the appraised value of your home all factor into how much money you would be able to receive with a reverse mortgage.
With a traditional HECM reverse mortgage, the home value limit that can be borrowed against is currently capped at $1,089,300—whereas that limit on a jumbo reverse mortgage can extend into the millions of dollars.
For example, let’s say Harold owns a home that is worth $1.5 million. He may be able to borrow more funds with a jumbo reverse mortgage than a HECM reverse mortgage because the home value amount he is borrowing against is its full appraised value, not the $1,089,300 maximum he would face with a HECM reverse mortgage.
NOTE: Story is for illustration purposes only. The persons depicted herein are fictional and any resemblance to actual persons is a coincidence.
Avoid paying a mortgage insurance premium (MIP)
Jumbo reverse mortgages often have no mortgage insurance premium (MIP), which can reduce the overall loan costs.
With a HECM reverse mortgage, the FHA requires that the borrower pays both an initial and ongoing mortgage insurance premium (MIP), which helps make it a non-recourse loan. A non-recourse loan means if the balance on the loan exceeds the home value at the time the home is sold, neither you nor your heirs will be responsible for paying the deficit. This feature on a HECM reverse mortgage loan is guaranteed by the FHA.
While most jumbo reverse mortgages are non-recourse loans, no jumbo reverse mortgages loans are insured by the FHA.
Less restrictive qualifications for condos
Unlike a HECM reverse mortgage, with a jumbo reverse mortgage, condos do not necessarily have to be FHA-approved.
DID YOU KNOW? A jumbo reverse mortgage can also be used to finance the purchase of a new home.
Frequently Asked Questions
Jumbo reverse mortgage interest rates can vary by lender and whether you select a fixed or variable product. The interest rates on jumbo reverse mortgages tend to be higher than other reverse mortgages, but they do not have Mortgage Insurance Premiums. To find out what the current jumbo reverse mortgage interest rates are, please reach out to a Fairway retirement mortgage specialist.
Jumbo reverse mortgages allow you to borrow up to $4 million. You can receive the funds as a single-disbursement lump sum payment or access the funds as needed through a line of credit.
There are many lenders nationwide who offer jumbo reverse mortgages. At Fairway, we offer a wide range of mortgage products, including Home Equity Conversion Mortgages and jumbo reverse mortgages, to meet our customers’ needs.