Jumbo Reverse Mortgages
 There are two main types of reverse mortgages: FHA conforming and
non-conforming, the latter commonly known as a Jumbo Reverse Mortgage. Jumbos
are usually considered by senior homeowners when the value of their home exceeds the FHA
conforming loan limit for their county. An FHA conforming loan limit is the
maximum amount of home value that Fannie Mae will recognize in calculating the
amount of money that they will lend on the home. In most counties with high cost
homes, including many in California, the conforming loan limit for reverse
mortgages is $362,790. Jumbo Versus Conforming
When a senior’s home value greatly exceeds $362,790 (or the FHA
reverse mortgage conforming loan limit for their county) they ought to consider all of the
available Jumbo Reverse Mortgage programs. Jumbo Reverse Mortgages do not have
the same value restriction as FHA reverse mortgages, which allows them to offer a larger amount of money to the borrower when
the home's value is much
greater than the conforming limit. But, the FHA reverse mortgage (known as the
Home Equity Conversion Mortgage or HECM) offers a much greater percentage of the
home’s first $362,790 in value, often making it the better choice until the home
value far exceeds the FHA conforming limit.
For Example
A 72 year old with a home in Orange County, Jumbo that is worth $400,000
might qualify for $225,000 under the FHA reverse mortgage, while the Jumbo
program would only offer $160,000. The reason is that Jumbo Reverse Mortgages
are much more conservative in the percentage of the value of the home that they
will offer. This more conservative lending percentage (known in the industry as
“loan-to-value” ratio) however, will overtake the FHA reverse mortgage when the
value of the home is very high. If the home is worth $700,000 for
example, then the 72 year old might qualify for $280,000, which is $55,000 more than the
FHA reverse mortgage would offer.
When a Jumbo Reverse Mortgage Makes Sense
As the home value goes up, the amount of money available under a Jumbo
Reverse Mortgage increases, while the FHA program does not change due to the
conforming loan limits. As a general rule, Jumbos begin to make financial sense
when the home is worth at least $600,000, but there are exceptions for both
higher and lower values.
Get a Quote
The loan scenarios above are intended only to illustrate the potential
differences between the Jumbo Reverse Mortgage and the FHA reverse mortgage.
These examples may
not apply to your particular circumstances, and are not an offer to lend. We
invite you to request an FHA or Jumbo Reverse Mortgage quote by calling us or
using the form below.
Call Toll Free: 1-866-311-3360 to speak with an Advisor.
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