Reverse Mortgage Guides - making the pros and cons of reverse mortgages clear.

Jumbo Reverse Mortgage

A jumbo refers to a reverse mortgage for a high-value property. However, a jumbo reverse mortgages is different from an FHA reverse mortgage (the HECM) because a jumbo reverse mortgage is not offered through the FHA and as a result has two major differences.

  1. The FHA's property value cap of $625,500 does not apply
  2. The percentage of equity that can be access is lower

A jumbo is normally only taken out on properties worth more than $2,000,000. The reason for the two million dollar threshold is that jumbo reverse mortgages only allow the homeowner to withdraw 15-20% of the property's value whereas the FHA HECM reverse mortgage allows homeowners to borrow 55% or more.

Example: Comparison of HECM vs Jumbo proceeds

HECM Jumbo HECM Jumbo
Age 72 72 72 72
Property value $1,000,000 $1,000,000 $5,000,000 $5,000,000
Effective property value $625,500 (FHA max) $1,000,000 $625,500 (FHA max) $5,000,000
Available proceeds $372,332 $162,500 $372,332 $812,500
Percent available 60% 16% 7% 16%