California has more homes above the FHA lending limit than any other state. If yours is one of them, a standard HECM leaves equity on the table — the loan simply ignores value above the cap.
The cap problem
A HECM calculates your principal limit against the lesser of your appraised value or the FHA maximum claim amount. A $1.8 million home in San Jose and a home worth exactly the cap produce identical HECM proceeds. Everything above the cap is invisible to the formula.
Proprietary reverse mortgages — often called jumbo reverse mortgages — are privately funded and underwrite against the full appraised value. On high-value properties this can mean several hundred thousand dollars in additional available proceeds.
How proprietary programs differ from a HECM
- No FHA insurance. That means no upfront or ongoing mortgage insurance premium, which lowers cost — but also removes the federal backstop.
- Higher value ceilings. Programs commonly lend against values into the millions.
- Different age minimums. Some proprietary programs start at 55 or 60 rather than 62.
- Fewer payout structures. Lump sum and, on some programs, a line of credit. Tenure payments for life are less common.
- Line of credit growth is not guaranteed. The HECM's growing credit line is an FHA feature; proprietary lines may not grow.
- Property types. Some jumbo programs accept condos that FHA will not, which matters in coastal and urban California.
Non-recourse still applies — but read the note
Reputable proprietary programs are non-recourse, meaning neither you nor your heirs owe more than the home's value at repayment. This protection comes from the loan contract rather than FHA insurance, so confirm it in the documents rather than assuming it.
Who actually benefits
Proprietary makes sense when your home value meaningfully exceeds the FHA limit, you want a large one-time draw, and you are comfortable trading the FHA insurance and growing line of credit for higher proceeds and lower insurance cost. It makes less sense if your value is at or below the cap, or if the growing line of credit is central to your plan.
Run both quotes
The only responsible way to choose is to model a HECM and a proprietary side by side, comparing net cash at closing, ongoing accrual, and long-term balance. Start with a HECM baseline in our calculator, review our product lineup, and contact us for a jumbo comparison on your specific property.
