Most people say "reverse mortgage" as if it were one product. It is actually three, and the differences decide how much you can borrow, what it costs, and who regulates the loan.
1. Home Equity Conversion Mortgage (HECM)
The HECM is the FHA-insured reverse mortgage and represents the overwhelming majority of reverse mortgages written in California. Because it is federally insured, it carries standardized rules: you must be 62 or older, the home must be your primary residence, and you must complete a HUD-approved counseling session before applying.
The HECM is the only reverse mortgage that is non-recourse and government insured. If the loan balance eventually exceeds the home's value, FHA insurance absorbs the shortfall — neither you nor your heirs owe the difference. That insurance is paid for through the mortgage insurance premium, which is part of why HECMs cost more up front than a conventional loan.
HECMs offer the widest range of payout options: lump sum, monthly tenure payments, term payments, a growing line of credit, or a combination. Use our reverse mortgage calculator to see what a HECM would produce on your home.
2. Proprietary (Jumbo) Reverse Mortgages
Proprietary reverse mortgages are private loans offered by individual lenders, not insured by FHA. Their reason for existing is the FHA lending limit: a HECM only counts home value up to the national limit, so a $2 million California home is treated as if it were worth the cap.
Proprietary programs underwrite against the full appraised value, which can dramatically increase proceeds for higher-value homes — extremely relevant in the Bay Area, coastal Southern California, and much of the Central Valley's upper market. Trade-offs: no FHA insurance, often no HUD counseling requirement (though reputable lenders still require it), different minimum ages depending on program, and fewer payout structures. Some proprietary programs skip the mortgage insurance premium entirely, which can make them cheaper at closing.
3. Single-Purpose Reverse Mortgages
Single-purpose reverse mortgages come from state or local government agencies and nonprofits. They are the least common and the most restricted: the money can only be used for one stated purpose, usually property taxes or a specific home repair.
In exchange for that restriction, costs are typically the lowest of the three. They are generally aimed at lower-income homeowners and availability varies by county. If your entire need is "I can't cover the property tax bill," this is worth investigating before a full HECM.
Quick comparison
- Loan size: Proprietary > HECM > single-purpose
- Cost: Single-purpose < proprietary (varies) < HECM with MIP
- Flexibility of use: HECM and proprietary are unrestricted; single-purpose is not
- Federal insurance: HECM only
- Counseling required: Always for HECM; usually voluntary otherwise
Which one fits you?
If your home is worth less than the FHA lending limit, the HECM is almost always the right starting point — the insurance and the growing line of credit are genuinely valuable. Above that limit, run both a HECM and a proprietary quote and compare net proceeds after costs, not headline numbers.
Before committing to any of them, review the full cost breakdown and schedule your HUD counseling session. When you are ready to see real numbers on your property, start here.
