The 4 Types of Reverse Mortgages, Explained Simply
There are four types of reverse mortgages in 2026: the Home Equity Conversion Mortgage (HECM), the FHA-insured standard that makes up most reverse mortgages; the jumbo (proprietary) reverse mortgage from private lenders, for homes worth more than the FHA's $1,249,125 limit, with loans up to $4 million; the HECM for Purchase, which lets buyers 62 and older buy a new home with no monthly mortgage payments; and single-purpose reverse mortgages from government agencies and nonprofits, restricted to one use such as property taxes or home repairs.
Type 1: The Standard HECM (What Most People Mean)
The Home Equity Conversion Mortgage is the government version: insured by the FHA, age 62 and up, counting home value up to $1,249,125 in 2026. It is the default for good reason. The federal insurance guarantees the loan is non-recourse (nobody ever owes more than the home is worth), the credit-line option actually grows over time, and payouts can be monthly checks for life.
Best for: most Southern California homeowners whose homes are worth up to around the federal limit. The complete HECM guide is here.
Type 2: The Jumbo (Proprietary) Reverse Mortgage
Private lenders offer reverse mortgages beyond the federal ceiling: loan amounts up to $4 million, counting your home's full value. No FHA insurance premiums (a real saving), age minimums as low as 55 in California, and condos without FHA approval can qualify. The trade: protections come from the contract rather than federal insurance, and most jumbo loans pay a fixed-rate lump sum rather than a growing credit line.
Best for: homes worth clearly more than $1,249,125. On a $2 million Encino or Newport Beach home, the jumbo can unlock hundreds of thousands more than the HECM. The full jumbo guide is here.
Type 3: The HECM for Purchase (Buying a Home at 62+)
Few people know this one exists: you can BUY a home with a reverse mortgage. You put down a large down payment, usually half or more of the purchase price (often from selling your previous home), and the reverse mortgage covers the rest. You own the new home, live in it with no monthly mortgage payments, and keep the leftover cash from your sale.
Best for: downsizing, moving closer to the grandkids, or trading a two-story for a single-story, all without taking a mortgage payment into retirement.
Type 4: The Single-Purpose Reverse Mortgage
Some state and local agencies and nonprofits offer small, low-cost reverse mortgages restricted to one stated purpose, most commonly property taxes or home repairs. California's Property Tax Postponement program works in a similar spirit: the state pays qualifying seniors' property taxes and collects when the home is sold. These are the cheapest option when your need matches their narrow purpose, and availability varies.
Best for: a single specific bill, not general retirement income.
How to Choose
- Home worth under ~$1.25 million: start with the standard HECM.
- Home worth more than that: compare the HECM and the jumbo side by side, in writing. The jumbo usually wins on dollars for high-value homes.
- Buying a new home at 62+: ask about the HECM for Purchase.
- Just need help with one bill: check single-purpose and state programs first; they are the cheapest.
Whatever the type, California's protections apply: independent counseling, the 7-day cooling-off period, and the ban on forced annuity purchases.