Two offers can be answering different questions
A reverse-mortgage offer with a bigger number can catch your eye. Before treating it as the better offer, ask what that number represents: money available after the old mortgage is paid, a gross borrowing limit, or cash you must take now rather than leave available for later.
A Home Equity Conversion Mortgage, or HECM, is the FHA-insured reverse mortgage. A proprietary reverse mortgage is a private product with its own terms. “Jumbo” commonly describes the private-market option aimed at higher-value homes; the label alone does not tell you its costs, payout choices or family protections.
HUD: Home Equity Conversion Mortgages (new tab)
FTC: Comparing reverse mortgages and their risks (new tab)
The useful comparison is not government versus private as a matter of taste. It is what each actual offer would let your household do, what it would cost, and what happens when circumstances change.
What the HECM framework tells you
HECM borrowers must be at least 62, and the home must be their principal residence. The program requires counseling through a HUD-approved agency and a lender review of the household’s ability to meet the loan’s obligations. A homeowner still needs a plan for taxes, insurance, upkeep and applicable association charges.
CFPB: HECM eligibility (new tab)
HECM borrowing capacity depends in part on age, interest rates and the property value used under the program. HUD explains that the value calculation is limited by the applicable federal HECM limit. That limit is not a promise that you can borrow that amount, and a high home value does not turn all of its equity into available cash.
HUD: Home Equity Conversion Mortgages (new tab)
FHA mortgage insurance is part of HECM costs, with an upfront premium and ongoing premiums. The CFPB also explains its role in guaranteeing expected loan advances. This is separate from homeowners insurance, which protects the property.
CFPB: HECM costs and mortgage insurance (new tab)
What you need to learn from the private contract
A proprietary loan may make more proceeds available on a higher-value home. That possibility is a reason to request a comparison, not a reason to assume it is cheaper. Private reverse mortgages do not carry the HECM’s FHA insurance; get the protections and obligations of the specific product in writing.
FTC: Comparing reverse mortgages and their risks (new tab)
Ask which ages and property types the lender accepts, whether the rate can change, and how the funds can be received. Then ask about the less cheerful moments: moving out, a spouse remaining after a borrower dies, a missed property charge, and repayment by the estate. Do not carry a rule you read about HECMs into a private contract without checking it.
If an offer is a reverse second mortgage, identify that explicitly. Keeping an existing first mortgage means keeping its separate payment obligation. That is a different household budget from using reverse-mortgage proceeds to pay the first loan off. Our guide to two mortgage balances explores that distinction; this comparison does not establish that any particular product is available to you.
Compare spendable money, not the headline limit
Ask for a written breakdown of the amount needed to pay existing liens, financed closing costs, any required set-asides, and the funds left for your use. Also separate money available at closing from credit available later. Two large numbers on two worksheets may describe very different things.
Consider an illustrative choice: one offer would deliver a larger lump sum, while another would leave a smaller reserve available to draw as needed. If the household only expects occasional repair bills, the larger check is not automatically more useful. If a known obligation must be paid immediately, timing matters more. No dollar amount in this example is a loan quote.
HECMs can offer different payout structures: an adjustable-rate credit line, monthly advances, a combination, or a fixed-rate lump sum. Do not assume a private loan offers the same menu or the same unused-credit growth feature. Read monthly cash, a credit line, or both before comparing payout plans.
CFPB: Reverse-mortgage payment options (new tab)
Ask to see the years after closing
A single rate comparison leaves out too much. Request projections using the same draw schedule and the same time in the home. Look at total costs, the balance owed and the equity that might remain under clearly stated home-value assumptions. A projection is not a promise about future rates or property prices.
Ask how the answer changes if you move sooner. Upfront costs have less time to serve you when the loan lasts only a few years. Ask for the Total Annual Loan Cost disclosure and an explanation of the assumptions; it is designed to show projected annual average reverse-mortgage costs over different periods.
FTC: Comparing reverse mortgages and their risks (new tab)
Finally, take the comparison to an independent counselor and include anyone whose housing could be affected. A bigger advance cannot substitute for understanding whether a spouse can remain, what heirs must do, or how much room is left for a future move.
The decision gets clearer when you can finish one sentence for each offer: “This gives us the money we need, in the form we need, while leaving these costs and obligations.” If you cannot finish it, the next step is a better explanation before a signature.