If you are a homeowner with a pretty valuable house—let’s say it’s worth more than $400,000—you must have heard about reverse mortgages. These loans let you borrow money against the value of your home. However, there is also a twist called reverse mortgage jumbo loans.

It is the deluxe version. This type of loan is for individuals with fancy homes who want to borrow more than the standard limit set by the government. So, if you have a high-value home and you need some extra cash, this loan could be your ticket to accessing even more of that sweet home equity.

What is the Maximum Allowable Reverse Mortgage?

Starting in 2024, the Federal Housing Administration (FHA) has some big news that affects Home Equity Conversion Mortgages (HECMs). They have raised the maximum amount you can get from these loans. Before, it was $1,089,300, but now it’s been bumped up to $1,149,825. This change applies to HECM loans assigned case numbers from January 1, 2024.

When Is the Reverse Jumbo Mortgage Needed?

For high-value property owners, reverse jumbo loans can acquire even more home equity. This helps you fund the things that matter the most to you. Following are the reasons why some homeowners can find such loans tempting:

  1. Increased Access to More Equity
    To start with the most popular perks of a jumbo reverse mortgage, the first is more cash in your account. Regular reverse mortgages from the FHA limit how much you can get, but with a jumbo one, you can tap into a bigger chunk of your home’s value.
    If you own a pricier home, you automatically have more equity to work with. With a jumbo reverse mortgage, you are not held back by the FHA limit, so you can acquire more money. Plus, depending on the loan terms, you can access all that value immediately.
  2. Eliminating Large Mortgage Debts
    One big advantage of a reverse mortgage, whether jumbo or FHA, is that it can help you clear out any existing debts, especially those hefty mortgage balances. Mortgages are the biggest debt for many people in the US, totaling over $10 trillion.
    While a regular FHA reverse mortgage can help with smaller mortgage balances, a jumbo one is even better because it can handle much larger debts. So, if you live in a pricey area and have a huge mortgage, a jumbo reverse mortgage could be just what you need.
  3. No Mortgage Insurance Fee
    When you think about getting a reverse mortgage, you probably hear about all the costs involved. One considerable expense is the mortgage insurance premium, which you pay at the beginning and every year after that.
    This insurance is there to protect you and your family. But the catch is: with jumbo reverse mortgages, you don’t have to pay these insurance fees because the government does not back them.
    So, when you go for a jumbo reverse mortgage, your closing costs are usually much lower than a regular FHA reverse mortgage. That means you can enjoy the benefits of a reverse mortgage without worrying about those extra fees.
  4. Strong Borrower’s Security
    even though jumbo reverse mortgages don’t involve regular insurance, they still have strong protections for borrowers. These protections are similar to what you get with FHA loans, including non-recourse protection.
    Therefore, with a jumbo reverse mortgage, you or your family won’t owe the lender more than your home is worth when you sell it. But remember, not all jumbo loans guarantee these protections, so when you decide to get one, ask your lender about what protections they offer.

Ending Note

Since many lenders offer versions of reverse mortgage jumbo loans, each with its own rules, interest rates, and extras, it’s important to pick the one that best suits you.

Looking for workable loan options for real estate investors in Texas? Visit us at Red Door Funding. Call us at (832) 539-1099 for consultation.

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