My aunt’s house outside Portland is worth far more than she ever expected it to be. She doesn’t feel rich, though. She feels squeezed, because her income stopped growing years ago and her property tax bill never got the memo. Last spring she asked whether a reverse mortgage was even possible on a house that valuable, and I gave her a mumbled non-answer. (I’m no loan officer, so treat everything below as background, not advice.)
Here’s what I should’ve told her. It depends on which kind you mean. A proprietary reverse mortgage is the private cousin of the FHA-insured loan most people have heard of, and it plays by looser rules on loan size, age, and property type. Most people never find out it exists.
The FHA Loan Has a Ceiling, and Expensive Homes Hit It
The standard federal program, called the HECM, only counts your home’s value up to a national cap. In recent years that’s been a little over $1.2 million, and the number gets reset annually. Own a house worth $2 million and the extra $800,000 might as well not exist. You also need to be 62.
For plenty of owners in Portland, the Bay Area, or anywhere prices ran off without them, that’s the entire problem. Not eligibility. Just arithmetic.
What a Private Loan Changes
Take the Choice Proprietary Reverse Mortgage, offered through Smartfi. It’s built for homeowners 55 and older in most states, and it works for refinancing an existing loan or buying a different home. Nobody requires monthly payments, though you can send money in whenever you like if you’d rather keep the balance from ballooning.
Here’s how it lines up against the FHA version:
| FHA HECM | Choice proprietary | |
| Minimum age | 62 | 55 in most states |
| Borrowing ceiling | Federal cap, a bit over $1.2 million | Up to $4 million in some cases |
| Mortgage insurance premiums | Required | None |
| County loan limits | Yes | None |
| Property types | FHA-approved only | Fewer restrictions |
The people who usually end up looking at a loan like this:
- Owners of homes worth more than the FHA cap will count
- Anyone between 55 and 61 who can’t touch the FHA program yet
- Condo owners whose building isn’t on the FHA-approved list, a bigger group than you’d guess
- Buyers who’d rather purchase a new primary residence with a reverse structure than stay put, though you’ll still need a substantial down payment, usually from selling your current place
Picture a couple, 58 and 60, living in a condo the FHA never approved. Under the federal program they’re out twice over: too young, and in the wrong building. Under a private one, in the states where it’s offered, they might at least get a seat at the table. Might. Approval still hinges on the appraisal, how much equity they hold, their finances, and whatever the lender decides that month. I bring it up because most people in that spot assume the answer is no and never ask, which is a strange way to handle a decision this big.
The Costs Don’t Vanish, They Move
Skipping mortgage insurance helps. It isn’t free money. You’ll still pay origination fees, an appraisal, and the usual title and escrow charges, and on a high-value house those numbers get real quickly.
The bigger cost is slower and easier to ignore. Interest accrues on whatever you borrow, so the balance climbs year after year instead of shrinking, and that chips away at what your kids eventually inherit. You also keep paying property taxes, homeowners insurance, and upkeep, and the house has to stay your primary residence. Fall behind on those and the lender can call the loan due. The same happens when you sell, move out for good, or pass away. That’s the part glossy brochures tend to skim past.
On the plus side, you keep title to the house. The loan is also non-recourse, which generally means neither you nor your heirs owe more than the home sells for. Get that in writing, though. Don’t take anyone’s word for it, including mine.
Questions That Save You From Regret
Sit down with the actual numbers before you sign anything. Ask what closing costs look like on a house your size. Ask how fast the balance grows if you never pay a dime. Ask what happens if you need long-term care and have to leave, or if your spouse is on the loan and you aren’t around to explain it to them. Then ask three lenders the same questions and compare. Figures that sound identical on a phone call look surprisingly different on paper, I promise.
Picking a Lender Who Isn’t Winging It
Plenty of mortgage shops treat reverse loans as a side hustle. Some do nothing else, and in my experience those shops explain the downsides more bluntly, because it’s all they know. When you’re weighing proprietary reverse mortgage lenders, watch for clear fee breakdowns, patience on the phone, and a team that still picks up after closing. A stack of client reviews saying “never felt rushed” tells you more than a low advertised rate ever will.
Conclusion
A reverse mortgage isn’t one product, and the private version exists precisely because the federal one leaves expensive houses out. If yours is one of them, or you’re 58 and the FHA door is still shut, a proprietary loan may be the only reverse option you have. That alone justifies a conversation.
It doesn’t justify signing the first offer that lands in your inbox. Run the numbers on a balance that keeps growing, ask what your heirs actually walk away with, and pull your family into the decision before you commit. Slow down.
