Last updated July 23, 2026 · Reviewed against current HUD/FHA guidelines · Our editorial standards

HECM vs. Jumbo Reverse Mortgage: Which Fits Your Home?

Phoenix's long housing boom created a problem the reverse mortgage industry had to solve: thousands of Valley homes, especially in Scottsdale, Paradise Valley, Arcadia, and North Phoenix, are now worth more than the FHA will insure. If your home is one of them, you have two paths: take a HECM and accept that part of your value will not count, or consider a proprietary "jumbo" reverse mortgage. This guide compares them honestly, because each is the right answer for different homes.

The HECM: The Standard Choice

The Home Equity Conversion Mortgage is the FHA-insured product that makes up the vast majority of reverse mortgages, and everything in our main Arizona guide describes it. Its defining features:

• The 2026 cap. Whatever your home is worth, the calculation uses at most $1,249,125 (the "maximum claim amount," raised for the tenth straight year in 2026).
• FHA insurance, which you pay for (2% upfront, 0.5% annually), buys the non-recourse guarantee, protection if your lender fails, and the famous growing credit line.
• Full menu of payouts: lump sum, growing line of credit, tenure (lifetime) payments, term payments, or a mix.
• Heavily standardized rules: mandatory HUD counseling, financial assessment, first-year draw limits, non-borrowing spouse protections, capped origination fees.

The Jumbo: Private, Flexible, Less Protected

Proprietary reverse mortgages are offered by private lenders without FHA insurance. Terms vary by lender far more than HECMs do, but the typical 2026 product looks like this:

• No FHA cap. Loan amounts can reach several million dollars on qualifying homes.
• Lower age floors at some lenders: often 55 in states that allow it, versus the HECM's hard 62.
• No FHA mortgage insurance premiums. That saves the 2% upfront charge, a headline savings on a large home, though lenders price their own risk into the interest rate instead.
• Usually a fixed-rate lump sum. Growing credit lines and lifetime tenure payments are rare; some lenders offer limited line-of-credit features without the HECM's guaranteed growth.
• Lower loan-to-value ratios. Jumbos typically lend a smaller percentage of value than a HECM would at the same age, because no government insurance backstops them.
• Non-recourse by contract. Reputable jumbos include non-recourse language, but it rests on the lender's contract rather than federal insurance; reading it matters.
• Condos above the FHA cap and some non-FHA-approved condos can qualify, which occasionally makes a jumbo the answer even on mid-value properties.

Counseling is still required for proprietary loans in most cases, and Arizona specialists routinely handle both product types, so comparing them side by side is a normal request, not a special favor.

The Cap Math: Why Scottsdale Homeowners Care

Consider a 75-year-old with a $1.6 million Scottsdale home, owned free and clear. Published 2026 principal limit factors at typical rates give a 75-year-old roughly 46% of value:

Notice the punchline: at $1.6 million the two products often land in the same neighborhood, and the HECM's insurance costs buy real protections. The jumbo advantage widens as value rises: at $2.5 million or $3 million, the FHA cap leaves too much equity stranded and the jumbo usually wins on proceeds. Below about $1.3 million, the HECM wins almost automatically. These are estimates, not quotes; exact numbers depend on the lender, rates, and appraisal.

Head-to-Head: Which Product When

• Home under $1.25M: HECM, almost always. The cap does not bind you, and the protections are stronger. Check our requirements guide and the calculator.
• Home $1.3M-$2M: genuinely compare both. Ask each lender for proceeds, all-in rate, and non-recourse terms in writing. The HECM's growing credit line and tenure options often outweigh a modest jumbo proceeds edge, especially if you want income rather than a lump sum.
• Home above $2M: the jumbo usually delivers meaningfully more money; scrutinize the rate and contract protections.
• Age 55-61 with a high-value home: jumbo is the only reverse option; also weigh a HELOC or other alternatives, which may cost far less if you can handle payments.
• Non-FHA-approved condo: ask a specialist whether a jumbo lender will take the project before giving up.

What About "HECM for Purchase"?

One more variant worth knowing: the HECM for Purchase lets buyers 62+ purchase a new primary residence with roughly 40-60% down and no monthly mortgage payments, subject to the same FHA cap and rules. Retirees moving to the Valley, or downsizing from a large family home into an active-adult community in Sun City West or Surprise, sometimes combine a sale with a HECM for Purchase to keep more cash from the sale. Jumbo purchase versions exist as well. A specialist can model this alongside the standard options.

Get Both Quotes From One Conversation

If your home sits anywhere near the cap, the practical move is simple: have a licensed specialist price both products for your exact age, home, and goals, then take both quotes to your counseling session. The form below connects you with a specialist serving the Phoenix area who handles HECM and proprietary loans. Free, no obligation, and useful even if your answer turns out to be "neither yet." Start with our Phoenix reverse mortgage overview if you want the full picture first.

Sources: NRMLA: 2026 HECM Limit · CFPB: Reverse Mortgage Types · HUD: HECM Program