| FHA conforming and non-conforming are the two main | | | | An example of this would be a 74 year old with a |
| types of reverse mortgages, the latter commonly | | | | home in San Diego County, California that is worth |
| known as a Jumbo Reverse Mortgage. When the | | | | $400,000 might qualify for $225,000 under the FHA |
| value of a home exceeds the FHA conforming loan | | | | reverse mortgage, while the Jumbo program would |
| limit for their county, a senior homeowner has the | | | | only offer $160,000. As the example shows, Jumbo |
| option of a jumbo loan. An FHA conforming loan limit is | | | | Reverse Mortgages are designed to be much more |
| the maximum amount of home value that Fannie Mae | | | | conservative in the percentage of the value of the |
| will recognize in calculating the amount of money that | | | | home that they will offer. In the industry, this more |
| they will lend on the home. As in much of California, | | | | conservative lending percentage is known as |
| most counties with high cost homes have a | | | | "loan-to-value" ratio. Despite the conservative |
| conforming loan limit for reverse mortgages of | | | | loan-to-value ratio of the jumbo, it will overtake the |
| $362,790. | | | | FHA reverse mortgage when the value of the home |
| Jumbo Reverse Mortgages do not have the same | | | | is very high. If the 72 year olds' home is worth |
| value restriction as FHA reverse mortgages, so they | | | | $700,000 for example, then they might qualify for |
| can offer a larger amount of money to the borrower | | | | $280,000, which is $55,000 more than the FHA |
| when their home value is significantly greater than the | | | | reverse mortgage would offer. |
| conforming limit. When a senior's home value greatly | | | | The amount of money available under the Jumbo |
| exceeds $362,790 (or the conforming FHA reverse | | | | Reverse Mortgage increases as the home value goes |
| mortgage limit for their county) they ought to consider | | | | up, while the FHA program does not change due to |
| all of the available Jumbo Reverse Mortgage | | | | the conforming loan limits. Generally speaking, Jumbos |
| programs. Still, the FHA reverse mortgage (known as | | | | begin to make financial sense when the home is worth |
| the Home Equity Conversion Mortgage or HECM) is | | | | over $600,000, but there are exceptions for both |
| often the better choice until the home value far | | | | higher and lower values. Check with your reverse |
| exceeds the FHA conforming limit, because it offers a | | | | mortgage lender for a quote and to see if a jumbo |
| much greater percentage of the home's first $362,790 | | | | reverse mortgage could be right for you. |
| in value. | | | | |