Unlocking More with Proprietary Reverse Mortgages — But Read the Fine Print

As home values continue to rise and more seniors look to maximize the equity in their homes, proprietary reverse mortgages have gained popularity. While these private, non-government-backed loans can offer significantly higher loan limits than the standard FHA-insured reverse mortgage (Home Equity Conversion Mortgage, or HECM), borrowers should proceed with both enthusiasm and caution.

At Atlantic Avenue Mortgage, we specialize in helping clients navigate reverse mortgage options that best suit their needs. Here’s what you need to know about proprietary reverse mortgages — including how to protect yourself from unnecessary costs.

What Is a Proprietary Reverse Mortgage?

A proprietary reverse mortgage is a private loan designed for homeowners, typically age 60 or older (depending on the lender), who want to access a larger portion of their home equity than what’s available through a traditional HECM. These loans are not insured by the Federal Housing Administration (FHA), but instead offered by private lenders.

They’re often ideal for:

• High-value properties exceeding FHA’s HECM lending limits (currently $1,220,000).
• Condos or non-FHA-approved homes that don’t qualify for a government-insured reverse.
• Seniors who want a larger lump sum payout or a unique draw schedule.

Proprietary reverse mortgages often have more flexible underwriting guidelines, less paperwork, and faster turnaround — but this flexibility comes with trade-offs.

The Benefits: Flexibility & Access to More Equity

1. Higher Lending Limits
   With no FHA cap, proprietary products can offer access to $4 million or more in equity — which is a game-changer for borrowers in high-value areas.
2. Expanded Property Eligibility
   Homes that don’t meet FHA criteria — including many luxury homes, non-FHA-approved condos, or second homes in some cases — may qualify.
3. Custom Structures
   Some proprietary loans offer line-of-credit options or term payments, although lump sums are more common. This can be tailored to suit your retirement needs.
4. Non-Recourse Protection
   Even though these are private loans, reputable proprietary reverse mortgages still include a non-recourse clause — meaning you or your heirs will never owe more than the home’s value when it is sold.

The Risks: Not All Lenders Are Created Equal

The biggest drawback we see in the market is inconsistency in pricing, especially with origination fees and interest rate margins. Because proprietary loans are not regulated like FHA loans, some lenders charge excessive upfront fees or build in unusually high margins to boost profits — sometimes without fully disclosing the long-term financial impact to the borrower.

At Atlantic Avenue Mortgage, we’ve reviewed quotes from national lenders that included origination fees of $25,000 or more — with no clear justification.

We believe in transparency and competition. That’s why we always:

• Shop multiple proprietary programs to find you the most competitive rate and fee structure.
• Clearly explain how interest and origination costs will affect your equity over time.
• Avoid pushing any product that’s not in your best interest — regardless of the lender’s compensation.

Questions to Ask Before Signing

If you’re exploring a proprietary reverse mortgage, make sure to ask your lender:

• What is the total origination fee and how is it calculated?
• Are there rate margins or servicing fees I should be aware of?
• How does this compare to other proprietary programs on the market?
• Will I receive a clear amortization schedule showing how my equity is impacted over time?

The Bottom Line

Proprietary reverse mortgages can be a powerful tool — especially for seniors with high-value homes or unique financial goals. But just like any financial product, it’s critical to work with a licensed, ethical, and experienced mortgage professional who compares multiple programs and puts your needs first.

At Atlantic Avenue Mortgage, we’re proud to be independent. We’re not tied to one lender, and we don’t answer to shareholders — we answer to our clients. That means we’ll work to find you the right reverse mortgage without unnecessary fees or surprises.

Let us help you unlock the full value of your home — with clarity, confidence, and care.