Reverse Mortgage California: HECM, Jumbo and Second-Lien Options

Ted Erickson is a mortgage broker with Barrett Financial Group, based in Novato and serving homeowners across Marin and Sonoma counties. He has 24 years closing loans. On reverse mortgages he brings what those years taught him: reading a file carefully, explaining trade-offs in plain words, and shopping several reverse mortgage lenders instead of handing you one product.

How Does a Reverse Mortgage Work?

A reverse mortgage is a loan against the equity in the home you live in. It is a loan, not a benefit. Instead of you paying the lender each month, the lender advances money to you. Depending on the product, that can be a lump sum, a line of credit or another payout choice. No monthly mortgage payment is required as long as you meet the loan terms.

Interest is added to your balance every month. On a HECM, the annual FHA mortgage insurance premium is added too. So what you owe goes up over time and your equity goes down. That can use up much, or all, of your equity, leaving little or nothing when you or your estate sells the home.

The loan comes due when the last borrower dies, sells the home, or moves out, including being away more than 12 consecutive months for illness. Most reverse mortgages are nonrecourse, which means you or your estate cannot owe more than the home is worth when the loan is due and the home is sold.

Reverse Mortgage California Options Ted Can Shop

There is more than one reverse mortgage, and reverse mortgage requirements differ from one to the next. Ted looks at four types and matches the one that fits your home, your age and your existing loan.

HECM (Home Equity Conversion Mortgage)

The HECM is the FHA-insured reverse mortgage. The youngest borrower must be 62 or older at closing, and the home must be your primary residence. For 2026, the HECM maximum claim amount is $1,249,125 nationwide, per FHA Mortgagee Letter 2025-22. A HECM must be the first lien, so any existing mortgage is paid off at closing from the loan proceeds or your own funds. HECM rules also include protections that may let an eligible non-borrowing spouse stay in the home after the borrower dies, if that spouse is named in the loan documents and keeps living there.

Jumbo reverse mortgage (proprietary)

If your Marin or Sonoma home is worth more than the HECM limit, a jumbo reverse mortgage may be worth comparing. Also called a proprietary reverse mortgage, it is offered by private lenders, typically for higher-value homes. It is not FHA-insured and is not part of the HECM program, so there is no FHA mortgage insurance. Some lenders accept borrowers younger than 62, some from 55. Age minimums, loan limits and terms vary by lender and state.

HECM for Purchase

A HECM for Purchase is a reverse mortgage for purchase of your next primary residence. You bring a sizable down payment from your own funds to cover the gap between the loan proceeds and the price plus closing costs. You must move in within 60 days of closing. After that, no monthly mortgage payment is required on the new home as long as you meet the loan terms.

Second-lien reverse mortgage

Some homeowners have a first mortgage they want to keep. If you want a reverse mortgage with existing mortgage terms left alone, this is the option to compare. A second-lien reverse mortgage sits behind your existing first mortgage. You keep, and keep paying, your first mortgage. The second requires no monthly payment as long as you meet the loan terms: taxes, insurance, upkeep and living in the home. It is not FHA-insured and not part of the HECM program. Some lenders allow borrowers from 55; it varies by lender and state.

Who a Reverse Mortgage Fits, and Who It Doesn’t

A reverse mortgage tends to fit people who:

• Plan to live in the home as their primary residence for a long time.
• Can comfortably keep paying property taxes, homeowners insurance, HOA dues and upkeep.
• Have meaningful equity and want to use it without adding a monthly mortgage payment.
• Understand, along with their family, that the balance grows and less equity may be left for heirs.

It is usually a poor fit if you:

• Expect to move, or to move into care, in the near future.
• Already struggle to pay taxes, insurance or upkeep.
• Want to leave the home itself to your heirs, free and clear.
• Share the home with someone who is not on the loan and would need to stay after you die or move out.

What a Reverse Mortgage Costs

A reverse mortgage is not cheap money. The FTC notes its costs can be higher than other ways to borrow, especially what you pay upfront. Expect:

• An origination fee and closing costs such as appraisal, title and escrow.
• On a HECM, an upfront FHA mortgage insurance premium plus an annual premium that is added to your balance.
• Interest that is added to your balance every month.
• Servicing fees on some loans.

Origination fees, interest rates, closing costs and servicing fees vary among reverse mortgage lenders. FHA mortgage insurance is usually the same from lender to lender. That is why comparing more than one lender matters.

What You Must Keep Doing

No monthly mortgage payment does not mean no obligations. To keep the loan in good standing, you must:

• Pay property taxes on time.
• Keep homeowners insurance, and flood insurance if required, in force.
• Pay HOA dues and any special assessments.
• Keep the home in good repair.
• Live in the home as your primary residence.

Fall behind on any of these and the lender can call the loan due, which can lead to foreclosure. On a second-lien reverse mortgage, you must also stay current on your first mortgage.

California Protections for Reverse Mortgage Borrowers

California adds its own rules on top of the federal ones, in Civil Code 1923.2 and 1923.5:

• Counseling first. HUD-approved counseling is required for a HECM borrower, any non-borrowing spouse and any non-borrowing owner. Before taking a final application, the lender must give you a list of at least 10 HUD-approved counseling agencies.
• A 7-day wait. The lender cannot accept your final application or charge fees until seven days after your counseling.
• No required annuity. No one can require you to buy an annuity to get a reverse mortgage, and the people originating your loan cannot steer you to buy annuities, investments or other insurance products. Customary title and homeowners insurance are allowed.
• A notice and worksheet. Before counseling you get a written notice and a worksheet of questions to raise with your counselor, such as what happens to others in your home after you die or move out.

The FTC also notes that with most reverse mortgages you have at least three business days after closing to cancel. Ted is not a counselor, and he does not sell annuities, investments or insurance. Counseling comes from an independent HUD-approved agency, which you can find through HUD’s counselor roster or by calling (800) 569-4287.

Why a Reverse Mortgage Broker Helps

A bank or direct lender shows you its own reverse mortgage. A reverse mortgage broker can show you several. Ted looks at your home value, your age, your existing loan and your goals, then lines up the products that fit: HECM, jumbo, HECM for Purchase or second-lien. Then he shops the loan among the lenders that fit and walks you through the costs and terms side by side. He’ll tell you straight what’s possible and what isn’t, including when another option makes more sense than a reverse mortgage.

What Ted Will Ask For

• The ages of everyone on title, and of a spouse who is not on title.
• Who else lives in the home.
• Your current mortgage statement, if you have a mortgage.
• Your property tax bill, homeowners insurance declarations page and any HOA statement.
• Income and asset documents, since lenders review whether you can keep up with taxes, insurance and upkeep.
• What you want the money to do, so he can match the payout to the goal.
• Your counseling certificate, once you have completed counseling.

The questions below cover losing the home, the 95% rule, heirs, buying a home and keeping an existing mortgage. If you would rather talk it through, call or text Ted.

If you are weighing your options, read how a mortgage broker compares with a bank, see how Ted handles jumbo loans in Marin and Sonoma, or meet Ted Erickson before you call.

Sources

• HUD: Mortgagee Letter 2025-22, 2026 HECM maximum claim amount
• HUD: Home Equity Conversion Mortgages for Seniors (HECM for Purchase, counselor roster)
• eCFR: 24 CFR Part 206, Home Equity Conversion Mortgage Insurance (age, residence, due and payable, counseling)
• CFPB: Reverse mortgage loans
• CFPB: With a reverse mortgage loan, can my heirs keep or sell my home after I die?
• CFPB: Are there different types of reverse mortgages?
• FTC: Reverse Mortgages (costs, shopping lenders, right to cancel)
• California Legislature: AB 1700 (2014), amending Civil Code 1923.2 and 1923.5

These materials are not from HUD or FHA and were not approved by HUD or a government agency. Proprietary (jumbo) and second-lien reverse mortgages are not FHA-insured and are not part of the HECM program.