Something quietly reversed in the home equity market this year. For the first half of 2026, proprietary reverse mortgages — private loans made without any federal insurance — accounted for 54% of all reverse mortgage originations, edging past the FHA-insured Home Equity Conversion Mortgage that has defined the category for decades. Proprietary production reached roughly $2.2 billion in the first half against $1.8 billion for HECMs, according to figures from Reverse Market Insights and New View Advisors.
The government product is shrinking as the private one grows. July 2026 HECM endorsements came in at 2,034 loans, down 14% from 2,365 a year earlier. New View's analysis found HECM unit volume grew just 6% between 2023 and 2025 while proprietary units nearly quadrupled.
"The growth in proprietary reverse mortgages is one of the most significant developments in our industry in recent years," said Michael McCully, co-founder of New View Advisors.
The Number That Actually Moves
This is happening in the same year HUD raised the HECM lending limit to $1,249,125, up 3.26% from $1,209,750 — the tenth straight annual increase, set by Mortgagee Letter 2025-22 effective January 1, 2026. Unlike forward FHA loans, it is a single national figure, calculated as 150% of the Freddie Mac conforming limit.
That headline is mostly noise. The cap only changes anything for homes appraised between the old and new figures. Below $1,209,750, the increase does nothing. Above $1,249,125, proceeds are still calculated at the ceiling.
What does move the needle is the expected interest rate. A HECM's principal limit equals the Maximum Claim Amount — the lesser of appraised value, sale price, or the HUD cap — multiplied by a Principal Limit Factor drawn from a HUD table indexed to the youngest borrower's age and that expected rate. The relationship is inverse: higher rates mean a smaller share of the home is reachable.
The expected rate is the 10-year Constant Maturity Treasury plus the lender's margin. The 10-year CMT sat at 4.66% for the week ending August 11, 2026, with the 10-year Treasury closing at 4.68% on August 12. Add typical margins of 1.75% to 2.00% and expected rates land near 6.4% to 6.7%. At a 5.875% benchmark, published factor tables run from roughly 35.1% of value at age 62 to 61.4% at age 90 — and today's rates sit above that benchmark.
Record equity does not mean record access. NRMLA's index put senior home equity at an all-time $14.92 trillion, but rates decide how much of it a 70-year-old can actually draw.
What Retirees Should Weigh
The HECM's mandatory insurance is the main reason private loans are winning on high-value homes: a 2.0% upfront mortgage insurance premium on the Maximum Claim Amount plus 0.5% annually is a real drag when a borrower is capped at the HUD limit anyway.
But that premium buys things the private products do not automatically include:
- FHA insurance stands behind the HECM's non-recourse protection. Proprietary loans commonly carry a non-recourse clause, but it is a contract term, not a federal guarantee — read it.
- Counseling from an FHA-approved third party is required for a HECM. For proprietary loans it is recommended, not mandated. Get it anyway.
- HUD caps HECM origination fees; proprietary loans are governed largely by state contract law, where remedies for unsuitable placement vary widely.
Practical takeaways: ask any lender for the expected rate and the resulting principal limit factor, not just the monthly payout. Compare a HECM and a proprietary quote side by side rather than accepting whichever a lender leads with. And if the loan is not FHA-insured, confirm the non-recourse language in writing before signing.
Sources: Asset Securitization Report / American Banker, New View Advisors, Reverse Market Insights, HUD Mortgagee Letter 2025-22, Consumer Financial Protection Bureau, NRMLA/RiskSpan Reverse Mortgage Market Index