Reverse mortgage pros sound off on 2025 HECM limit

The Federal Housing Administration (FHA) announced last week that the Home Equity Conversion Mortgage (HECM) limit for 2025 will be $1,209,750. It’s the ninth straight year that the limit will increase based on home-price appreciation levels, which feeds into a single, national limit for all HECM loans.

While the increased limit theoretically increases the borrowing power for anyone considering a HECM loan, industry analysts are somewhat split over the potential benefits such a limit would have on the industry in the new year. This is because interest rates remain relatively high even after some moderation.

But the new limit is largely seen as positive by reverse mortgage industry participants who spoke with HousingWire’s Reverse Mortgage Daily (RMD), as well as social media posts from those who reacted to the news online.

At Finance of America (FOA), the increased limit for next year is seen as a positive development that could also make clearer the potential use cases for reverse mortgage products beyond the federally insured HECM options.

“This is good for the industry because it allows more older homeowners to tap their home equity using a reverse mortgage and also underscores the use cases for proprietary products,” said Jonathan Scarpati, FOA’s senior vice president of wholesale production.

“For those outside of the loan limit, that’s where our proprietary offerings can help — like our HomeSafe loan for those above the limit and our HomeSafe Second loan for those looking to take out less equity.”

The HomeSafe product suite — and specifically the HomeSafe Second product — have been major focal points for FOA in recent months, a priority reflected by Scarpati’s comments.

“We know HECMs are a good fit for some, but our partners often need other options to reach a greater number of homeowners,” he said.

Lisa Moriello, national retail reverse sales manager at loanDepot, also views the new limit as a positive.

“The recently announced increase to the HECM limit is exciting news for reverse mortgage borrowers,” she told RMD in a statement. “Using a reverse mortgage as part of retirement planning is more important today than ever before and this change allows for greater opportunities for qualified borrowers to leverage the financial tool for luxury homes, as well as for new construction and existing properties.”

A higher HECM limit also emphasizes that the FHA is committed “to helping people stay in their homes for their lifetime,” she added.

Others are taking a more nuanced approach to the increase. Peter Sciandra, executive vice president of reverse lending and secondary marketing at Fairway Independent Mortgage Corp., met with members of his team to assess their feelings on what the limit could mean for the company next year.

“Overall, we feel that this is positive as it helps to expand the industry to even more individuals that can benefit from a reverse loan,” Sciandra said. “This includes those that are looking to purchase a new home as it allows those buyers to look at higher-value properties that were previously out of reach, and should allow us to compete more effectively in more affluent markets, attract higher-income clients and close more transactions in areas where there are elevated home prices.”

HECM for Purchase has been a priority for Fairway’s reverse mortgage business, he explained, and the new limit is seen as conducive to these efforts. “This allows us to further solidify our foothold in the HECM for Purchase space as well as the HECM space overall,” he said.

Sciandra also understands there are concerns that a higher limit will exacerbate issues related to high upfront costs for HECM loans, but he said he isn’t sure if he agrees with that idea.

In general, perspectives shared via social media were also positive.

“This is great news for HECM borrowers with higher value homes, as these borrowers will now be able to access even more equity from their homes than they could previously,” Bob Garczewski, national account manager at Simple Reverse, said in a social media post.

Echoing the sentiment was Rick Rodriguez, senior vice president of reverse mortgage lending at VIP Mortgage.

“This is fantastic news for homeowners 62 and older who are considering a reverse mortgage,” he said in a LinkedIn post. “The higher limit means greater access to home equity, providing more financial flexibility for retirement planning, reducing monthly expenses, or simply enjoying the retirement lifestyle one deserves.”

When reached by phone, Rodriguez added that the increase also helps to communicate that the FHA remains focused on the HECM program so that lenders can offer as much as possible in proceeds to keep pace with home-price appreciation.

“It’s great to see FHA carry the HECM ball further down the field,” he said.