The Federal Housing Administration (FHA) announced last week that the 2025 Home Equity Conversion Mortgage (HECM) limit will be $1,209,750. It is the ninth year in a row that the limit has been increased based on home price growth, contributing to a single, national limit for all HECM loans.
While the increased limit theoretically increases borrowing power for anyone considering a HECM loan, industry analysts are somewhat divided on the potential benefits such a limit would have for the industry in the new year. This is because the interest rate, even after some moderation, remains relatively high.
But the new limit is largely seen as a positive by reverse mortgage industry participants who spoke HousingWire‘s Reverse Mortgage Daily (RMD), as well as social media posts from those who responded to the news online.
Bee 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 federally insured HECM options.
“This is good for the industry because it allows more older homeowners to tap into their home equity with a reverse mortgage and also underlines the use cases for proprietary products,” said Jonathan Scarpati, senior vice president of wholesale manufacturing at FOA.
“For those outside the borrowing limit, that’s where our own offering can help – such as our HomeSafe loan for those over 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 key focuses for FOA in recent months, a priority reflected in Scarpati’s comments.
“We know HECMs are right 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 loanDepotalso views the new limit as positive.
“The recently announced increase in 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 provides greater opportunities for qualified borrowers to leverage the financial tool for luxury homes, as well as new construction and existing properties.”
A higher HECM limit also emphasizes the FHA’s commitment “to helping people live in their homes for the rest of their lives,” she added.
Others take 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 about what the cap could mean for the company next year.
“Overall, we believe this is positive as it helps expand the industry to even more individuals who can benefit from a reverse loan,” Sciandra said. “This also applies to those looking for 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 customers with higher incomes and close more transactions in areas where housing prices are high.”
HECM for Purchase has been a priority for Fairway’s reverse mortgage business, he explained, and the new limit is seen as beneficial to these efforts. “This allows us to further solidify our position in the HECM for Purchase space and the HECM space in general,” he said.
Sciandra also understands that there are concerns that a higher limit will exacerbate problems associated with the high upfront costs for HECM loans, but he said he’s not sure he agrees with that idea.
Overall, perspectives shared via social media were also positive.
“This is great news for HECM borrowers with higher-value homes because these borrowers will now have access to even more equity from their homes than before,” said Bob Garczewski, national account manager at Simply the other way aroundsaid in a post on social media.
Echoing the sentiment was Rick Rodriguez, senior vice president of reverse mortgage lending VIP mortgage.
“This is great news for homeowners age 62 and older who are considering a reverse mortgage,” he said A LinkedIn after. “The higher limit means greater access to equity, providing greater 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 communicate that the FHA remains focused on the HECM program so that lenders can offer as much yield as possible to keep pace with home price growth.
“It’s great to see FHA carrying the HECM ball further down the field,” he said.
