Tennessee Set to Authorize Private Jumbo Reverse Mortgage Options

Tennessee is moving to modernize its lending laws by legalizing proprietary reverse mortgages, a move that provides senior homeowners with more financial flexibility. Currently, residents are largely restricted to the Federal Housing Administration’s Home Equity Conversion Mortgages (HECMs). By allowing private, proprietary products, the state will enable homeowners with high-value properties to access more equity than federal limits allow.

This legislative shift is significant because it removes the existing cap on loan amounts. For 2026, the federal limit on HECMs is approximately $1.25 million; however, many homes in Tennessee’s luxury markets exceed this valuation. Proprietary reverse mortgages—often called "jumbo" reverse mortgages—will allow seniors to borrow against the full value of their high-end estates without the federal ceiling getting in the way.

As the bill moves toward implementation, real estate experts are watching to see how private lenders enter the Tennessee market. The change is expected to attract national lenders who have previously bypassed the state due to its restrictive regulations. This competition could lead to more diverse product offerings and lower costs for borrowers looking to tap into their home equity during retirement.

The expansion of these lending options follows a broader trend of states reevaluating their reverse mortgage statutes to better accommodate rising home values and the needs of a growing retiree population. This report was originally covered by HousingWire.