Both the HECM (US Department of Housing and Urban Development) and the Home Keeper reverse mortgage (Fannie Mae) remain the two most popular programs for seniors. Both offer very similar benefits, but there are some differences and it's important you should be aware of them if you're considering either program.

Here are some of the key differences between the two programs.

What homes are eligible?

To qualify for the HECM program your home must be either a one- to four-unit dwelling or a unit in a condominium or planned unit development (PUD) project. Leasehold properties are eligible if they meet HUD guidelines. Manufactured housing and units in condominiums and PUDs may be eligible if they are FHA-approved.

All of the mentioned properties qualify for the Home Keeper program but, in addition, properties held in trust are eligible if they conform to standard Fannie Mae guidelines and a power of attorney is allowed if it conforms to Fannie Mae guidelines.

How much money can you get?

Both use the value of the home, current interest rate and age of borrower(s) to determine the maximum amount that can be borrowed. Both are capped but in different ways. With the Fannie Mae program the maximum amount that can be borrowed currently stands at $417,000 (2007). HECM maximum limit depends on the FHA mortgage limit for a given county, which varies from $200,160 to $362,790 (2007).

What are the payment options?

The HECM is the most flexible of all programs. There are five ways one can elect to receive the money.

Tenure - equal monthly payments as long as at least one borrower lives and continues to occupy the property as a principal residence. Term - equal monthly payments for a fixed period of months. Line of Credit - unscheduled payments, at times and amounts of the borrower's choosing until the line of credit is exhausted. Modified Tenure - a combination of line of credit with monthly payments for as long as the borrower remains in the home. Modified Term - a combination of line of credit with monthly payments for a fixed period of months specified by the borrower.

Note: line of credit is not available in Texas.

With a Home Keeper reverse mortgage, there are 3 options: Tenure, Line of Credit and Modified Tenure.

One important point about receiving a line of credit is that the Fannie Mare program is a revolving line of credit, which means the borrower can withdraw a certain amount, then pay it back and withdraw it again at a later stage. Also, a HECM allows for appreciation of the line of credit; interest is added to what is still left in the undrawn funds, but this does not happen with a Home Keeper line of credit.

Both programs allow the borrower to switch payment types without penalty although a small charge is made each time the payment option is changed. Currently, the HECM program charges $30 and the Home Keeper $50.

The above are the main differences between a HECM and a Home Keeper reverse mortgage but there are others. You should talk to your broker about these differences and how they would impact your financial situation. Also, don't forget to explore proprietary (jumbo) programs and what they might be able to offer you.

The above is a brief overview; follow the links for more detailed advice on the Home Keeper reverse mortgage and the FHA reverse mortgage and much more reverse mortgage information.