Reverse Mortgage Costs in Colorado: Full Breakdown, No Surprises
The most common thing I hear from Colorado homeowners who almost didn't call me: "I thought reverse mortgages were expensive." Sometimes that's true. Sometimes it's completely wrong — depending on your home value and which product you use. The only way to know is to run the actual numbers.
Here's the thing. Cost transparency is something I take seriously. I've seen too many homeowners walk away from a product that would have genuinely helped them because they had a vague fear about fees, when the reality was a lot more manageable than they imagined.
I'm Bobby Friel, a licensed Colorado mortgage broker. This post covers every cost category for both HECM and jumbo reverse mortgages — with real numbers, not ranges designed to obscure anything.
HECM Reverse Mortgage Costs: The Full List
The HECM (Home Equity Conversion Mortgage) is backed by FHA and is the most common reverse mortgage product for Colorado homes under roughly $1.2M. Here's every cost category:
Origination Fee
HECM origination fees are federally capped. The formula: 2% of the first $200,000 of appraised value, plus 1% of the remaining value above $200,000. Maximum cap: $6,000. Minimum: $2,500.
On a $650,000 Colorado home: 2% × $200,000 = $4,000, plus 1% × $450,000 = $4,500. That would be $8,500 — but the cap brings it to $6,000. The cap protects homeowners with higher-value properties.
FHA Mortgage Insurance Premium (MIP)
Upfront MIP: 2% of the home's appraised value (or FHA lending limit, whichever is lower). On a $650,000 Colorado home, that's $13,000 upfront. Annual MIP: 0.50% of the loan balance, accruing monthly.
This is the line item that surprises most people. But the MIP is what funds the non-recourse guarantee. It's what ensures your heirs are never personally liable for a loan balance that exceeds your home's value. It's not just a fee — it's a federally backed protection.
Closing Costs
Third-party closing costs — appraisal, title, escrow, recording — run similar to a standard refinance in Colorado. Expect $2,000–$4,500 depending on county, home value, and title company. Denver County tends to run slightly higher than rural counties.
HECM Counseling Fee
FHA requires independent counseling before you apply for a HECM. The counseling session covers your rights, loan terms, alternatives, and long-term implications. The fee is typically $125–$175, paid directly to an HUD-approved counseling agency. This is non-negotiable and genuinely worth it — I encourage clients to ask every question they have during that session.
| Cost Category | HECM on $750K Home | HECM on $1.5M Home |
|---|---|---|
| Origination Fee | $6,000 (capped) | $6,000 (capped) |
| Upfront FHA MIP (2%) | $15,000 | $23,040 (on FHA limit) |
| Closing Costs (est.) | $3,000–$4,000 | $3,500–$5,000 |
| Counseling Fee | $125–$175 | $125–$175 |
| Annual MIP (0.50%) | Accrues to balance | Accrues to balance |
| Total Upfront (est.) | $24,000–$25,000 | $32,500–$34,000 |
Jumbo Reverse Mortgage Costs: A Different Structure
For Colorado homes valued above approximately $1.2M — Boulder, Cherry Hills Village, Aspen, Telluride, Vail, parts of Evergreen — a jumbo (proprietary) reverse mortgage is often available. The cost structure is fundamentally different.
No FHA MIP. On many jumbo programs, no origination fee either. Closing costs are present but similar to a standard refinance — typically $3,000–$6,000 depending on home value and title costs. No mandatory counseling (though I encourage it anyway).
The result: on a $1.5M Colorado home, a jumbo reverse mortgage can cost $25,000–$35,000 less upfront than a HECM. That difference is significant — and it's why the jumbo product often wins on total cost for high-value properties, even though it lacks FHA backing.
| Cost Category | HECM on $1.5M Home | Jumbo on $1.5M Home |
|---|---|---|
| Origination Fee | $6,000 | $0–$2,000 (varies) |
| MIP (upfront) | $23,040 | $0 |
| Annual MIP | 0.50% accruing | $0 |
| Closing Costs | $3,500–$5,000 | $3,500–$6,000 |
| Counseling | $125–$175 | Not required |
| Total Upfront (est.) | $32,500–$34,000 | $3,500–$8,000 |
Important Distinction
Jumbo reverse mortgages do not carry FHA non-recourse guarantees — that protection comes from the loan contract itself, not a federal backstop. Read the non-recourse language in the jumbo contract carefully before closing. I review this with every client. The protection should be there — but it's a contractual term, not a federal regulation.
The Homeowner Who Was Surprised Jumbo Was Cheaper
A homeowner in Boulder came to me assuming the HECM was the "standard" and the jumbo was some exotic product that would cost more. Her home was worth $1.4M. She'd owned it since 2001 and had a small remaining mortgage of $95,000.
I ran both scenarios side by side.
The HECM on her home: $6,000 origination fee, $23,040 upfront MIP (based on the FHA lending limit at the time), $4,200 in closing costs. Total upfront: $33,240. Plus 0.50% annual MIP accruing to her balance every year.
The jumbo on her home: $0 origination fee on the program available to her, $0 MIP, $5,100 in closing costs. Total upfront: $5,100.
The jumbo gave her access to more of her equity (higher lending limits than the HECM), cost $28,140 less upfront, and accrued no annual MIP to her balance.
"I assumed the bank product would be cheaper," she said. It wasn't. Not by a long shot.
The jumbo was the right call — and she almost didn't ask the question because she assumed the answer.
— Homeowner, Boulder CO
How Costs Affect Your Net Proceeds
Upfront costs on a reverse mortgage are almost always financed — they come out of your loan proceeds rather than your pocket. You rarely write a check at closing. But they do reduce the net equity you receive.
On a $750,000 home where you might qualify for $350,000 in proceeds (depending on age and rate), paying $24,000 in financed costs leaves you $326,000 net. That's still a substantial amount of equity turned into usable capital — but understanding what those costs are, and comparing them clearly between HECM and jumbo, is how you make the right call. Run the numbers with our refinance calculator to compare a reverse mortgage to conventional refinancing options.
I run a net proceeds comparison for every client before they apply. You should know exactly what you're getting, net of all costs, before you sign anything. The Colorado reverse mortgage page has more detail on qualification and proceeds.
See Your Net Proceeds After All Costs
I'll model HECM and jumbo side by side for your home value — with every fee line included — so you know exactly what you'd net before committing to anything.
Get Your Equity BlueprintOne Cost People Forget: Servicing Fees
Historically, HECM servicers charged a monthly servicing fee of $30–$35 that accrued to the loan balance. Most current HECM programs have eliminated this fee, but it's worth confirming on your specific loan estimate. Ask your originator to confirm whether a monthly servicing fee is included in your loan documents — if it's there, it should be disclosed clearly.
Jumbo reverse mortgages generally do not carry separate servicing fees.
My Assessment of Reverse Mortgage Costs
Are reverse mortgages expensive compared to a conventional refinance? For HECM loans, yes — the upfront MIP adds meaningful cost. But you're not comparing a reverse mortgage to a refinance. You're comparing a tool that eliminates monthly payments, carries non-recourse protection, and doesn't require repayment until you leave the home to a loan that requires $1,000–$1,500 per month in ongoing debt service.
On a $750,000 Colorado home, paying $24,000 in upfront costs to eliminate a $1,350/month mortgage payment pays for itself in under 18 months — in pure cash flow terms. Over a 10-year period, the savings are enormous compared to any conventional option. Homeowners under 55 can access equity through HELOCs with similar flexibility — compare current Colorado HELOC rates or explore fixed-rate home equity loan options for a different structure.
That's not me selling the product. That's math. Use the reverse mortgage calculator to run your own version of that comparison.
Frequently Asked Questions
Don't Overpay for Homeowners Insurance
One cost that's easy to overlook when evaluating a reverse mortgage: your homeowners insurance premium. Colorado premiums have increased 20–45% in the past two years across many counties due to wildfire and hail risk. Since insurance is a required loan condition, an overpriced policy is a hidden ongoing cost of your reverse mortgage. Our insurance team compares 30+ carriers and has saved clients $600–$1,800 per year on premiums they were overpaying.
Full Cost Breakdown for Your Home
HECM vs. jumbo, all fees, net proceeds — I'll build the complete picture for your Colorado property before you apply.
Start Your Equity AnalysisBobby Friel
NMLS# 332039 · Colorado Licensed Mortgage Loan Originator
Published May 22, 2026
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