Smartfi Home Loans launched a 50-basis-point interest rate discount on its proprietary Choice reverse mortgage for eligible veterans, a move that fills a market gap and targets an underserved segment. The offer, effective from Memorial Day (May 25, 2026), is available indefinitely, according to Kim Smith, SVP of wholesale lending at the company.
The Big Picture
The reverse mortgage market has undergone a quiet but profound transformation over the past decade. For years, FHA-insured Home Equity Conversion Mortgages (HECMs) dominated the industry, accounting for over 90% of origination volume. But over the past five to seven years, the proprietary segment has steadily gained ground, offering more options to homeowners aged 55 and older looking to tap home equity without selling. Industry data shows proprietary loans now represent roughly 25% of the total reverse mortgage market, up from less than 10% in 2019. Smartfi, with its Choice product, is betting on customization and flexibility to stand out in an increasingly crowded field.
The decision to focus on veterans responds to concrete demand from originators and channel partners. "Our originators told us that something veteran-related would go over very well," Smith explained. The company doesn't formally track how many borrowers are veterans, but it identified a clear gap: no product explicitly recognized their military service. This void is particularly notable given that veterans make up about 7% of the U.S. population and have homeownership rates above 80%, well above the national average. Moreover, many veterans face unique financial challenges, such as fixed incomes from pensions and VA benefits, making reverse mortgages a particularly relevant tool for them.
“The 50-bps discount is a thank-you gesture, but also a strategic play in an increasingly competitive market where differentiation is key to capturing market share.”
By the Numbers
- Discount: 50 basis points off the interest rate for eligible veterans, applied directly to the Choice product rate.
- Eligibility: Proof of prior military service only, which can be a military ID, VA benefits letter, or DD Form 214. No minimum service time or disability status required.
- Availability: Indefinite, per Smartfi. The company has set no end date, suggesting a long-term commitment to this segment.
- Age requirement: 55 and older, same as standard Choice product. This aligns with typical proprietary product thresholds, which are lower than the 62-year minimum for HECMs.
- Market context: The proprietary reverse mortgage segment has grown substantially, with originations up 40% year-over-year in Q1 2026, per industry estimates. Growth is driven by demand for larger loans (HECMs have a 2026 limit of $1,089,300) and greater term flexibility.
Why It Matters
Smartfi's move is not just patriotic; it's smart business on multiple fronts. Veterans represent a stable demographic with predictable income (pensions, VA benefits) and high homeownership rates. By offering an exclusive discount, Smartfi positions itself to capture a loyal, low-risk market share. Additionally, veterans tend to have higher credit scores and lower default rates on mortgage loans, reducing lender risk.
Timing is key. With interest rates still elevated in 2026 —the average rate for proprietary reverse mortgages hovers around 7.5%— any 50-bps reduction can be a significant differentiator. For a typical $300,000 loan, a 50-bps discount translates to roughly $1,500 in interest savings in the first year, enough to sway undecided borrowers. Competitors without similar offers could lose ground in this niche, especially those relying on HECM products with higher effective rates due to mortgage insurance premiums.
The growth of the proprietary market also plays to Smartfi's advantage. Unlike HECMs, which have loan limits and stricter requirements (like financial assessment), proprietary products offer more flexibility in loan amounts, property types, and fund usage. Smartfi is betting that flexibility plus a veteran discount will be unbeatable, especially in an environment where older homeowners seek to maximize home equity without the added costs of HECM insurance.
What This Means For You
If you're a veteran aged 55 or older, this offer could be a real opportunity to access cash without selling your home, whether to supplement retirement income, pay off debt, or cover medical expenses. But it's not the only option, and it's crucial to evaluate all alternatives. Here are practical steps:
- 1Verify eligibility: Gather your military ID, VA benefits letter, or DD Form 214. The proof is straightforward and doesn't require extensive documentation. Ensure documents are current and legible.
- 2Compare with HECM: While the discount is attractive, compare total costs and rates with an FHA-insured HECM. The 50-bps discount may not offset differences in insurance (HECM has a 2% upfront premium and 0.5% annual premium) or loan limits. For high-value properties, the proprietary product may be more advantageous; for lower values, HECM could offer better terms.
- 3Consult a counselor: Reverse mortgages are complex with long-term implications for inheritance and benefit eligibility. A HUD-approved housing counselor can help you evaluate suitability. Additionally, consider speaking with a financial planner who understands veteran-specific needs.
What To Watch Next
Smartfi's move could trigger a wave of similar offers in the reverse mortgage market. Competitors like Finance of America (with its HomeSafe product) or American Advisors Group (AAG) might respond with discounts for veterans or other specific groups (teachers, firefighters, first responders). Also watch for regulatory changes: the CFPB has shown interest in proprietary reverse mortgages, and increased scrutiny could affect marketing and disclosure practices.
Another factor is the interest rate trajectory. If the Fed begins cutting rates in H2 2026 —as some analysts project— the 50-bps discount may become less compelling in absolute terms, but it would still serve as a competitive differentiator. Conversely, if rates remain high or rise, the discount will be an even more powerful magnet for veterans seeking cost relief.
Additionally, monitor how other proprietary lenders adjust their offerings. If Smartfi's discount proves successful in driving volume, we could see a discount war in the veteran segment, benefiting borrowers but compressing lender margins. Also worth watching is HECM origination volume: if it drops significantly, the FHA might adjust insurance premiums to make the product more competitive.
The Bottom Line
Smartfi has taken a bold step by offering an exclusive veteran discount in a market seeking differentiation. The move blends gratitude with solid business strategy, leveraging a stable and growing demographic segment. For veterans, it's an opportunity worth exploring, but always with eyes open to total costs and available alternatives. The reverse mortgage market is maturing, and veterans may be the first to benefit from this new competition. In a high-rate environment, any cost advantage is welcome, and Smartfi has planted a flag that others will likely follow.
