HECM For Purchase

A Home Equity Conversion Mortgage (HECM) for Purchase is a reverse mortgage that allows seniors, age 62 or older, to purchase a new principal residence using loan proceeds from the reverse mortgage. 

Real estate professionals who are interested in learning more about HECM for Purchase can download free resources from NRMLAonline.org

Eligibility Requirements:

  • Be 62 years or older

  • Must be living in home as primary residence; vacation homes and investment properties do not qualify

  • Complete a HUD-approved counseling session

  • Must be able to pay property taxes, homeowners insurance, and any applicable HOA fees.

Features:

  • No monthly mortgage payments*

  • Borrower can reserve cash assets

  • More cash available for retirement

  • No repayment of loan until last borrower moves out of home 

Eligible Property: 

  • Single Family 

  • HUD Approved Condos

  • Planned Unit Developments (PUD) 

  • Two to four unit property (one must be owner occupied) 

  • Manufactured Homes built after June 15th 1976 (must own land and be on permanent foundation) 

  • Property must be occupied within 60 days after closing date

Down Payment: 

  • Down payment will vary based on age of youngest borrower, the current expected rate and the appraised value of the home. The older the youngest borrower is the smaller the down payment. Please call for specific numbers. Max value of home is capped by FHA at $726,525. 

Allowed Sources of Down Payment:

  • Sale of departure home

  • Sale of homebuyer’s other assets

  • Homebuyer savings

  • Gift money from parties not involved in transaction 

Not Allowed For Down Payment:

  • Seller financing and concessions

  • Cash from credit card

  • Bridge loan of any kind

  • Subordinate financing

* Must keep property taxes, insurance and HOA dues current.

Use our free calculator to provide some of the basic information we need to collect in order to analyze a HECM for Purchase loan. Additional information will be required, such as the purchase price of the new home, which will require a follow up consultation.

This information is not intended to be a substitute for legal, tax or financial advice. Consult with a qualified attorney, accountant or financial advisor for additional legal or tax advice. These materials are not from HUD or FHA and were not approved by HUD or a government agency. * There are some circumstances that will cause the loan to mature and the balance to become due and payable. The borrower(s) must continue to maintain the home as their primary residence, pay for property taxes and insurance and maintain the property to meet HUD standards or risk default. Credit is subject to age, minimum income guidelines, credit history, and property qualifications. Program rates, fees, terms, and conditions are not available in all states and subject to change.