HECM for Purchase

A Home Equity Conversion Mortgage (HECM) that could help you purchase a new home without making monthly mortgage payments.

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It’s not too good to be true—it’s just a special kind of reverse mortgage designed to help homeowners 62 and older buy the home they need, while meeting their financial and retirement goals.

If you qualify, you can use a HECM for Purchase reverse mortgage to relocate to a home that’s closer to your family; one that’s more physically accessible; or one that’s a better fit for your current or future needs.

Of course, a HECM for Purchase reverse mortgage is still a loan, so interest does accrue on the portion of the loan amount disbursed. As with any home, the homeowner is responsible for paying for property taxes, insurance premiums, and necessary maintenance.

HECM for Purchase: how it works

  • If you qualify, you can buy a home or FHA approved condo as your principal residence by taking out a HECM reverse mortgage on that property.
  • Using proceeds from the sale of your current home or cash on hand, you make a down payment (usually 40% to 50% of the cost of the new home) and cover closing costs.
  • The balance of the purchase is covered by your HECM proceeds—any remaining funds can be used as you choose.
  • There’s just a single closing, as the home purchase and HECM reverse mortgage are executed in one transaction.
  • You make no monthly mortgage payments on the new home.
  • You own the home—not the bank—and you can continue to live in it, as long as the terms of the loan are met.
  • The loan is repaid, including principal plus accrued fees and interest, when the last surviving homeowner vacates the property for 12 months of the home or passes away.