Can I Purchase a Home with a HECM Reverse Mortgage?

Reverse mortgages are becoming a more popular way for seniors to tap into their home equity and age in place. A question that often comes up is whether or not a reverse mortgage can be used to purchase a new home. The answer is yes, in most cases you can use an FHA reverse mortgage, also known as a home equity conversion mortgage (HECM), to purchase a new home. Let's take a closer look at how this works.

What is the HECM For Home Purchase (H4P) Program?

The Home Equity Conversion Mortgage (HECM) For Purchase (H4P) Program is a reverse mortgage program that helps people 62 years and older purchase a new home. This FHA-Insured and HUD-regulated program combines a reverse mortgage with a down payment, which means eligible seniors won’t have to worry about making monthly mortgage payments in their new home.

Who qualifies for the HECM For Home Purchase (H4P) Program?

In order to qualify for a HECM For Purchase (H4P) Program, you must:

• Be 62 years of age or older
• Purchase a primary residence home only
• Have suitable credit and income history
• Pass a mandatory Financial Assessment to ensure the reverse mortgage will be feasible for them
• Remain current on property taxes, homeowner’s insurance, HOA dues, and routine home maintenance

Why should you consider the HECM For Home Purchase (H4P) Program?

Unlike many conventional mortgages, the HECM For Purchase (H4P) Program offers lower upfront investments and no monthly mortgage payments, giving you more peace of mind in pursuit of your goal of homeownership. And with less strict eligibility requirements than a traditional mortgage, many more people can finally achieve their dream home with the backing of this innovative program.

How to Determine Your One-time Down Payment Amount**

Purchase Price	Approximate Purchase Payment Required from the Borrower
	Youngest Borrower Age 62	Youngest Borrower Age 65	Youngest Borrower Age 70	Youngest Borrower Age 75	Youngest Borrower Age 80
$300,000.00	$173,400.00	$167,400.00	$157,500.00	$150,000.00	$138,600.00
$400,000.00	$231,200.00	$223,200.00	$210,000.00	$200,000.00	$184,800.00
$500,000.00	$289,000.00	$279,000.00	$262,500.00	$250,000.00	$231,000.00
$600,000.00	$346,800.00	$334,800.00	$315,000.00	$300,000.00	$277,200.00
$700,000.00	$404,600.00	$390,600.00	$367,500.00	$350,000.00	$323,400.00
$822,375.00	$475,350.00	$458,900.00	$431,750.00	$411,200.00	$379,950.00

If you are interested in using a reverse mortgage to purchase a new home, reach out to one of our Loan Officers. We would be happy to discuss the HECM For Home Purchase Program with you and answer any questions you have. Our team is here to help make your retirement dreams come true. Please provide your contact information below and we will be in touch soon.

**The above illustration is for educational purposes only and assumes the transaction is an Adjustable-Rate Mortgage with Variable Rate Monthly CMT 10, Margin: 2.500, Initial Interest Rate: 2.5700%, Expected Average Interest Rate: 4.1500%, Closing costs: 4 % of the purchase price, Expected Closing Date/Note Date: 05/29/2021, No tax and insurance paid at closing, no life expectancy set aside required. The appraised value is equal to or higher than the purchase price. The purchase payment required from the borrower is rounded to the nearest $50.

Note: The values in the above table are generated as of 03/30/2022 and are subject to change.

Borrowers’ income, credit, and property charge payment history will be assessed to validate if the borrowers meet the FHA guidelines for residual income and whether life expectancy set aside will be applicable or not.