Reverse Mortgage
for Purchase

Reverse mortgages were originally created to help homeowners, particularly retirees. stay in their home. However, it’s now possible for borrowers to purchase a new home under the Federal Housing Administration’s (FHA) Home Equity Conversion Mortgage (HECM) program.

What is a Reverse Mortgage for Purchase?

The FHA HECM program was introduced in 2009 to allow borrowers to use the proceeds of a reverse mortgage to buy a new primary residence in a seamless transaction. This is a cost effective way to downsize housing expenses or relocate to a new location. This type of transaction will generally provide the borrower with a fixed-rate, lump-sum loan that’s applied to the purchase of the new home

HECM Eligibility Requirements for Purchase

When considering qualifying for the FHA reverse mortgage program, you must meet the following requirements:

Property must meet FHA property requirements
Borrower must complete HUD-approved counseling
Borrower must be at least 62 years of age or older
The property being purchased must be the primary residence and occupied within 60 days of loan closing
The difference between the purchase price of the new home and HECM loan must be paid in cash from qualifying sources

Eligible HECM for Purchase Dwellings

Single-family homes

Single-family homes

2-4 unit homes with one unit occupied by the borrower

2-4 unit homes with one unit occupied by the borrower

HUD approved condominiums

HUD approved condominiums

FHA approved manufactured homes

FHA approved manufactured homes

Is a HECM for Purchase Right for Me?

Homeowners should consider this option if they are looking to downsize or relocate. You must be able to afford a down payment, but it can come in the form of a gift from friends or family. It’s important to note that although you don’t need to own an existing property or sell your existing home to qualify, you will be required to occupy the new home as your primary residence.