For some buyers 62 and older, the goal isn’t just buying the next home. It’s buying a home that fits retirement without adding a monthly mortgage payment. With a HECM for Purchase, there’s no required monthly mortgage payment, but you’re still responsible for living in the home as your primary residence, paying property taxes and homeowners insurance, paying any HOA dues, and keeping the home in good repair.
Maybe the house you raised your family in has too many stairs now. Maybe the grandkids live a few hours away and you’d like to be closer. Or maybe you simply want a home that fits this stage of life better, without taking on a new monthly mortgage payment in retirement.
Still, many retirees assume their only choices are to buy the next home with cash or take on a traditional mortgage with a monthly payment. There’s another option that a lot of people, and even many real estate professionals, haven’t heard of.
What HECM for Purchase is
A HECM for Purchase is a reverse mortgage used to buy a new primary residence. It’s part of the same FHA-insured Home Equity Conversion Mortgage program as a standard reverse mortgage, but instead of borrowing against a home you already own, you combine the purchase and the reverse mortgage into a single transaction.
Here’s the basic idea. You make a significant down payment from your own funds, and the reverse mortgage covers the rest. After closing, there’s no required monthly mortgage payment for as long as you live in the home and keep up with your obligations, which include property taxes, homeowners insurance, HOA dues, and upkeep.
Who it’s for
- Buyers age 62 or older.
- The home must be your primary residence, and you’ll need to move in within a short period after closing, as set by FHA rules.
- You’ll complete counseling with a HUD-approved reverse mortgage counselor before closing. In California, state rules add a worksheet and a waiting period after counseling, which we’ll guide you through.
The down payment
This is the part that surprises people most. Because a reverse mortgage only lends a portion of the home’s value, the down payment is usually substantial, and how much depends on factors like your age and the home’s price.
HUD sets the rules for where the down payment can come from. Sources that generally work include:
- Proceeds from selling your current home.
- Savings or other assets you own.
- A qualifying gift from a family member.
Some things can’t count toward it, such as sweat equity, trade equity, or a rent credit. If you’re thinking about borrowing any part of the down payment, ask before you plan on it. Current FHA rules do allow certain contributions from the seller, real estate agent, or builder toward closing costs, which is worth raising when you write the offer.
Why people choose it
- Buy without a required monthly mortgage payment. You’ll still pay taxes, insurance, and upkeep, but not having a mortgage payment can make a big difference to a retirement budget.
- Keep more of your savings. Instead of putting all your cash into the new home, you put in a portion and keep the rest working for you.
- Buy the home that fits. Single-level living, a smaller yard, or a home closer to family.
- One transaction. The purchase and the reverse mortgage close together, rather than buying with cash and taking out a reverse mortgage later.
What to understand before you decide
- You’re still the owner, and you’re responsible for taxes, insurance, and upkeep. The lender will review your finances to make sure those are manageable.
- The balance grows over time, which typically means less equity left for heirs.
- Costs can be higher than a traditional purchase loan, including FHA mortgage insurance.
- The property has to qualify under FHA standards, including condo approval if you’re buying a condo.
- Timing matters if you’re selling your current home. Since the down payment often comes from that sale, the sequence needs planning. Buying Your Next Home Before You Sell
For higher-value homes, some private reverse mortgage programs also allow purchases. Jumbo and Proprietary Reverse Mortgages
A situation we see often. A retired couple wants to leave a house with too many stairs and move into a single-level home closer to their grandchildren, without taking on a monthly mortgage payment in retirement. They also didn’t want to put everything from the sale into the new home. After counseling and a full review, they used part of the proceeds from selling their old home as the down payment on a HECM for Purchase, and kept the rest in savings. Now they live in a home that fits this stage of life, with no required monthly mortgage payment as long as they keep up with taxes, insurance, and upkeep.
Illustrative of one client’s situation. Not a guarantee or commitment to lend. Every file is different.
For real estate agents
If you work with clients who are downsizing or relocating in retirement, HECM for Purchase can widen what they can comfortably buy. It works best when the lender is involved early, before the offer, so the down payment, property eligibility, and counseling timeline are all lined up.
Qualified Home Loans brokers reverse mortgages through wholesale lenders, including HECMs, proprietary (jumbo) reverse mortgages, and second-lien reverse products, so we can compare programs side by side for you.
A simple plan
- Book a strategy call. Family members are welcome to join. We’ll talk about where you want to live and what you want your budget to feel like.
- We review everything up front. Your current home, savings, income, and the kind of property you’re considering.
- We map out the right path. If a HECM for Purchase fits, you’ll know roughly what down payment to plan for and how the timeline works, before you start touring homes.
The goal is a move that makes retirement easier, not harder.
Thinking about your next home?
If you or a parent are considering a move in retirement, I’m happy to walk through whether a HECM for Purchase makes sense. Family members are welcome to join.
More: Reverse Mortgages Explained
Mike Pacheco
President, Qualified Home Loans
Qualified Home Loans, NMLS 884457 · CA DRE 01910455 · Mike Pacheco, NMLS 236302 · Equal Housing Opportunity · Subject to qualification.