Essentials

The Home Equity Conversion Mortgage (HECM) for Purchase is a program offered by the Federal Housing Administration (FHA) that allows seniors aged 62 and older to purchase a new primary residence using a reverse mortgage. This program provides an alternative financing option for seniors who wish to downsize, relocate, or move closer to family.

• The borrower(s) must be at least 62 years old or older.

• The purchased property must be the borrower’s primary residence and should be occupied within 60 days of closing.

• The borrower must make a down payment on the property using funds from a qualifying source.

• Borrower(s) are not required to make any monthly mortgage payments on the reverse mortgage purchase loan as long as they live in the home, maintain the property, and pay property taxes and homeowners insurance.

• The down payment amount is determined by factors such as the age of the youngest borrower, the current interest rate, the appraised value of the property, and the FHA lending limit.

• Prior to obtaining a HECM for Purchase loan, borrowers are required to undergo counseling with an FHA-approved counselor. The counselor will provide information about the program, the loan terms, and help the borrower understand their financial obligations.

• Borrowers must demonstrate the ability to pay for property taxes, homeowners insurance, and other property-related expenses. The lender will assess the borrower’s income, credit history, and financial stability to determine eligibility.

• The property being purchased must meet certain FHA requirements, including being a single-family home, a 2-4 unit property (with one unit occupied by the borrower), or a HUD-approved condominium.

• The maximum loan amount for a HECM for Purchase is based on the lesser of the appraised value of the property or the FHA lending limit for the area.

• The loan is repaid when the borrower sells the home, moves out of the property, or passes away. The loan balance, including accrued interest and mortgage insurance premiums, must be repaid.

These guidelines provide a general overview of the HECM for purchase program. However, it’s advisable to consult with a qualified financial professional or a HUD-approved housing counselor for the most up-to-date information on the HECM for purchase program.