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Purchasing a Home with a Reverse Mortgage

You may be aware that reverse mortgages can provide a valuable financial cushion to qualified seniors who want to stay in their homes as they age. But did you know that reverse mortgages can also be used to purchase a home? A Home Equity Conversion Mortgage (HECM) for Purchase is a reverse mortgage program designed to help senior homeowners finance the cost of a new home purchase. Read below to learn more and feel free to reach out to us with additional questions and to request a free rate quote.

How does an HECM for Purchase work?

An HECM for Purchase allows seniors age 62 or older to purchase a new principal residence using the loan proceeds from a reverse mortgage. In simplest terms, the HECM for Purchase is designed to allow seniors to purchase a new home and obtain a reverse mortgage in a single transaction.

How does the seller get paid?

The reverse mortgage proceeds are paid to the seller of the home through the title company (settlement agent). The title company is responsible for disbursing funds in accordance with state law.

What are the benefits?

An HECM for Purchase can be a great financial tool to help senior homeowners relocate to other geographical areas where they can be closer to family. As we age, being close to loved ones and having their support becomes more important.

Also, an HECM for Purchase can allow seniors to downsize to a more manageable home or one that has features that meets their changing physical and mobility needs, i.e. handrails, one-level homes, ramps, wheelchair accessible entryways, etc.

Where can I learn more?

You can review Department of Housing and Urban Development’s guidelines for HECM for Purchase loans. You may also contact one of our knowledgeable lending professionals to review the details of the program and discuss whether an HECM for Purchase loan makes sense for you.

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Potential Benefits of Reverse Mortgages**:

  • No monthly payments and no repayment is required until all borrowers are no longer using their property as their primary residence, all parties on the deed pass away, or they fail to pay their property taxes and homeowners insurance.
  • Tax free monthly income*
  • Payments can be used for whatever the borrower wants, including home renovations, consolidating debt, paying for medical expenses and insurance costs, and traveling and other leisure activities
  • Reverse mortgages provide a tool that allows seniors to tap into the equity they have in their homes. There are no income or minimum credit score qualifications. In today’s tightening credit markets, reverse mortgage products may be one of the best solutions available to most retired homeowners.
  • Possibly the greatest benefit of all, reverse mortgage programs may help seniorsremain in their homes that they have worked so hard to pay for throughout their lives.
  • A reverse mortgage is what we call a non-recourse loan. This means that with a reverse mortgage you are not personally liable. The liability is only to the extent of the value of your home at time of sale, death or vacating the premises as your permanent residence. You are not liable nor are your heirs personally liable; they can either sell the home at time of your death or keep the home and pay off the remaining balance of the reverse mortgage.

Talk to a reverse mortgage professional to learn more about some of the benefits of reverse mortgages and to see if one is right for your financial needs.

*Consult a financial tax professional for details.
**Loan benefits and parameters are subject to change. Consult with a mortgage professional for up-to-date information.

Learn more about how people are using home equity conversion mortgages for purchasing homes:

Please keep in mind that the reverse mortgage industry is constantly changing and some of the information contained on this site may not be current. Please ask a licensed reverse mortgage professional for up-to-date guidelines.