Can You Buy a Home With a Reverse Mortgage? HECM for Purchase Explained
By Toni Taylor Gozza, Certified Reverse Mortgage Specialist and Senior Loan Originator | Interconnect Mortgage Inc. | NMLS 274323
Most people know a reverse mortgage can help homeowners stay in their current home. What a lot of buyers over the age of 62 do not know is that a reverse mortgage can also be used to buy a brand new one.
The program is called HECM for Purchase, and it is one of the most powerful and most underused tools in retirement real estate planning. Today I am walking you through exactly how it works, who it is for, how the down payment is calculated, and what happens when the loan comes due.
What Is HECM for Purchase?
HECM stands for Home Equity Conversion Mortgage. It is the FHA insured reverse mortgage program backed by the federal government.
A HECM for Purchase takes that same program and applies it to buying a new home instead of tapping equity in an existing one. The result is a way for buyers 62 and older to purchase a home, live in it as their primary residence, and make no required monthly mortgage payments for as long as they live there.
No required principal and interest payment. None.
How Does HECM for Purchase Work?
The process is simpler than most people expect.
1. You find a home you want to buy.
2. You bring a down payment from your own funds, typically from the sale of your current home, retirement savings, or other assets.
3. The reverse mortgage covers the remaining purchase price.
4. You move in and you own the home.
You make no required monthly principal and interest payments for as long as you live in the home as your primary residence. You remain responsible for property taxes, homeowners insurance, any HOA dues, and maintaining the home. That part has not changed.
The loan balance grows over time as interest accrues, but you never have to make a monthly mortgage payment while you live there.
Do You Actually Own the Home?
Yes. Let that sink in for a minute.
You buy a home, you own it, your name is on the title, and you do not have to make a monthly mortgage payment. That is the core of the program. It is a mortgage, just structured differently than what most people are used to.
What Happens When the Loan Comes Due?
The loan becomes due when the last surviving borrower permanently leaves the home as a primary residence. That can happen through the sale of the home, a permanent move out, or the passing of the last borrower.
At that point, the home is sold, the loan balance is repaid, and any equity remaining goes to you or your heirs.
Because this is a non recourse loan, your family will never owe more than the home is worth. If the loan balance has grown larger than the home value, FHA mortgage insurance covers the difference to protect your heirs.
If your heirs want to keep the home, they can pay off the loan balance themselves or refinance into a traditional mortgage. No one is forced to sell anything.
Who Benefits Most From HECM for Purchase?
A few different buyers benefit most from this program.
The first group is downsizers. These are homeowners selling a larger property who want to buy something smaller without locking all their cash into the new home.
The second group is buyers relocating. People moving closer to family or moving to South Florida for retirement often fit this program well.
The third group is retirees focused on cash flow. If you want to eliminate a monthly mortgage payment and improve your cash flow on a fixed income, this program is built for that.
The fourth group is buyers who want to stretch their purchasing power. Because the reverse mortgage covers a portion of the purchase price, some people end up able to afford a better home than they could paying entirely in cash.
Every situation is different, and the right answer depends on your age, your financial picture, and your long term plans.
How Is the Down Payment Calculated?
The down payment for a HECM for Purchase is not a fixed percentage. It is calculated based on three things.
1. Your age
2. The purchase price of the home
3. The current interest rate
The older you are, the more the loan covers and the less cash you need to bring to closing.
Because the math depends on current rates and your specific age, the only accurate way to see your real number is through a strategy call. We run the numbers based on your actual situation, not a guess.
A Note for Financial Advisors and Retirement Planners
If you are a financial advisor, retirement planner, or CPA reading this, HECM for Purchase is worth a closer look. It is increasingly recognized as a legitimate retirement income strategy.
The program allows clients to preserve liquid assets, eliminate a monthly mortgage payment, and maintain housing stability at the same time. For clients with significant home equity or proceeds from the sale of a previous home, this can meaningfully change the math on their retirement income plan.
I am available to meet with advisor teams, walk through case studies, and help you understand how this program fits into a broader retirement plan. Reach out directly and we will set something up.
Frequently Asked Questions
Can you really buy a home with a reverse mortgage?
Yes. The FHA HECM for Purchase program allows buyers age 62 and older to purchase a home using a reverse mortgage combined with a down payment from their own funds. The buyer owns the home and has no required monthly principal and interest payments as long as they live in the home as their primary residence.
Do I own the home if I buy it with a HECM for Purchase?
Yes. Your name is on the title and you own the home the same way you would own any home bought with a traditional mortgage. The reverse mortgage is simply the loan structure. You remain responsible for property taxes, homeowners insurance, HOA dues if applicable, and maintaining the home.
How is the down payment calculated on a HECM for Purchase?
The down payment is based on three factors. The age of the youngest borrower, the purchase price of the home, and the current interest rate. Older borrowers typically need to bring less cash to closing. A strategy call is the most accurate way to calculate a specific down payment for your situation.
What happens to the home when the borrower passes away?
When the last surviving borrower no longer lives in the home as a primary residence, the loan becomes due. The home is typically sold, the loan balance is repaid, and any remaining equity goes to the estate or the heirs. Because the loan is non recourse, heirs never owe more than the home is worth. If the heirs want to keep the home, they can pay off the loan balance themselves or refinance into a traditional mortgage.
Who qualifies for HECM for Purchase?
Borrowers must be at least 62 years old, buying the home as their primary residence, and able to cover the required down payment from acceptable sources like the sale of a current home, retirement accounts, or savings. Credit and financial assessment guidelines also apply.
Is HECM for Purchase the same as a traditional reverse mortgage?
Both programs are FHA insured HECM loans, but they serve different purposes. A traditional reverse mortgage taps equity in a home you already own. HECM for Purchase is used to buy a new home. Same core program, different application.
Ready to See Your Real Numbers?
If you are 62 or older and you are thinking about buying a new home, or if you have a client or family member in that situation, the best first step is a free strategy call.
Step one. Book a free strategy call at interconnectmortgage.com/calendar. We will run the actual numbers based on the age of the youngest borrower, the home price you are considering, and the current interest rate. You will leave the call knowing exactly what this program could look like for your specific situation. No pressure. No obligation.
Step two. Download the free Pre-Approval Checklist at interconnectmortgage.com/pre-approval-checklist. It walks you through the documents to start pulling together so you are ready when the time comes.
If you are buying a home in Palm Beach Gardens, South Florida, or anywhere across Florida, Georgia, or South Carolina, we are here to help.
Toni Taylor Gozza
Certified Reverse Mortgage Specialist
Senior Loan Originator and Owner
Interconnect Mortgage Inc.
5220 Hood Rd Suite 110
Palm Beach Gardens, FL 33418
561-556-7109
Book a strategy call: interconnectmortgage.com/calendar
Toni Taylor Gozza NMLS 274323
Interconnect Mortgage Inc. NMLS 1720882
5220 Hood Rd Suite 110
Palm Beach Gardens FL 33418
561-556-7109
Equal Housing Lender
Licensed in Florida, Georgia, and South Carolina
NMLS Consumer Access: nmlsconsumeraccess.org
This material is not from HUD or FHA and has not been approved by any government agency. For information directly from HUD or FHA visit hud.gov/guidance.
A reverse mortgage is a loan that must be repaid when the last surviving borrower no longer occupies the home as a primary residence. The borrower remains responsible for property taxes, homeowners insurance, any HOA dues, and maintaining the home. Loan program guidelines, interest rates, and qualification requirements are subject to change. All examples are illustrative only and do not represent actual loan terms. Contact us for current qualification criteria specific to your situation.
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