A HECM for Purchase lets homeowners who are 62 or older use a reverse mortgage to buy a new primary residence. You can buy the home you want without taking on a monthly mortgage payment. It works the same way as a regular HECM. You stay on title and the loan does not require monthly payments.

You must live in the home as your primary residence.

The way the financing works is simple. You bring a down payment from the sale of your current home, savings, or other assets. The reverse mortgage covers the rest. Everything is rolled into one closing so you do not have two separate settlements or duplicate closing costs.

Just like any HECM, you are still responsible for paying your property taxes, homeowner insurance, and keeping the home in good shape.

What Changed Recently and Why It Matters

There have been some updates that make HECM for Purchase much more attractive, especially for seniors who do not want to drain their savings.

Sellers, builders, real estate agents, and other parties are now allowed to contribute up to six percent of the sale price toward your required investment. That money can be used toward closing costs, prepaid items, discount points, and even the initial mortgage insurance premium. This can take a big chunk out of what you need to bring to closing.

This six percent contribution gives people on fixed incomes more flexibility. It helps retirees who are selling one home and buying another keep more of their cash in the bank. It also helps anyone looking to downsize without using all their savings.

Important Things Borrowers Need To Know

A HECM for Purchase is a great tool, but there are rules and trade offs you need to understand.

At least one homeowner must be 62 years old. There is no way around that requirement.

You will need a substantial down payment. A reverse mortgage will not cover one hundred percent of the purchase price. The exact amount depends on your age and the price of the home you are buying.

Even with no monthly mortgage payments, you must keep up with taxes, homeowner insurance, and maintenance.

Using a HECM will reduce the amount of equity you leave to your heirs. That is not always an issue, but it is something you need to be aware of.

The home you buy must meet FHA property standards. It has to be safe, structurally sound, and meet all occupancy guidelines.