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What is a Reverse Purchase?

A Home Equity Conversion Mortgage (HECM) that could help you purchase a new home without making monthly mortgage payments.

Questions? It’s not too good to be true—it’s just a special kind of reverse mortgage designed to help homeowners 62 and older buy the home they need, while meeting their financial and retirement goals.

If you qualify, you can use a HECM for Purchase Reverse Mortgage to relocate to a home that’s closer to your family; one that’s more physically accessible; or one that’s a better fit for your current or future needs.

Of course, a HECM for Purchase Reverse Mortgage is still a loan, so interest does accrue on the portion of the loan amount disbursed. As with any home, the homeowner is responsible for paying for property taxes, insurance premiums, and necessary maintenance.

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HECM for Purchase: how it works

  • If you qualify, you can buy a home or FHA approved condo as your principal residence by taking out a HECM Reverse Mortgage on that property.

  • Using proceeds from the sale of your current home or cash on hand, you make a down payment (usually 40% to 50% of the cost of the new home) and cover closing costs.

  • The balance of the purchase is covered by your HECM proceeds—any remaining funds can be used as you choose.

  • There’s just a single closing, as the home purchase and HECM Reverse Mortgage are executed in one transaction.

  • You make no monthly mortgage payments on the new home.

  • You own the home—not the bank—and you can continue to live in it, as long as the terms of the loan are met.

  • The loan is repaid, including principal plus accrued fees and interest, when the last surviving homeowner vacates the property for 12 months or passes away.

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