Purchase Reverse Mortgages

A Purchase Reverse Mortgage, also known as a HECM for Purchase, can help eligible homeowners age 62 and older purchase a new primary residence while preserving more of their retirement savings. Instead of making monthly principal and interest payments, borrowers use a reverse mortgage to finance a portion of the home purchase.
Crestico helps seniors understand reverse mortgage purchase options and determine whether this type of financing fits their home buying and retirement goals.

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Senior couple purchasing a home with a reverse mortgage

What Is a Reverse Mortgage Purchase?

A reverse mortgage purchase allows eligible seniors to buy a new primary residence using a reverse mortgage loan. The Federal Housing Administration insures the HECM for Purchase program, providing an option for qualified borrowers who want to move into a new home without taking on a traditional monthly mortgage payment.

The borrower typically provides a substantial portion of the purchase price from their own funds and uses the reverse mortgage to finance the remaining eligible amount.

The home must be the borrower’s primary residence and meet applicable FHA property requirements.

How a HECM for Purchase Works

A HECM for Purchase combines a home purchase with reverse mortgage financing. The amount you can finance depends on factors such as the youngest borrower’s age, the purchase price, available funds, and applicable loan requirements.

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Step 1

Check Eligibility

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Step 2

Payment Option

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Step 3

Get Approved

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Step 4

Close the Loan

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Step 5

Repayment & Loan Terms

Who Should Consider a Reverse Mortgage Purchase?

A reverse mortgage purchase may be worth considering for seniors who want to purchase a new primary residence while reducing or eliminating the need for traditional monthly mortgage payments.

It can be particularly useful for homeowners who are:

Looking for a retirement friendly home

Moving closer to family

Relocating to a different area

Planning to downsize into a more manageable home

Using retirement assets to fund a home purchase

Seeking an alternative to traditional mortgage financing

Reverse Mortgage Purchase Eligibility Requirements

To qualify for a HECM for Purchase, borrowers must meet applicable program requirements.

Common requirements include:

The borrower must generally be at least 62 years old

The property must be used as the primary residence

The property must meet applicable FHA property standards

The borrower must have sufficient funds available for the required purchase contribution

The borrower must satisfy applicable financial and loan requirements

For married borrowers, the age of the younger borrower can affect the amount available through the reverse mortgage.

How Much Do You Need for a Down Payment?

A HECM for Purchase generally requires a larger upfront contribution than many traditional mortgage programs.

The required amount can vary based on the age of the youngest borrower, the purchase price, and other loan factors. In many situations, borrowers may need approximately 50 to 60 percent of the purchase price from their own eligible funds.

The required contribution may be lower or higher depending on individual circumstances.

Available funds can come from sources such as proceeds from the sale of an existing home or eligible personal assets.

What Properties Qualify for a Reverse Mortgage Purchase?

Single family homes

Two to four unit properties

Eligible townhomes

FHA approved condominiums

Eligible manufactured homes that meet HUD requirements

The property must satisfy applicable FHA requirements and be suitable as the borrower’s primary residence.

Some properties may not qualify, including certain cooperative properties, non FHA approved condominiums, manufactured homes located on leased land, and unique properties where acceptable comparable sales are not available.

New construction properties may also qualify in certain circumstances when program requirements are satisfied.

Reverse Mortgage Purchase for Seniors in California

California seniors may use a HECM for Purchase to explore financing options when purchasing a new primary residence.

Whether you are downsizing, relocating, moving closer to family, or looking for a more suitable retirement home, a reverse mortgage purchase can provide an alternative to traditional mortgage financing for eligible borrowers.

Crestico serves California homebuyers and can help you review available reverse mortgage purchase options based on your individual circumstances.

Frequently Asked Questions

Who qualifies for a reverse mortgage purchase?

Eligible borrowers are generally age 62 or older and must purchase the property as their primary residence while meeting applicable HECM and FHA requirements.

How much money do I need for a reverse mortgage purchase?

The required purchase contribution varies based on factors such as the youngest borrower’s age, purchase price, and loan terms. Many borrowers should expect to contribute a substantial portion of the purchase price.

Can I use a reverse mortgage to buy my primary residence?

Yes. A HECM for Purchase is designed to help eligible seniors purchase a new primary residence using reverse mortgage financing.

What types of properties qualify for a HECM for Purchase?

Eligible properties can include single family homes, two to four unit properties, eligible townhomes, FHA approved condominiums, and qualifying manufactured homes. Property requirements must be satisfied.

Do I need to make monthly mortgage payments with a reverse mortgage purchase?

A HECM generally does not require monthly principal and interest payments. However, borrowers must continue meeting their loan obligations, including property taxes, homeowners insurance, and property maintenance requirements.

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