HECM for Purchase 2026: Buy a New Home with a Reverse Mortgage
HECM for Purchase lets homeowners 62 and older buy a new primary residence and never make a monthly mortgage payment. By combining your down payment with a reverse mortgage, you can downsize, relocate near family, or move to a more accessible home while preserving retirement savings. Here's how this powerful program works.
HECM for Purchase at a Glance
- Purpose: Buy a new primary residence
- Age Requirement: 62 years or older
- Down Payment: 35-50% typical
- Monthly Payment: None required
- Best For: Downsizing, relocating, accessibility
- Property Types: SFH, condos, manufactured
- Counseling: HUD-approved required
- Closing: Single transaction, no two closings
What Is HECM for Purchase?
HECM for Purchase is a specialized reverse mortgage program that allows seniors to buy a new home using reverse mortgage financing. Created by Congress in 2009, it combines the homebuying process with a reverse mortgage into a single transaction—you make one down payment, and there are no monthly mortgage payments going forward.
Think of it as a traditional purchase combined with a traditional HECM, but streamlined into one closing. Instead of buying a home with a conventional mortgage (and its monthly payments) or paying all cash, you make a larger down payment (typically 35-50%) and finance the remainder with a reverse mortgage.
How It Works: Simple Example
Scenario: A 70-year-old couple wants to buy a $500,000 home near their grandchildren.
- Traditional Mortgage: Put down 20% ($100,000), finance $400,000 with ~$2,600/month payments for 30 years
- HECM for Purchase: Put down 40% ($200,000), finance $300,000 with a reverse mortgage—no monthly payments ever
Result: The couple preserves $100,000 more in savings (difference between down payments) AND eliminates a $2,600 monthly payment, dramatically improving their retirement cash flow.
Who Uses HECM for Purchase?
HECM for Purchase serves seniors in various situations. The most common use cases include:
Downsizers Who Want to Preserve Wealth
Seniors selling a large family home often have substantial equity. Rather than purchasing a smaller home with all cash, they can use HECM for Purchase to put down less money, keep more in savings, and still have no monthly payment. This preserves assets for healthcare, travel, or emergencies.
Relocators Moving Near Family
Many retirees want to move closer to children or grandchildren. If selling an existing home, they can use proceeds for the HECM for Purchase down payment and keep remaining funds for retirement. If they currently rent or have minimal equity, they can combine savings with the reverse mortgage.
Seniors Seeking More Accessible Homes
Two-story homes with stairs become challenging as we age. HECM for Purchase allows seniors to move into single-story homes, properties with accessibility features, or communities with senior-friendly amenities—all without monthly mortgage payments straining a fixed income.
Current Renters Who Want to Own
Seniors who rent can use savings to purchase a home with HECM for Purchase. Instead of rent payments increasing each year, they lock in their housing costs (only property taxes and insurance, which they'd pay as renters indirectly anyway) and build equity in a property they own.
How Much Down Payment Is Required?
The required down payment depends on several factors:
- Borrower's age: Older borrowers qualify for higher loan amounts, so they need smaller down payments
- Interest rates: Lower rates mean higher loan amounts and smaller required down payments
- Property value: Subject to FHA lending limits ($1,209,750 in 2026 for most areas)
- Property type: Single-family vs. condo vs. manufactured may affect amounts
Estimated Down Payment by Age
| Youngest Borrower Age | Typical Down Payment | $500K Home Example |
|---|---|---|
| 62 years | 48-52% | $240,000-$260,000 |
| 67 years | 44-48% | $220,000-$240,000 |
| 72 years | 40-44% | $200,000-$220,000 |
| 77 years | 36-40% | $180,000-$200,000 |
| 82+ years | 32-38% | $160,000-$190,000 |
*Estimates based on typical 2026 rates. Your actual down payment depends on current interest rates and property details.
HECM for Purchase vs. Traditional Mortgage: Which Is Better?
The comparison depends on your priorities and financial situation:
Traditional Mortgage
- ✓ Lower down payment (3-20%)
- ✓ Build equity faster
- ✓ Lower total interest cost
- ✓ More equity for heirs
- ✗ Monthly payments required
- ✗ Income qualification needed
- ✗ Risk of payment difficulties
Best for: Seniors with strong income, who want to maximize inheritance
HECM for Purchase
- ✓ No monthly mortgage payment
- ✓ Easier qualification
- ✓ Protects retirement savings
- ✓ Non-recourse protection
- ✓ Improved cash flow
- ✗ Higher down payment needed
- ✗ Less equity over time
Best for: Seniors prioritizing cash flow and financial flexibility
HECM for Purchase vs. Paying All Cash
Many seniors have enough from a home sale to pay cash for a new home. But should they? HECM for Purchase offers an alternative worth considering:
All Cash vs. HECM for Purchase Comparison
Scenario: Senior selling $800,000 home, buying $500,000 home
Pay All Cash
- • Home cost: $500,000
- • Remaining savings: $300,000
- • Monthly housing cost: ~$800 (tax/ins)
HECM for Purchase
- • Down payment: $200,000 (40%)
- • Remaining savings: $600,000
- • Monthly housing cost: ~$800 (tax/ins)
Result: Same monthly cost, but $300,000 more in liquid savings with HECM for Purchase. Those funds can generate investment income, cover healthcare, or serve as emergency reserve.
What Types of Homes Qualify?
HECM for Purchase can be used for various property types, with some requirements:
- Single-family homes: Most common choice, must meet FHA minimum property standards
- FHA-approved condominiums: Unit must be in an FHA-approved condo project
- Manufactured homes: Must have permanent foundation, be built after June 1976, and meet FHA requirements
- 2-4 unit properties: Allowed if borrower occupies one unit as primary residence
- New construction: Permitted once Certificate of Occupancy is issued
Properties must pass an FHA appraisal, which evaluates both market value and property condition. Any required repairs must typically be completed before closing.
The HECM for Purchase Process: Step by Step
- Complete HUD-approved counseling: Required before any loan processing can begin. Costs approximately $125 and takes 60-90 minutes. Certificate valid for 180 days.
- Get pre-qualified: Work with a reverse mortgage lender to understand how much you can borrow and what down payment you'll need based on your age and target price range.
- Find your new home: Work with a real estate agent to find properties in your price range. Let them know you're using HECM for Purchase—some processes differ.
- Make an offer: Include standard contingencies. Your offer may take slightly longer to close than a cash offer but is typically faster than conventional financing.
- Complete loan application: Provide documentation including counseling certificate, identification, income/asset verification, and property information.
- FHA appraisal: An FHA-approved appraiser will evaluate the property's value and condition. Any required repairs must be addressed.
- Underwriting: Lender reviews all documentation, verifies eligibility, and prepares final loan approval.
- Closing: Sign documents, provide down payment, and receive keys. You own your new home with no monthly mortgage payment.
Timeline Expectation
HECM for Purchase typically takes 45-60 days from accepted offer to closing—longer than cash (2-3 weeks) but comparable to or faster than many traditional mortgages. Allow extra time if property repairs are needed or in competitive markets.
Requirements for HECM for Purchase
Borrower Requirements
- Age: At least 62 years old (youngest borrower if married)
- Citizenship: U.S. citizen, permanent resident, or eligible non-citizen
- Counseling: Complete HUD-approved HECM counseling
- Financial assessment: Demonstrate ability to pay property taxes, insurance, and maintenance
- No federal debt: Must not be delinquent on federal debt
Property Requirements
- Primary residence: Must be your main home
- FHA standards: Property must meet minimum condition requirements
- Eligible type: Single-family, approved condo, manufactured home, or 2-4 unit
- Occupancy: Must move in within 60 days of closing
Costs and Fees for HECM for Purchase
Costs for HECM for Purchase are similar to a standard HECM refinance:
- FHA Mortgage Insurance Premium (Upfront): 2% of home value or FHA lending limit
- Origination fee: Capped by FHA formula; typically $2,500-$6,000
- Third-party closing costs: Appraisal, title insurance, recording fees, etc.
- Ongoing MIP: 0.5% annually, added to loan balance
Most closing costs can be financed into the loan rather than paid out of pocket, though this reduces the net proceeds you keep from your down payment funds.
Potential Drawbacks to Consider
While HECM for Purchase offers significant benefits, consider these factors:
- Large down payment required: You'll need significant funds—typically 35-50% of purchase price—which may deplete savings more than desired
- Equity decreases over time: As interest accrues, your equity position declines, potentially leaving less for heirs
- Ongoing obligations: You must continue paying property taxes, insurance, and maintaining the property
- Complexity: More complex than a traditional purchase; not all real estate agents are familiar with the process
- Moving restrictions: If you need to move (health reasons, relocate again), the loan becomes due
Frequently Asked Questions About HECM for Purchase
Can you use a reverse mortgage to buy a house?
Yes, the HECM for Purchase program allows homeowners 62 and older to buy a new primary residence using a reverse mortgage. Instead of making monthly mortgage payments, you make a larger down payment (typically 35-50% of purchase price) and the reverse mortgage covers the rest, with no monthly payments required.
How much down payment is needed for HECM for Purchase?
The down payment typically ranges from 35% to 50% of the purchase price, depending on the borrower's age, interest rates, and property value. Older borrowers require smaller down payments because they qualify for a higher percentage of home value. For example, a 75-year-old might need only 35% down, while a 62-year-old might need closer to 50%.
Who is HECM for Purchase best suited for?
HECM for Purchase is ideal for seniors who are downsizing from a larger home and want to preserve savings, relocating to be closer to family or healthcare, moving to a more accessible single-story home, or buying a retirement home using equity from selling their current home—anyone 62+ who wants to buy without monthly mortgage payments.
What are the advantages of HECM for Purchase over a traditional mortgage?
The main advantage is no monthly mortgage payments, which dramatically improves cash flow in retirement. Other benefits include preserving more savings for retirement, simplifying budgeting without a mortgage payment, using home sale proceeds more efficiently, and qualifying based on asset strength rather than income.
Can I use sale proceeds from my current home for the down payment?
Yes, most HECM for Purchase borrowers use the equity from selling their current home to fund the down payment. This is a common strategy: sell your current home, use a portion for the HECM down payment, and keep the remaining proceeds as retirement savings—all while having no monthly mortgage payment on your new home.
What types of homes can be purchased with HECM for Purchase?
HECM for Purchase can be used for single-family homes, FHA-approved condominiums, manufactured homes meeting FHA requirements (permanent foundation, built after June 1976), and 2-4 unit properties where one unit is your primary residence. The property must meet FHA minimum property standards.
Is HUD counseling required for HECM for Purchase?
Yes, HUD-approved counseling is required for all HECM loans, including HECM for Purchase. The counseling session covers how the loan works, costs, alternatives, and your ongoing obligations. Counseling must be completed before your loan application can be processed.
Learn More About Reverse Mortgages
Considering HECM for Purchase?
Let's discuss your home buying plans and see how HECM for Purchase could work for your situation. I'll provide a preliminary estimate of down payment requirements and walk you through the process.