Buy the right house for the next chapter. Keep more of your cash.

The problem it solves

Most people over 62 who move do one of two things. They pay cash for the new place and tie up most of their net worth in a house that produces no income, or they take a conventional mortgage and spend retirement making a payment they'd rather not have. A HECM for Purchase is the third door: one transaction, a big down payment from your own funds, a reverse mortgage covering the rest, and no monthly principal and interest payment for as long as you live there.

How it works

1. You bring the down payment. Often somewhere between 45 and 70 percent of the price, depending on the age of the youngest borrower or eligible spouse, current rates, the appraised value, closing costs and any set-asides; older buyers generally put less down. There is no fixed rule and I'll give you the exact figure for your scenario. It must come from your own funds: sale proceeds, savings, retirement accounts, or a documented gift. It cannot be borrowed.
2. The HECM covers the rest and is repaid when you sell, move out permanently, or pass away. Non-recourse applies, same as any HECM.
3. You move in within 60 days and the home is your primary residence. Single-family homes, FHA-approved condos, owner-occupied 2 to 4 unit properties, and eligible manufactured homes qualify. New construction works once the certificate of occupancy is issued.
4. Everything else is standard HECM: HUD counseling, appraisal, financial assessment, FHA mortgage insurance, and the same obligations below.

A worked example

Illustrative only, not an offer; the figures are rounded and will differ from a real quote. A 72-year-old buyer purchasing a $500,000 single-level home. Depending on rates at the time, the HECM might provide roughly $230,000 and the buyer would bring about $270,000 plus closing costs. If she netted $600,000 from her previous home after paying off any mortgage and selling costs, she keeps roughly $300,000 in reserve instead of writing a $500,000 check, and she has no required monthly principal and interest payment. She pays taxes, insurance, HOA dues if any, and upkeep, as she would in any home she owned outright. The estimator models a HECM on a home you already own, so for a purchase, send me the price range and your age and I'll run the real numbers.

Where buyers get tripped up

• Seller concessions are limited. Under current HUD policy, interested parties can contribute up to 6 percent of the sales price toward specified costs, and some costs (such as discount points) aren't allowed at all. Your agent needs to know this before writing the offer, and I'm happy to get on the phone with them.
• Repairs usually have to be done before closing, not after. The appraiser will flag health and safety items.
• Timing the sale and the purchase. Your down payment often comes from the home you're selling. We plan the sequence so you aren't caught between two closings.
• Agents who've never seen one. Most haven't. I teach a class for real estate agents on exactly this; if yours wants to understand the process, send them my way.

Compared with the alternatives