A Home Equity Conversion Mortgage (HECM) for Purchase helps you purchase a home by taking out a reverse mortgage on that home. It’s applicable for the purchase of a one- to four-family dwelling unit, to be occupied as a principal residence only. It could help you move to a home that will better fit your future needs.
HECM Reverse mortgages are available to seniors who would like to buy a new home if:
- The youngest homeowner is age 62 or older
- The purchased home will be the primary residence
- The purchased home will be occupied within 60 days of closing
- No mortgage loan other than the HECM can be used to buy the purchased home
- The difference between the purchase price of the home and the HECM proceeds must be paid in cash or from the sale of an existing home
Qualifications Special Restrictions:
- If the homeowner is using cash (instead of the sale of your existing home) to make up the difference, that cash must be “seasoned” for 60 days.
- Cash from a gift is not acceptable.
To prove that the homeowner has “eligible funds” for the closing, any of the following documents can be provided:
- Letter of Verification of Deposit from the bank
- Proof of liquidation of retirement assets
- Deed of sale
- HUD1 home sale statement
The property must be the primary residence and may be:
- 1-4 Units
- HUD- Approved Condominiums
- Fully completed (with certificate of occupancy or equivalent)
- Land contracts are acceptable
Ineligible property types include:
- Homes without a Certificate of Occupancy or its equivalent
- Boarding houses
- Bed and breakfast establishments
- Existing manufactured homes built before June 15, 1976
- Existing manufactured homes built after June 15, 1976 that fail to conform to the manufactured home construction safety standards or lack a permanent foundation
What if the home needs repairing? Most repairs aren’t critical but major ones have to be taken care of before the transaction can close:
- Critical health and safety and structural integrity issues must be repaired
- Repairs must be completed prior to closing by the seller
- The buyer can not pay for any repairs before they own the home
- The repairs must be included in the purchase agreement
Costs With a HECM for Purchase, all of the normal costs associated with selling and buying property apply as well as the normal Reverse Mortgage Fees.
*These materials are not from HUD or FHA and were not approved by HUD or a government agency*