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:

    • Cooperatives
    • 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*