HECM For Purchase


  • Use the funds from a reverse mortgage to complete a purchase of a new home.
  • Any funds not used towards the home purchase can be used for other purposes.
(7 Votes)

Use a reverse mortgage to purchase a new home

In 2009, HUD began allowing seniors to use a reverse mortgage to purchase a new primary residence. The new home must be occupied within 60 days after the date of closing.  This option is great for seniors looking to downsize into a newer, smaller home.

HECM for Purchase Example Scenario 1

Bill is 65 years old and has a three bedroom home valued at $300,000 with no mortgage balance.  He would like to move into a newer and better home in Los Angeles worth $400,000.  If Bill sells his home, he would be short $100,000 and be unable to move into the new home.  With a reverse mortgage, however, Bill can receive about $213,000 on the $400,000 Los Angeles property and use the proceeds to purchase the home.  As result, Bills now has a fund of $513,000 ($300,000 from the existing home sale and $213,000 from the reverse mortgage).  Bill purchases the new home for $400,000 and has $113,000 in cash remaining.

HECM for Purchase Example Scenario 2

Emily is 62 years old with a home valued at $200,000 and a mortgage balance of $60,000.  She has found a home in Miami worth $300,000.  In her current situation, Emily would be short $160,000 to buy the Miami home.  Emily therefore decides to take out a reverse mortgage loan on the $300,000 home and receives about $152,000.  With the reverse mortgage proceeds and the sale of her existing home, Emily has $292,000.  She makes up the difference with $8,000 in her savings and completes the purchase.  Emily now has no mortgage payment on her new home

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(7 Votes)


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