Lending

HECM for Purchase: Buying Your Next Home With a Reverse Mortgage

How to buy your next home with a reverse mortgage, with one plan for the sale, the purchase and the loan.

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Talk to Maggie directly: cell (916) 549-3131 (text or call) · maggie@loveyoursurroundings.coMaggie B. Hopkins, NMLS #349517 · Surroundings NMLS #2528307

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What is HECM for Purchase, in plain words?

This page is general information, not legal, tax or financial advice for your situation. Rules can change, so every fact below names its source and date.

HECM for Purchase lets you buy a new home and put a reverse mortgage on it in the same closing. You make one large payment toward the price, usually from the sale of your current home or your savings. The reverse mortgage covers the rest. After that, you have no monthly mortgage payment for as long as you meet the loan's terms.

It is the same FHA-insured Home Equity Conversion Mortgage described on our reverse mortgage overview. It is simply used to buy instead of to stay put. You still own the home. You still pay property taxes, insurance and upkeep. The balance still grows over time, because interest and mortgage insurance are added to it.

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Who usually looks at a HECM for Purchase?

Many people who ask about it are rightsizing. The house that raised the family has stairs, a big yard or more rooms than anyone uses. They want a single-story home, a home closer to family, or a place in a 55+ community. They also want to keep more cash in the bank than a cash purchase would allow.

Here is the idea in words. Say you sell your current home and want to buy a smaller one. You could pay cash and have little left over. You could take a regular mortgage and have a monthly payment again. Or you could put part of your sale money into the new home and let a HECM cover the rest, with no monthly mortgage payment. The trade-off is that the loan balance grows, and that leaves less equity later for you or your heirs.

Our page Is it time to downsize? can help you think through the move itself before you think about the loan.

How does the down payment work?

Federal rules call it a "monetary investment." Under 24 CFR 206.44 (checked October 22, 2026), you bring the difference between the price of the home and the HECM's principal limit. You also bring any loan fees you don't finance, minus your earnest money deposit. The principal limit is the most the loan can provide. It's explained on our reverse mortgage costs page.

The same rule lists where that money can come from:

cash on hand,
cash from selling or cashing out your assets, such as your current home,
HECM proceeds, as the rule allows, or
other sources HUD approves by notice.

Because the amount depends on your age, the price and the rate on the day the loan is set, nobody can tell you the exact down payment from a rule of thumb. We run it for your real numbers and show it next to a cash purchase and a regular loan.

Do you have to move in right away?

Yes, close to it. The new home must be your principal residence. Under 24 CFR 206.39 (checked October 22, 2026), each borrower, and any eligible non-borrowing spouse, must move in within 60 days of closing.

That timing shapes the whole plan. If you're selling one home and buying another, the two closings need to line up. You also need a plan for packing, sorting and moving within that window. This is where our Well MOVED senior move program helps. It puts the sale, the move and the new home on one calendar so the 60 days are not a scramble.

Can the seller pay some of your costs?

Only in limited ways. On a regular purchase loan, a seller credit toward your closing costs is common. HECM for Purchase is stricter. Under 24 CFR 206.44(c) (checked October 22, 2026), the allowed seller contributions are:

fees a seller must pay under state or local law,
fees sellers customarily pay where the home is located, and
a home warranty the seller buys for you.

HUD can add to that list by notice. Ask your lender for the current rules before you negotiate. If a seller offers a credit, we check with the lender first so it doesn't cause a problem at closing. This is one reason it helps when the agent and the loan team talk every day.

What kinds of homes can you buy with a HECM?

The home has to meet FHA's rules for the program. 24 CFR 206.45 (checked October 22, 2026) covers homes built mainly for one family, plus condominium units built for one family. For a condo, 24 CFR 206.51 says the building or project itself must be acceptable to FHA. Many condos are not, so we check the project before you fall in love with a unit.

The home also must be bought from the owner of record, with no assigned contracts. 24 CFR 206.52 sets time limits on homes that were just bought and resold. A home resold 90 days or less after the seller acquired it is not eligible. Homes resold a bit later may need extra paperwork on value. Those rules matter most on flipped homes.

The appraisal also has to support the home's condition. If repairs are needed, they become part of the conversation about the price.

Can you use a HECM for a brand-new home?

It's possible, but timing is the issue. A new home has to be finished and ready to live in before the loan can go through FHA's process. Builder timelines often slip. Ask the lender exactly when the certificate of occupancy is needed and what happens to your rate and your sale if the builder runs late.

Builder incentives raise a second question. Many builders offer credits or upgrades if you use their lender. With HECM for Purchase, seller contributions are limited, as explained above. Ask the builder and the lender, in writing, whether a promised incentive is allowed with a HECM before you sign the purchase contract.

What happens to a reverse mortgage you already have?

It has to be paid off. HUD's Programs of HUD 2025 says that if you sell a home that has a reverse mortgage and use HECM for Purchase on a new one, the existing reverse mortgage must be paid off first. In most cases the sale of the old home pays it.

Your sale proceeds are what's left after that payoff and the costs of selling. That number drives the whole plan, so we estimate it early. A home value review is a good first step.

What should you ask before choosing HECM for Purchase?

How much cash will I bring to closing, and how much will I have left in the bank?
How does that compare with paying cash, or with a regular loan, over the years I expect to live there?
What are the upfront costs, and which of them are added to the loan?
Is this condo project, or this new home, eligible?
Can the seller or builder give me anything without causing a problem?
Can I truly afford the property taxes, insurance and HOA dues on the new home?
What will my heirs need to know?

Bring these to your counseling session too. Counseling with an independent HUD-approved HECM counselor is required before the loan, and the counselor works for you, not for the lender.

How do you start a HECM for Purchase?

Start with the home you have. Fill out the loan options form and choose "A reverse mortgage," or call Maggie's cell at (916) 549-3131. As a mortgage broker, Maggie compares HECM offers across lenders. As a real estate broker, she can put your sale, your purchase and your loan on one timeline.

You're always free to use any lender or agent you like. If HECM for Purchase doesn't fit, we'll say so and show you the other paths.

Frequently Asked Questions

How soon do I have to move in with HECM for Purchase?

Within 60 days of closing. Federal rules (24 CFR 206.39, checked October 22, 2026) say each borrower, and any eligible non-borrowing spouse, must occupy the new home within 60 days.

Where can my down payment come from?

Federal rules (24 CFR 206.44) allow cash on hand, cash from selling or cashing out your assets, HECM proceeds as the rule allows, and other sources HUD approves. Most people use the sale of their current home.

Can the seller pay my closing costs on a HECM for Purchase?

Only in limited ways. The allowed seller contributions are fees the seller must pay by law, fees sellers customarily pay in that area, and a home warranty. Check current rules with the lender before you negotiate.

Can I buy a condo with a HECM for Purchase?

Sometimes. The condo project itself must be acceptable to FHA under 24 CFR 206.51. Many projects are not, so check the project before you make an offer.

Will I have a monthly mortgage payment?

No monthly principal and interest payment is required while you meet the loan terms. You still pay property taxes, homeowners insurance, HOA dues and upkeep, and the loan balance grows over time.

Do I need counseling for HECM for Purchase?

Yes. Counseling with an independent HUD-approved HECM counselor is required before any HECM, including HECM for Purchase.