What HECM for Purchase actually is

HECM stands for Home Equity Conversion Mortgage. It is the FHA-insured reverse mortgage. Most people think of a HECM as something you take out on the home you already own. That is only half the story.

HECM for Purchase is a version of the same program designed for buying a new home. You combine a down payment from your own funds with a reverse mortgage that covers the rest. After closing, you own the home, and you are not required to make a monthly mortgage payment. You still pay property taxes, homeowners insurance, and upkeep — those obligations never go away.

Who it is built for

HECM for Purchase tends to fit one of three life moments.

• Right-sizing. The family home is bigger than you need. You want one level, a smaller yard, or a newer build with less upkeep.
• Moving closer to family. Children, grandchildren, or siblings have settled somewhere, and you want to be near them for the next chapter.
• Retiring to a preferred climate. You have spent decades in one place and want to finish in another — a milder winter, a specific town, a community you already love to visit.

It is understandable to wonder whether downsizing “pencils.” Many families in your situation have equity in the current home but hesitate to move because a new mortgage would eat into retirement income. HECM for Purchase is the tool designed for exactly that problem.

How the math is structured (in plain language)

A HECM for Purchase has two pieces.

1. Your down payment. This comes from the sale of your current home, savings, or other allowable sources.
2. The HECM loan. The reverse mortgage covers the remainder of the purchase price plus closing costs.

The size of each piece depends on the age of the youngest borrower, current HECM program parameters, and the purchase price of the new home. Older borrowers qualify for more loan proceeds, so their required down payment is smaller. Younger borrowers (closer to 62) contribute a larger share.

Safe phrasing on specifics: we do not publish a fixed down-payment percentage here because the exact number depends on your age, the home price, and the HECM principal limit factor at the time you close. Your HUD-approved counselor and your lender will walk through the exact figures for your scenario. Call us or run the calculator below for a personalized estimate.

What “no required monthly mortgage payment” means — and does not mean

After closing, the HECM loan balance grows over time. You are not required to pay it down monthly. Most HECM for Purchase borrowers never make a voluntary payment, though the option is always available.

What you do continue to pay:

• Property taxes
• Homeowners insurance (and flood insurance if required)
• HOA dues, if applicable
• Regular maintenance so the home stays in good condition

These ongoing obligations are part of keeping the loan in good standing. A HUD counselor will walk you through them in detail before you sign anything.

Two typical HECM for Purchase scenarios

Scenario A — The downsizer

A 72-year-old couple has lived in a four-bedroom two-story for 30 years. They sell, walk away with meaningful equity, and want a single-level patio home nearer to their daughter. They could buy the new home outright in cash — but that would drain their savings. Instead, they use part of the sale proceeds as the down payment on a HECM for Purchase and keep the balance of the sale in their investment account. They own the new home. They have no required monthly mortgage payment. Their retirement income stays intact.

Scenario B — The relocator

A 65-year-old widow wants to move from a rural property to a town closer to her son. Her current home has equity but not enough to pay cash for the new one at today's prices. A traditional mortgage would require monthly payments she does not want in her fixed-income years. HECM for Purchase lets her put a down payment from the sale of her current home toward the new one and close without a required monthly mortgage payment. She keeps her Social Security and pension free for living expenses.

Eligibility, step by step

1. Age. At least one borrower must be 62 or older at closing.
2. Property. The new home must become your primary residence within 60 days of closing and stay so.
3. HUD counseling. Required before application — a third-party certified counselor walks you through the program in a 60 to 90 minute session.
4. Financial assessment. The lender reviews income, credit, and obligations to confirm you can cover property taxes, insurance, and upkeep.
5. Down payment sourcing. Funds must come from allowable sources — home sale proceeds, savings, gifts from family, and certain retirement accounts.

Honest questions we hear (and the honest answers)

“Will my heirs lose the new house?” When the last borrower no longer occupies the home, the loan becomes due. Heirs can sell the home, use other funds to repay the balance, or walk away — the HECM is a non-recourse loan, which means the home itself is the only collateral. Your family is not on the hook for more than the home is worth at that time.

“Is this a government giveaway?” No. A HECM is an FHA-insured loan, not a government benefit program. You are borrowing against the equity in the new home.

“Can I make this decision alone?” You can. Most families do not. Invite an adult child or a trusted financial advisor into the HUD counseling call.

Next step

Before you list your current home, it is worth a 20-minute call to confirm the HECM for Purchase math fits. We will walk through the target home price, your target down payment, and whether the HECM program today would cover the rest. No pressure. No obligation.

Homestead Capital Partners · NMLS #2587985 · Licensed CO · NEXA Lending LLC · NMLS #1660690 · 5559 S Sossaman Rd Bldg 1 Ste 101 Mesa AZ 85212 · Equal Housing Lender