HECM for Purchase: Buy a Home With No Monthly Payment
In This Article
What Is HECM for Purchase?
HECM for Purchase (H4P) allows homeowners aged 62 and older to buy a new primary residence using a HECM reverse mortgage in a single transaction. Instead of buying a home with a traditional mortgage and then converting to a HECM, the purchase and reverse mortgage are combined into one closing.
The result: you move into your new home with no monthly mortgage payment required — ever.
How It Works
In a HECM for Purchase, you make a down payment (typically 40-60% of the purchase price, depending on your age and current rates) and the HECM covers the rest. There are no monthly mortgage payments — just the standard obligations of homeownership: property taxes, insurance, and maintenance.
The down payment amount is determined by the same PLF calculation used for a standard HECM. The older you are and the lower interest rates are, the less down payment required.
For example: A 70-year-old buying a $400,000 home might put down approximately $200,000 and finance the rest with a HECM. No monthly payments on the financed portion.
Who It's Best For
HECM for Purchase is ideal for retirees who:
• Want to downsize or relocate and eliminate monthly mortgage payments • Are selling a larger home and moving to a more suitable property • Want to move closer to family or to a lower cost-of-living area • Have substantial proceeds from a home sale and want to preserve cash flow • Want to buy a single-story home for aging in place
It's particularly powerful when combined with the proceeds from selling an existing home. You can use part of the proceeds for the down payment and invest or reserve the rest — all while having no monthly mortgage payment on the new home.
Important Considerations
H4P uses the same PLF tables, MIP costs, and non-recourse protections as a standard HECM. The key differences:
• The property must meet FHA standards (just like any HECM) • HUD counseling is still required before closing • The larger your down payment, the more equity cushion you start with • Any unused principal limit can be set up as a growing Line of Credit
The same non-recourse guarantee applies: you and your heirs can never owe more than the home is worth.
Key Topics Covered
Frequently Asked Questions
How much down payment do you need for HECM for Purchase?
The down payment is typically 40-60% of the purchase price, depending on your age and current interest rates. Older borrowers qualify for a lower down payment because their PLF is higher.
Can you use sale proceeds as a down payment for H4P?
Yes. Most HECM for Purchase buyers use proceeds from selling their current home as the down payment, investing or reserving the remainder.
Want to see how this applies to your situation?
Try our HECM calculator or book a free consultation.