Buy your next home with a reverse mortgage
A HECM for Purchase lets homeowners 62+ buy a new primary residence using reverse mortgage proceeds — combining the purchase and the reverse mortgage into a single transaction with one set of closing costs instead of two.
If you're downsizing, moving closer to family, or just ready for a home that fits this chapter of life better, a HECM for Purchase can let you do it without taking on a monthly mortgage payment. Created under the Housing and Economic Recovery Act of 2008 and active since January 2009, it follows the same core HECM rules as a traditional reverse mortgage, with a few additional requirements layered on top.
How a HECM for Purchase works
Eligible properties
You can purchase a 1-to-4 unit property, as long as it becomes your principal residence.
One lien, one lender
No additional liens are allowed — your lender sits in first position, with HUD in a silent second.
Cash to close
You'll bring a monetary investment to closing from an approved funding source — more on that below.
Move-in timeline
You must occupy the new property within 60 days of closing.
Which properties qualify
Eligible
- Single-family homes, detached homes, and townhouses
- 1-to-4 unit properties, owner-occupied
- FHA-approved condominiums
- The same general property types accepted for a traditional HECM
Not eligible
- Cooperative units
- Manufactured homes (eligible only in certain circumstances)
- Bed-and-breakfasts and boarding houses
Funding your purchase
At closing, you'll need to cover the gap between the HECM principal limit and the home's purchase price, plus any loan-related fees that aren't financed or covered by another allowable source. In practice, that means your reverse mortgage proceeds plus your contribution need to add up to the full purchase price — there's no financing the rest later.
Allowable funding sources
- Your own funds, including proceeds from selling another property
- Withdrawals from savings or retirement accounts
- Seller, builder, agent, or other interested-party credits, up to 6% of the sales price
What won't work
- Bridge loans or other interim ("gap") financing
- Credit card cash advances
- Secured or unsecured loans against another asset, like a car or existing home equity
- Closing cost assistance programs
Lenders are required to verify the source of every dollar you bring to the table — recent large deposits or newly opened accounts will need a documented explanation before closing.
A few other things worth knowing
- There's no three-day right of rescission on a HECM for Purchase the way there is on a traditional HECM, so funds can be disbursed the day of closing.
- Seller contributions are allowed, within the limits noted above.
- New construction needs a certificate of occupancy in place before the loan can be insured by FHA.
- If you already have a HECM and use this program to buy a new home, that transaction is treated as a brand-new HECM, not a continuation of your old one.
Thinking about buying with a HECM for Purchase?
Let's talk through the numbers for the home you have in mind.
This page is for general education and does not constitute financial, legal, or tax advice. HECM for Purchase transactions are subject to FHA guidelines, lender requirements, and state-specific rules that may change without notice. Please consult a qualified advisor about your specific situation.