Reverse Mortgage For Purchase - H4P (HECM For Purchase)
The Financing You Need to Buy the Home You Really Want in Retirement
If you’re 62 or older, retirement might bring thoughts of a new home that suits your evolving needs. Perhaps you’re looking for:
- A home closer to your family.
- A residence better equipped for aging comfortably.
- A breathtaking location near the ocean or in your dream area.
But, concerns about affordability or depleting your nest egg might be holding you back. Before making a decision, consider the HECM for Purchase (H4P) loan—a flexible financing option with significant advantages over traditional mortgages or paying cash.
What Is a HECM for Purchase (H4P)?
A Home Equity Conversion Mortgage for Purchase (H4P) is:
- A Federal Housing Administration (FHA)-insured loan.
- Specifically designed for homebuyers aged 62+.
- Aimed at helping you buy a home that better fits your current lifestyle.
Use our HECM for Purchase Calculator to get an instant estimate.
Benefits of an H4P
With an H4P loan, you can:
- Increase purchasing power to buy your ideal home.
- Free up cash flow—monthly mortgage payments are not required (you still need to maintain the home and pay taxes and insurance).
- Extend the life of your retirement assets.*
- Qualify for a mortgage in retirement, thanks to minimal income and credit requirements.
How Does It Work?
Down Payment:
- Combine your own funds (e.g., proceeds from selling your current home) with the H4P loan to purchase your new home.
- The required down payment is typically 40%-60% of the purchase price and is based on:
- The age of the youngest borrower.
- Current interest rates.
- The purchase price of the home.
Repayment Flexibility:
- Choose to repay as much or as little of the loan balance each month—or no monthly payments at all.
- The FHA ensures repayment isn’t required until:
- The last borrower moves out or passes away.
- Obligations like home maintenance, property taxes, and insurance are met.
- After the loan becomes due, you or your estate have up to 12 months to repay, often by selling the home.
Key Considerations
- Loan amounts depend on:
- Current interest rates.
- Loan-related charges.
- Borrower’s (or non-borrowing spouse’s) age.
- Purchase price and standard closing costs.
- Interest rates and fees are subject to change.
- Once the home purchase is completed, no further principal or interest payments are required as long as:
- A borrower occupies the home as their primary residence.
- Property taxes, insurance, and maintenance are kept current.
Eligibility Requirements
To qualify for an H4P, you must:
- Be at least 62 years old.
- Meet minimal credit and property criteria.
- Receive counseling from a HUD-approved agency.
- Have no delinquent federal debt.
- Use the home as your primary residence.
- Choose a property that is a:
- Single-family home.
- 2- to 4-unit dwelling.
- FHA-approved condominium.
Frequently Asked Questions
Yes! With a Home Equity Conversion for Purchase (H4P) loan, you can:
- Buy a new primary residence by putting down as little as 45%-65% of the purchase price from your own funds.
- Have the remaining balance funded by the H4P loan.
The required down payment depends on factors such as your age (or your non-borrowing spouse’s age, if applicable), current interest rates, and the lesser of the home’s appraised value or purchase price.
No, but they share similarities:
- A reverse mortgage lets you borrow against the equity in your existing home.
- A reverse mortgage for purchase helps you buy a new primary residence by requiring a down payment at closing.
Once the loan is in place, the features and benefits of both products are essentially the same.
It could be! A HECM for Purchase loan may:
- Increase your purchasing power to afford your ideal home.
- Offer financial flexibility for retirement.
Every homebuyer has unique needs. Consult a reverse mortgage professional to determine if this option suits your situation.
The program is designed to help seniors affordably:
- Downsize, right-size, or upsize into a better-fitting home for retirement.
Here’s how it works: - Put down 30%-70% of the purchase price using your funds (e.g., savings or proceeds from selling your current home).
- Fund the remainder with the H4P loan.
- You are not required to make monthly principal or interest payments. Instead:
- Live in the home as your primary residence.
- Maintain the property and pay taxes and insurance.
- Defer loan repayment until the home is no longer your primary residence.
Yes!
- You retain ownership of the home for the life of the loan.
- The H4P loan is secured with a lien, just like a traditional mortgage or home equity line of credit.
Absolutely.
- You can make prepayments at any time.
- Certain tax advantages* may apply.
Please consult a tax advisor for guidance specific to your situation.
Yes, but:
- The sales contract must be signed more than 90 days after the seller’s purchase of the property.
The funds must come from:
- Liquid assets (e.g., bank accounts, CDs, retirement accounts).
- Documented proceeds from selling other assets, like your current home.
Yes, but:
- The Certificate of Occupancy must be issued before the appraisal and loan closing can occur.
The funds must come from:
- Liquid assets (e.g., bank accounts, CDs, retirement accounts).
- Documented proceeds from selling other assets, like your current home.
Because you won’t have monthly mortgage payments.
- The upfront investment eliminates monthly principal and interest payments, helping preserve long-term cash flow.
Get Reverse Mortgage Advice From Kim!
Kim Prater - Licensed Reverse Mortgage Professional
"Reverse mortgages can be complicated. If you want straight forward advice from a reverse mortgage specialist who really cares about his clients, then fill out this form or give me call."
Kerry Kim Prater
