REVERSE MORTGAGE PURCHASE GUIDE
Reverse Mortgage Purchase Program
Buy Your Next Home With a Reverse Mortgage
A reverse mortgage isn’t only for homeowners who want to access equity from the home they already own. It can also be used to purchase a new primary residence.
A HECM for Purchase allows eligible homebuyers age 62 and older to combine a substantial down payment with reverse mortgage financing to purchase a home without required monthly principal and interest payments.
For retirees who want to downsize, move closer to family, relocate, or purchase a home better suited for aging in place, this can create an entirely different way to approach the next chapter of homeownership.
How Does a Reverse Mortgage for Purchase Work?
With a traditional mortgage, you make a down payment, finance the remaining purchase price, and make monthly mortgage payments.
A reverse mortgage purchase works differently.
You contribute a portion of the purchase price using your own funds, and the reverse mortgage finances the remaining eligible amount.
After closing, there are no required monthly principal and interest payments as long as you continue meeting the terms of the loan.
1
You Contribute Funds
You bring the required portion of the purchase price to closing using eligible funds.
2
The HECM Finances the Rest
The reverse mortgage provides the remaining eligible financing based on applicable program guidelines.
3
You Move Into Your New Home
You take ownership and establish the property as your primary residence according to program requirements.
What You’re Still Responsible For
A reverse mortgage purchase removes the requirement for monthly principal and interest payments, but it does not remove the normal responsibilities of homeownership.
You Must Continue To:
• Pay property taxes
• Maintain homeowners insurance
• Pay HOA dues, if applicable
• Maintain the home
• Occupy the property as your primary residence
Why Would Someone Buy a Home With a Reverse Mortgage?
Retirement often changes what homeowners need from their home.
The large house that worked perfectly while raising a family may eventually have too much maintenance. Stairs may become inconvenient. Family may live farther away.
Or you may simply want to spend retirement somewhere new.
A Reverse Mortgage for Purchase May Help You:
• Downsize into a more manageable home
• Purchase a single-level property
• Move closer to children or grandchildren
• Relocate to a retirement-friendly community
• Reduce home maintenance
• Purchase a more accessible property
• Preserve more retirement savings instead of paying all cash
• Avoid required monthly principal and interest payments
How Much Down Payment Is Required?
A reverse mortgage purchase typically requires a larger down payment than a traditional mortgage.
The required contribution may depend on:
• Age of the youngest borrower or eligible non-borrowing spouse, when applicable
• Purchase price
• Current interest rates
• FHA lending limits
• Amount of reverse mortgage proceeds available
• Closing costs
Platinum Lending Solutions can prepare a personalized illustration showing approximately how much you may need to bring to closing for the homes you’re considering.
Reverse Mortgage for Purchase vs. Paying Cash
Paying All Cash
If you sell your longtime home and have substantial proceeds available, one option is to use all—or most—of that money to purchase the next home with cash.
That may reduce or eliminate housing debt, but it can also commit a large portion of available retirement capital to the property.
Using a HECM for Purchase
A reverse mortgage for purchase may allow you to contribute only part of the purchase price and retain more of your available cash for other retirement priorities.
Those funds may remain available for retirement investments, reserves, travel, healthcare, home improvements, family needs, or unexpected expenses.
Reverse Mortgage for Purchase vs. a Traditional Mortgage
A traditional mortgage may require less money upfront, but it generally creates an ongoing monthly principal and interest payment.
HECM for Purchase
A reverse mortgage purchase generally requires more money upfront but eliminates the requirement to make monthly principal and interest payments as long as the applicable loan requirements continue to be met.
The Retirement Planning Question
Would you rather preserve more cash at closing and maintain a monthly mortgage payment—or contribute more upfront and eliminate required monthly principal and interest payments?
There isn’t one correct answer. We’ll help you compare both options based on your goals.
Can You Use a Reverse Mortgage to Downsize?
Yes.
Downsizing is one of the most natural uses of a reverse mortgage for purchase.
You might sell a larger home and use only a portion of the proceeds toward a smaller, more manageable property.
Instead of investing all of your sale proceeds into the new home, the reverse mortgage may allow you to retain additional funds for retirement.
Can You Buy a More Expensive Home?
Potentially, yes.
A reverse mortgage purchase isn’t limited to downsizing.
Some retirees use the program to purchase a newer home, a property with a main-level primary suite, a home closer to family, a more accessible property, or a residence in a retirement-friendly location.
The important factor is whether you have sufficient funds for the required investment and meet the applicable reverse mortgage guidelines.
What Homes Are Eligible?
HECM for Purchase financing may be available for qualifying primary residences.
The home must meet applicable program and property standards.
• Single-family homes
• FHA-eligible condominiums
• Two- to four-unit properties when the borrower occupies one unit
• Manufactured homes that meet applicable FHA requirements
Generally Not Eligible
• Second homes
• Vacation properties
• Investment properties
Buying a Home in Oregon or Washington With a Reverse Mortgage
For example, a homeowner might sell a longtime residence and use a HECM for Purchase to buy a home better suited to retirement, accessibility, location, or maintenance needs.
Eligible buyers relocating from another state may also consider the program if they want to preserve more of the proceeds from selling a previous home.
What matters is not the city, but whether the property meets applicable program requirements and will become your primary residence.
How Does the Purchase Process Work?
The process has specialized reverse mortgage requirements, but the basic path is similar to other home purchases.
1 — Review Your Options
We review your age, available assets, estimated purchase price, and retirement goals.
2 — Determine Your Purchasing Power
We prepare an illustration showing estimated reverse mortgage proceeds and the funds you may need to contribute.
3 — Shop for Your New Home
Once you understand your purchasing power, you can work with your real estate agent to find the right property.
4 — Complete Required Counseling
HECM borrowers must complete independent HUD-approved reverse mortgage counseling.
5 — Appraisal & Underwriting
The property is appraised and the loan is reviewed to ensure both the borrower and home meet program requirements.
6 — Closing
You bring the required funds to closing, the reverse mortgage provides the remaining eligible financing, and ownership transfers to you.
Do You Still Own the Home?
Yes.
You own the home and hold title just as you would if you purchased it with cash or traditional financing.
The reverse mortgage is simply a lien against the property.
You may sell the home whenever you choose.
What Happens to the Home Later?
When the reverse mortgage eventually becomes due, the home may be sold and the loan repaid from the proceeds, kept by heirs who satisfy the loan according to applicable program requirements, or refinanced into another loan when appropriate.
Any remaining equity after the reverse mortgage is repaid belongs to you or your estate.
HECM reverse mortgages also include non-recourse protection according to applicable program rules.
Frequently Asked Questions About Reverse Mortgage Purchases
Do I have to be 62 to buy a home with a reverse mortgage?
For an FHA-insured HECM for Purchase, borrowers must meet HECM age requirements. Different rules may apply when there is an eligible non-borrowing spouse.
Do I need to own a home already?
No. You don’t have to currently own a home to use a HECM for Purchase, provided you meet the applicable eligibility requirements and have sufficient funds for your required contribution.
Can I use proceeds from selling my current home for the down payment?
Yes. Sale proceeds from an existing home are commonly used toward the required investment, subject to applicable sourcing and program requirements.
Can I use a reverse mortgage to purchase a vacation home?
No. A HECM for Purchase is intended for your primary residence.
Will I have a monthly mortgage payment?
There are no required monthly principal and interest payments as long as you continue meeting the loan requirements. You remain responsible for property taxes, homeowners insurance, maintenance, HOA dues when applicable, and other required property charges.
Can I sell the new home later?
Yes. You retain ownership and may sell the home whenever you choose. The reverse mortgage balance is repaid when the property is sold.
Could a Reverse Mortgage Help You Purchase Your Next Home?
Your retirement home should fit the life you’re planning—not simply the financing options you’re familiar with.
At Platinum Lending Solutions, we’ll help you compare purchasing with cash, using traditional financing, and buying with a reverse mortgage so you can understand how each option affects monthly cash flow and available retirement assets.
If you’re considering buying your next home in Oregon or Washington, we can also work alongside your real estate agent to determine your purchasing power before you begin seriously shopping.
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