Reverse Mortgage for Purchase
In January 2009, HUD introduced the ‘FHA HECM for Purchase’ program, allowing
seniors to purchase a new principal residence and obtain an FHA HECM mortgage
within a single transaction, eliminating the need for a second closing. The
Reverse Mortgage for Purchase program enables senior homeowners greater freedom
and quality of life in their retirement years.
- Downsizing: The homeowners can sell the larger family home
they’ve lived in for years and move into a smaller, more convenient home that
requires less maintenance. With a reverse mortgage, the borrowers use only a
portion of their proceeds to purchase a new home with no monthly mortgage
payment. The rest of the proceeds is free to be used as needed.
- Relocating: The retired homeowner is able to move to a
different city to be closer to family or to simply pursue their favored
lifestyle. By selling their home and purchasing a new home with an HECM for
Purchase loan, the homeowner can relocate with no monthly mortgage payment to
the city of their own choosing.
- Family Live-in Arrangements: The senior homeowner can
purchase a home with the intent of incorporating a family member or members to
provide in-home living assistance. The senior can stay in the home and does not
incur in-home health care costs. The HECM for Purchase mortgage property must be
the primary residence of the senior and in his/her/their name only. Property
within a Living Trust is acceptable with verification of Trustee
powers.
- Gift Funds Allowance: An HECM for Purchase borrower may
utilize sourced and seasoned gift funds from a family member for the down
payment on a home. Such gift fund allowances enable family members to help the
senior borrower by providing part or all of the down payment, and the senior
lives in the home with no monthly payments thereafter.
- Multi-Unit Properties: Borrowers may purchase up to a
four-unit property with an HECM for Purchase loan as long as they occupy one of
the units as their primary residence. The other two or three units may be rented
out, creating income.