Reverse Mortgage Home Purchase Options
The reverse mortgage purchase program was designed to allow those over age 62 to purchase a new principal residence and obtain a reverse mortgage within a single transaction by eliminating the need for a second closing and the resulting extra costs.
If you are over 62 and have a downpayment of at least 50% of the purchase price you could live in your new home without ever making a mortgage payment*
*The loan may become due if the borrower fails to pay property taxes, homeowners insurance, lets the condition of the home significantly deteriorate, or transfers the title of the property to a non-borrower (excluding trusts that meet HUD’s requirements).
The government insured Home Equity Conversion Mortgage, [HECM] or Reverse Mortgage, was signed into law on February 5, 1988 by President Ronald Reagan as part of the Housing and Community Development Act of 1987 then later the Housing and Economic Recovery Act of 2008 provided HECM users with the opportunity to purchase a new principal residence with HECM loan proceeds — the so-called HECM for Purchase program, effective January 2009.
In a 2006 survey of borrowers by AARP, 93 percent said their reverse mortgage had a mostly positive effect on their lives, compared with 3 percent who said the effect was mostly negative.
Use our FREE Reverse Mortgage Evaluator to find out how a reverse mortgage could work for you!
Reverse Mortgage Facts
What is a Reverse Mortgage or HECM?
A reverse mortgage is a type of mortgage in which a homeowner can borrow money against the value of his or her home. No repayment of the mortgage (principal or interest) is required until the borrower dies or the home is sold.
Who can use a reverse mortgage?
Reverse mortgages aren’t for everyone. They were specifically designed for Americans over age 62 whose net worth was/is currently tied up and/or seniors who are looking to retain liquid assets for expenses later in life rather than have substantial capital tied up in their primary home.
How does a reverse mortgage for purchase work?
The reverse mortgage can cover 47% to 52% of the home’s purchase price. You will need to come up with the balance. You can use funds for your downpayment from retirement accounts, gift money or savings.
How do I know how much I can borrow?
The exact amount you can borrow for Purchase in a reverse mortgage depends on the age of the youngest borrower or non-borrowing spouse, current interest rates, the home’s appraised value and the FHA mortgage insurance premium.
Please feel free to use the Reverse Mortgage Calculator which can be found lower down on this page.
What type of home can I buy using a reverse mortgage?
Types of property acceptable for Reverse Mortgage Purchase are:
- Single-family homes
- 2- to 4-unit homes with 1 unit occupied by the borrower
- Condominiums approved by the U.S. Department of Housing and Urban Development
- FHA-approved manufactured homes.
Lender requirements under the Reverse Mortgage Purchase program
- Applicants are at least 62 years old
- The home must be your primary residence
- You must be able to pay property taxes, insurance premiums, association dues and any other ongoing property costs
- You cannot have any delinquent federal debt
- The property must meet all FHA standards and flood requirements.
Reverse mortgage calculator
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Fact -v- Fiction -- Reverse Mortgages
Click on the image to see a full size, downloadable version of fact -v- fiction, the facts about reverse mortgages from the National Reverse Mortgage Lenders Association.
New Florida Mortgage charges $0 Origination Fees on purchase reverse mortgage programs saving you thousands in closing costs.