Reverse Mortgage for Purchase: How One Retiree Earns $61,200/Year from a 4-Plex | Jay Zayer, CRMP

One client's real story — selling a paid-off home, buying a 4-plex, and generating $61,200 a year without a single mortgage payment.

$700K

Net proceeds from home sale

$5,100/mo

Monthly net rental income

$61,200/yr

Extra income per year

Monthly mortgage payment

Back in 2021, I helped a retired client get a reverse mortgage on the home he'd lived in for decades. It gave him breathing room — access to equity without a monthly payment hanging over him. Fast-forward to today, and he's made a bold next move that shows just how creative retirement planning with a reverse mortgage can get.

He decided to sell his house, take approximately $700,000 in net proceeds, and use a Reverse Mortgage for Purchase (H4P) to buy a 4-unit residential property. He'll live in one unit and rent out the other three — and because he's using a reverse mortgage to purchase, he has no monthly mortgage payment.

The result? A completely restructured retirement with a built-in income stream, a place to call home, and the financial freedom to travel and spend time with family.

What is a Reverse Mortgage for Purchase?

Most people know the traditional reverse mortgage (officially called a Home Equity Conversion Mortgage, or HECM) as a tool for tapping into the equity of a home you already own. But fewer people know about its lesser-known sibling: the HECM for Purchase, also called a Reverse Mortgage for Purchase or H4P.

Here's how it works: instead of refinancing your current home, you use a reverse mortgage to buy a new primary residence. You bring a substantial down payment — typically 45–65% of the purchase price, depending on your age, interest rates, and the home's value — and the reverse mortgage covers the rest. No monthly mortgage payment is required as long as you live in the home, keep up with property taxes and insurance, and maintain the property.

“You don't have to choose between a comfortable home and a comfortable retirement. The right structure can give you both.”

The strategy: buying a 4-plex with a reverse mortgage

My client's situation was genuinely creative. He's retired, healthy, and wants to be mobile — but he also wanted predictable income. Here's how the numbers break down on his 4-plex purchase:

3 rental units × $1,700/unit (net)	$5,100
His unit — owner occupied	$0 rent paid
Monthly mortgage payment	$0
Property taxes & insurance	Included in net figure
10% maintenance reserve	Already deducted
Net monthly rental income	$5,100
Annual supplemental retirement income	$61,200

Those rental figures — $1,700 per unit after taxes, insurance, and a 10% maintenance reserve — represent the real, conservative, spendable cash. There's no mortgage eating into it. That $61,200 per year is genuinely extra income layered on top of whatever Social Security, pension, or investment income he already has.

Why this works so well for retirees

The elegance of this strategy is in the alignment between the product and the life stage. A reverse mortgage is designed for borrowers aged 62 and older. It requires no monthly principal or interest payment. The loan balance grows over time and is repaid when the homeowner sells, moves out, or passes away — typically from the proceeds of the home sale.

For a retiree buying an investment property with rental income, this means:

Cash flow is maximized. There's no mortgage payment cutting into the rental income. Every dollar of rent — after the operating expenses — stays in his pocket.
The equity from the old home is preserved. Rather than parking $700,000 in a low-yield account or drawing it down over time, he converted it into a real estate asset that generates income and potentially appreciates.
He has a place to live — rent-free. His unit in the 4-plex is his primary residence. He's not paying rent. He's not paying a mortgage. His housing cost is absorbed by the property itself.
He still has flexibility. He can travel. He can visit family. He can use property management if he prefers. The reverse mortgage doesn't penalize him for being away — as long as the home remains his primary residence.

Important considerations before you do this

This isn't a strategy for everyone, and it's worth being clear-eyed about the requirements and trade-offs.

Primary residence requirement

The HECM for Purchase requires you to live in the property as your primary residence. That means you must occupy one of the units — it's not a pure investment play.

You'll need a significant down payment

The larger the down payment relative to the purchase price, the smaller the reverse mortgage balance — and the more equity remains in the property long-term.

Ongoing obligations remain

Property taxes, homeowner's insurance, and HOA fees (if applicable) must be kept current. Falling behind can trigger the loan to become due.

Multi-unit properties have their own dynamics

Vacancies, tenant issues, and maintenance are real. The 10% maintenance reserve set aside is smart planning, but property management is still active work — or an expense if you hire it out.

Estate considerations

When the borrower eventually sells or passes away, the loan balance (principal + accrued interest) is repaid from the proceeds. Heirs can also refinance and keep the property. This is worth discussing with an estate planning attorney.

Who is this strategy best for?

This approach is most powerful for retirees who:

Are 62 or older and own a home with substantial equity
Want to downsize or relocate but also want income-producing real estate
Have enough equity to make a 45–65% down payment on the new property
Want to eliminate a monthly mortgage payment in retirement
Are comfortable with basic landlord responsibilities (or can hire management)

Frequently asked questions

Can I use a reverse mortgage to buy a multi-unit property?

Yes. The HECM for Purchase program allows borrowers to purchase a 1–4 unit residential property, as long as they occupy one unit as their primary residence. A 4-plex is an eligible property type.

Do I still have to pay property taxes and insurance if I have a reverse mortgage?

Yes. Keeping property taxes and homeowner's insurance current is one of the core ongoing obligations of a reverse mortgage. Failure to do so can result in the loan becoming due and payable.

What happens to the rental income — does it affect the reverse mortgage?

No. Rental income from the other units does not affect the reverse mortgage. The borrower keeps all rental income. The reverse mortgage lender has no claim on it.

What if I want to travel for several months a year?

You can travel, but the property must remain your primary residence. Generally, you cannot be absent for more than 12 consecutive months. If you plan extended travel, discuss specifics with your loan servicer.

Is this strategy available in all states?

HECM for Purchase loans are federally backed through FHA and are available in all 50 states, though state-specific licensing and property requirements may vary. Work with a HUD-approved reverse mortgage counselor and a licensed specialist.

Thinking about a similar strategy?

Every situation is different. The right property type, down payment amount, and timing depend on your age, equity, income needs, and goals. A reverse mortgage specialist can run the numbers for your specific scenario.

This post is for educational purposes and does not constitute financial or legal advice. Reverse mortgage products are subject to FHA guidelines and may vary.

Want to explore HECM for Purchase in California or Arizona?

Jay Zayer, CRMP helps homeowners 55+ model purchase scenarios with real numbers — no pressure, no obligation.

Book a Free 30-Minute Strategy Call

760-271-8646 Jay@ReverseMortgage.Coach reversemortgage.coach/calculator

About the author

Jay Zayer is a Certified Reverse Mortgage Professional (CRMP) and Certified Housing Wealth Advisor serving homeowners 55+ in California and Arizona. CA DRE #01456165, #01450361 · NMLS #307713 · AZ #1022722.

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This material is not from HUD or FHA and has not been approved by HUD or any government agency. All reverse mortgage loans are subject to credit and property approval. This content does not constitute financial, investment, or legal advice. Consult qualified professionals regarding your specific situation.