HECM for Purchase: Buy Your Next Home With No Monthly Mortgage Payment
A reverse mortgage purchase loan — officially called a HECM for Purchase (H4P) — is an FHA-insured program that allows homebuyers 62 and older to purchase a new primary residence by combining a down payment with reverse mortgage proceeds. According to the National Association of Realtors , 42% of recent homebuyers were over the age of 60. For that group, the HECM for Purchase eliminates the monthly mortgage payment permanently while preserving retirement cash flow.
By Jay Zayer, CRMP · Certified Housing Wealth Advisor · CA DRE #01456165 · NMLS #307713 · Updated May 2026
Direct answer
A HECM for Purchase lets you buy a new home at 62+ with no required monthly mortgage payment. You bring the down payment — typically 40% to 60% of the purchase price depending on your age — and the reverse mortgage covers the rest. The seller receives full payment at closing. You retain ownership. No monthly payment is required for as long as you live in the home.
How a Reverse Mortgage Purchase Works
Congress created the HECM for Purchase program in 2008 through the Housing and Economic Recovery Act. It allows buyers 62 and older to purchase a new primary residence in a single transaction — combining their down payment with FHA-insured reverse mortgage proceeds to pay the seller in full at closing.
The critical difference from a conventional purchase: instead of the buyer borrowing most of the purchase price and paying it back monthly, the buyer brings a larger down payment and the reverse mortgage covers the remainder. From that point forward no monthly principal or interest payment is required for as long as the buyer lives in the home and meets program obligations. For a full overview of reverse mortgages generally, see our reverse mortgage guide.
In my experience working with buyers in San Diego, Scottsdale, and Palm Springs, the HECM for Purchase is the most underutilized product I offer. The buyers who benefit most are homeowners selling a long-held California property — often with $500,000 to $1,000,000 or more in equity — who want to right-size into a new home without committing to a $3,000+ monthly payment in retirement. One client in Scottsdale sold her San Diego home, used the proceeds as the down payment on a Scottsdale property she had always wanted, and closed with no monthly mortgage payment at age 71. The monthly cash flow difference transformed what her retirement looked like.
Step-by-Step: How It Works
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1. HUD Counseling First
Before any application begins you must complete an independent session with a HUD-approved reverse mortgage counselor. This is required by federal law and takes approximately 60–90 minutes by phone. You receive a counseling certificate to provide your lender.
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2. Get Pre-Qualified Before You Search
A pre-qualification from Jay tells you exactly how much reverse mortgage proceeds you will receive based on your age, the expected purchase price range, and current rates. This determines your required down payment range before you begin searching. Knowing your number keeps your home search focused. Start with the free calculator or readiness assessment.
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3. Find the Right Property
Work with a real estate agent familiar with the HECM for Purchase program. Not all properties qualify — confirm eligibility early. Single-family homes, FHA-approved condos, and 2–4 unit properties where you occupy one unit are the most common eligible types.
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4. Write the Offer
A HECM for Purchase offer is written and closes like any other real estate transaction. The seller sees full payment at closing. Sellers can contribute up to 6% of the purchase price toward your closing costs — a significant advantage in California’s negotiation-friendly markets.
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5. Application and Appraisal
Your lender processes the HECM for Purchase application including a financial assessment and an FHA appraisal of the property. The appraisal confirms the home meets FHA standards and establishes the value used to calculate your loan amount.
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6. Close and Move In
At closing you bring your down payment funds. The HECM covers the remaining purchase price. The seller receives full payment. You take ownership. You must occupy the home as your primary residence within 60 days of closing.
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7. No Monthly Payment — Ever
From closing day forward no monthly mortgage payment is required. You remain responsible for property taxes, homeowner’s insurance, HOA dues if applicable, and basic maintenance.
Down Payment by Age — What to Expect
The down payment is the most important number in any HECM for Purchase transaction. It is determined by three factors: the age of the youngest borrower (older = larger loan = smaller down payment), current interest rates, and the purchase price relative to the 2026 HECM lending limit of $1,249,125.
Estimated Down Payment Requirements by Age — 2026
| Age | Approx Down Payment % | $500K Home | $800K Home |
|---|---|---|---|
| 62 | 55–60% | $275K–$300K | $440K–$480K |
| 65 | 52–57% | $260K–$285K | $416K–$456K |
| 68 | 49–54% | $245K–$270K | $392K–$432K |
| 70 | 47–52% | $235K–$260K | $376K–$416K |
| 75 | 42–48% | $210K–$240K | $336K–$384K |
| 80 | 37–43% | $185K–$215K | $296K–$344K |
Estimates based on 2026 rate environment. Exact amounts require a personalized calculation from Jay. Closing costs are in addition to the down payment and can be partially offset by seller concessions up to 6%.
Seller concessions can offset closing costs
In California and Arizona markets sellers can contribute up to 6% of the purchase price toward your closing costs. On an $800,000 home that is up to $48,000 in cost offsets — significantly reducing your total out-of-pocket cash beyond the down payment. Jay structures offers to maximize this benefit whenever market conditions allow.
Where Your Down Payment Can Come From
Unlike a conventional purchase where the lender provides most of the funds, in a HECM for Purchase the buyer provides the larger share. Eligible sources for the down payment include:
- Proceeds from the sale of your current home — the most common source. See downsizing with no monthly payment
- Savings, money market, or checking accounts
- Investment accounts, brokerage accounts, or retirement distributions
- Gift funds from family members — properly documented and sourced
- Proceeds from a life insurance policy or annuity surrender
- Bridge loan or sale proceeds from another asset
- Funds from the seller, real estate agent, builder, or any party with a financial interest in the transaction
- Cash advances from credit cards or personal loans obtained for the purpose of the down payment
- Unsourced cash deposits
What Properties Qualify
Not every property qualifies for a HECM for Purchase. Confirming eligibility early in your home search prevents wasted time and missed opportunities. Here is what qualifies and what does not:
Eligible property types
- Single-family detached homes
- FHA-approved condominiums
- Townhomes that meet FHA standards
- 2-to-4 unit properties — you must occupy one unit as primary residence
- Manufactured homes on permanent foundations built after June 15, 1976 meeting FHA standards
- New construction — if completed before closing
Not eligible
- Investment properties or rentals
- Vacation homes or second homes
- Non-FHA-approved condominiums (may qualify for proprietary program)
- Cooperative housing (co-ops)
- Mixed-use commercial properties
- Homes not yet built or under construction at closing
California condo buyers — important note
Many California condominium complexes are not FHA-approved and therefore do not qualify for a HECM for Purchase. If you are targeting a specific condo project Jay can check FHA approval status immediately. Non-FHA-approved condos may qualify for a proprietary reverse mortgage purchase program — a separate but comparable option available through private lenders.
Who Is This Best For
In Jay’s practice across California and Arizona, the HECM for Purchase works best for a specific buyer profile. Here is an honest assessment of who it serves well and who it does not:
Strong fit
- Homeowners 62+ selling a long-held home with significant equity and buying a new property
- Downsizers who want to right-size without a monthly payment
- Buyers relocating from California to Arizona — see HECM for Purchase Arizona guide
- Snowbirds buying an Arizona property as their primary residence
- Buyers who want to preserve their investment portfolio rather than depleting savings for a cash purchase
- 2–4 unit buyers who want rental income from other units while living payment-free in one
Not a strong fit
- Buyers planning to sell within 2–3 years — closing costs not recoverable on short timelines
- Buyers under 62 — though California proprietary programs may be available from age 55
- Buyers whose primary goal is maximum inheritance for heirs
- Properties that do not meet FHA standards with no proprietary alternative
Real Scenarios — California and Arizona Buyers
Scenario 1: San Diego Downsizer
A 70-year-old San Diego homeowner sells her $950,000 home with $820,000 in equity after paying off her existing mortgage. She wants to buy a $650,000 single-family home in Carlsbad near her daughter. With a HECM for Purchase her down payment at age 70 is approximately $305,000–$338,000 (47–52% of $650,000). She uses those funds from her sale proceeds, the HECM covers the remaining $312,000–$345,000, and she closes with no monthly mortgage payment. She retains $482,000–$515,000 from the sale proceeds for retirement savings. San Diego HECM for Purchase guide →
Scenario 2: California-to-Arizona Snowbird
A 74-year-old couple sells their Carlsbad home for $1,100,000 and wants to buy a $750,000 home in Scottsdale as their primary residence. At age 74 their combined down payment is approximately $330,000–$375,000 (44–50% of $750,000). The HECM covers $375,000–$420,000. No monthly mortgage payment. They retain $725,000–$770,000 from the California sale for retirement income and investments. Scottsdale purchase guide →
Scenario 3: Phoenix Buyer on Fixed Income
A 68-year-old Phoenix buyer has $280,000 in savings and wants to purchase a $500,000 home. At age 68 the down payment is approximately $245,000–$270,000. She uses $260,000 from her savings, the HECM covers $240,000, and she closes with no mortgage payment — preserving $20,000 in emergency savings. Her fixed Social Security and pension income more than covers property taxes and insurance going forward.
From Jay’s practice:
The HECM for Purchase is the most underused product I work with — and consistently the most impactful when the right buyer finds it. The clients who benefit most are not those who need money. They are homeowners who have money — from a California home sale — and want to use it efficiently. Buying a $700,000 home for $330,000 down with no monthly payment and keeping $370,000+ in cash for retirement is a fundamentally different retirement than either a cash purchase or a conventional mortgage. It deserves more attention than it gets.
HECM for Purchase vs Conventional Mortgage
Which is right for a buyer 62+?
| Factor | HECM for Purchase | Conventional Mortgage |
|---|---|---|
| Monthly payment required | None | Yes — $2,000–$5,000/mo depending on loan |
| Down payment | 40–60% | 3–20% typical |
| Loan balance over time | Grows (no payment) | Shrinks (payments made) |
| Income qualification | Financial assessment — no minimum income | Full DTI and income qualification required |
| Age requirement | 62+ | No age requirement |
| Non-recourse protection | Yes — never owe more than home value | No — full recourse loan |
| Effect on retirement cash flow | Dramatically positive | Reduces monthly cash flow |
| Best for | Buyer who wants to eliminate payment permanently | Buyer with qualifying income and flexible cash flow |
Compare financing alternatives: reverse mortgage vs HELOC
For Realtors — Working With a HECM for Purchase Buyer
If you are a real estate agent in California or Arizona and you have a buyer 62+ who is serious about purchasing without a monthly payment, Jay is a resource you can offer them directly. Here is what Realtors should know:
- A HECM for Purchase closes like any conventional transaction — the seller receives full payment at closing
- Your commission is not affected by the buyer’s use of a reverse mortgage
- The seller can contribute up to 6% toward the buyer’s closing costs — which can be structured into the offer
- The FHA appraisal is required and may take a few additional days compared to a conventional appraisal — plan for a 45–55 day close
- Jay can provide a pre-qualification letter that specifies the buyer’s exact down payment requirement for a given purchase price — the same function as a conventional pre-approval
Reverse mortgage guide for Realtors · Contact Jay for a Realtor consultation →
Frequently Asked Questions
Yes, with a condition. The home must be fully complete — with a certificate of occupancy — before closing. You cannot use a HECM for Purchase to buy a home that is still under construction. Once the certificate of occupancy is issued the purchase can proceed through normal HECM for Purchase channels.
If one spouse is under 62 they cannot be a co-borrower on the HECM for Purchase. They can be designated as an Eligible Non-Borrowing Spouse which provides specific protections — including the right to remain in the home after the borrowing spouse passes away — as long as the designation is properly established at closing. The loan amount is calculated using the younger spouse's age even though they are not on the loan, which reduces the available proceeds.
If the appraisal comes in below the purchase price the HECM for Purchase loan is calculated using the appraised value — not the contract price. The buyer either renegotiates the purchase price, makes up the difference in cash, or the transaction does not proceed. This is the same outcome as any conventional purchase with a low appraisal.
Yes — and this is one of the most common scenarios Jay handles. California sellers with significant equity use the proceeds from their California home sale as the HECM for Purchase down payment on an Arizona property. The Arizona home must be your primary residence — you cannot maintain the California home as a primary residence simultaneously. Many snowbirds who decide to make Arizona their permanent base use this exact structure. Read the full California-to-Arizona snowbird purchase guide.
Yes — the HECM for Purchase is available throughout California. Jay specifically serves San Diego, San Marcos, Carlsbad, Temecula, Palm Springs, Los Angeles, Orange County, Riverside, and all surrounding communities. See the HECM for Purchase California guide and proprietary reverse mortgage purchase programs for buyers 55+ and for properties that do not meet FHA condo approval requirements.
Yes. You retain full ownership and title from the first day of closing. The HECM for Purchase places a lien on the property as security for the loan — the same as any mortgage — but your name is on the deed throughout. You can sell the home at any time, renovate it, or leave it to heirs through your estate.
Ready to Find Out Exactly What You Can Buy?
Jay will run a personalized HECM for Purchase calculation based on your age, target purchase price, and current rates — and show you exactly what your down payment would be and what you would close with. Free. No pressure. No obligation.
Related Reading
Explore these guides for deeper answers on HECM for Purchase.
- HECM for Purchase: The Complete 2026 Guide to Buying a Home Without Monthly Mortgage Payments
- Reverse Mortgage for Purchase: What H4P Is and How It Works
- HECM for Purchase in California: The Complete 2026 Guide
- Reverse Mortgage Purchase Loan Down Payment: How Much Do You Need?
- How to Use a Reverse Mortgage to Downsize Without Monthly Payments
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. Terms and conditions may apply. All scenarios shown are for illustration purposes only and are not guarantees of actual loan amounts. CA DRE #01456165, #01450361 · NMLS #307713 · AZ #1022722.