HECM for Purchase

A Home Equity Conversion Mortgage (HECM) for Purchase is a reverse mortgage that allows seniors, age 62 or older, to purchase a new principal residence using loan proceeds from the reverse mortgage.

The HECM for Purchase gives you more flexible buying power while giving you the option to eliminate monthly mortgage payments.

You may be able to use a HECM for Purchase reverse mortgage loan to buy your next home. Some eligibility requirements are:

  • The youngest titleholder must be 62 years or older
  • The purchased home will be occupied within 60 days of closing
  • The purchased home must be your primary residence
  • You must meet financial eligibility criteria as established by HUD
  • You may need to set aside additional funds from the loan proceeds to pay for taxes and insurance
  • The difference between the purchase price of the home and the HECM proceeds will be paid in cash from the sale of an existing home or another source of eligible funds

Special restrictions:

  • Gift funds may be an acceptable form of down payment, however certain restrictions may apply
  • If the homeowner is using cash, the cash must be seasoned for 60 days
  • There must be proof that the homeowner has “eligible funds” from qualifying sources for the closing. Depending on the source of funds, specific documentation may be required.

The property must be a primary residence and can be a:

  • Single family home
  • FHA approved condominium
  • Manufactured home (must meet FHA guidelines)

Ineligible property types include

  • Cooperatives
  • Newly constructed principal residences where a Certificate of Occupancy or equivalent has not been issued by the appropriate local authority
  • Boarding house
  • Bed and Breakfast establishments
  • Liberty does not offer HECM for Purchase loans on multi-unit properties

All major home repairs must be completed by the property seller before the loan can close:

  • Property must meet FHA’s minimum property requirements
  • Critical health, safety and structural integrity issues must be repaired
  • Repair set-asides are not permitted with the HECM for Purchase
  • The buyer cannot pay for any repairs before they own the home
  • The repairs must be included in the purchase agreement


With a HECM for Purchase loan the usual costs associated with selling and buying a property will apply as well as the fees associated with a reverse mortgage loan.