Buy the next house outright — without emptying the account.
A HECM for Purchase lets you buy a home and place a reverse mortgage on it in a single closing. You bring roughly half the price in cash, the loan covers the rest, and there is no required monthly principal and interest payment while you live there. Most people over 62 have never heard of it, including a good many real estate agents.
One closing, two sources of money
The structure is simpler than the name suggests.
1. Your cash contribution
A substantial down payment, usually from the sale of the home you are leaving. The share you bring depends on your age, the expected rate, and the price of the new home. Older buyers contribute less.
2. The HECM covers the rest
Reverse mortgage proceeds make up the balance of the purchase price. There is no required monthly principal and interest payment on that portion while you live in the home and meet the loan obligations.
3. One closing, one set of costs
You are not buying with cash and then refinancing later. The purchase and the reverse mortgage close together, which means one appraisal, one title policy, one escrow, one set of fees.
In every case the borrower remains responsible for property taxes, homeowner’s insurance, and home maintenance. Failing those obligations can make the loan due and payable.
The move most retirees want, without the payment they don’t
The classic California file looks like this. A couple in their early seventies is in a two-story house with stairs they have started to think about, in a neighbourhood their grandchildren do not live in. The house is worth a great deal and it is paid off. They want a single-story home closer to family.
The conventional options are both unattractive. Buy the new house outright and a very large share of their liquid net worth is now sitting in stucco, unavailable. Take a conventional mortgage and they have re-introduced a monthly payment in their seventies on a fixed income.
A HECM for Purchase is the third option: buy the new home, keep a substantial portion of the sale proceeds invested and available, and carry no required monthly principal and interest payment on the new house.
The same structure serves several other situations. Downsizing into a smaller, newer, lower-maintenance property. Moving from an expensive coastal county to an inland one and keeping the difference. Buying a single-story home specifically so that aging in place is realistic rather than aspirational.
What it is not is a way to buy a home you could not otherwise afford. The cash contribution is large, the property has to be your primary residence, and the ongoing obligations — taxes, insurance, HOA dues, upkeep — do not go away. Where the money for those obligations is coming from is a legitimate part of the underwriting, and a legitimate part of the conversation.
Why an agent should know this program exists
If you list to the 62-plus market in California, this is a tool that closes transactions other financing cannot.
It expands what a buyer can consider
A buyer who assumed they had to pay all cash, and therefore had to shop in a lower price band, may be able to consider a better property. The buyer’s budget question changes shape entirely once the payment comes off the table.
Up to 6% in interested party contributions
On an H4P, the seller, builder, or agent may contribute up to 6% of the sales price toward closing costs. That is real negotiating room, and per FHA Mortgagee Letter 2024-06 it is more generous than most agents expect.
The Reverse Purchase Agent Guide
Thirty pages written for California agents: how the program works, how to sequence the sale and the purchase, what to put in the offer, and fourteen worked case files. Emailed as a PDF from my own address.
Get the agent guideThe order these steps have to happen in
Getting this out of order is the single most common way an H4P purchase goes sideways.
Run the numbers before you shop
The cash contribution depends on your age and the price of the home. Knowing that figure first tells you what price band you are actually shopping in, which is a considerably more useful thing to know before you fall in love with a house.
Counseling, and California’s seven days
Independent HUD-approved counseling is required, and California adds a seven-day cooling-off period afterwards before a lender may take your application. Start this early: it sits on the critical path of your escrow, and it cannot be compressed.
Write the offer with the right terms
The financing type belongs in the offer, along with any interested party contribution you are negotiating. Your agent and I should speak before this goes in, not after the counter comes back.
Sell, close, move
The sale of the departing residence and the purchase have to be sequenced so the cash contribution is available at closing. This is ordinary transaction management, but it is the part that needs a person who has done it before paying attention.
Questions buyers and agents ask
What is a HECM for Purchase?
How much cash do I need to bring?
Can the seller pay some of my closing costs?
Do I have to sell my current home first?
What kinds of property qualify?
Have you actually closed these?
Written by Kenneth M. Adler
Broker & Owner, Ideal Financial, Inc. · 30 years in California lending · NMLS #240317 · CA DRE #01216608
Published September 7, 2026 · Last reviewed September 7, 2026
Every page on this site is written and maintained by me: the same person who answers the phone, runs your numbers, and handles your file start to finish. No call center, no hand-offs, no lead-selling. More about how I work →
The rest of the reverse mortgage library
Each page below covers one decision in full, rather than a paragraph of it. Start wherever your question is.
Run the numbers before you shop.
Knowing your cash contribution first tells you which price band you are really shopping in. That conversation belongs before the offer, not after.
- Your actual contribution on a specific price point
- Sequencing the sale and the purchase properly
- Happy to talk your agent through it too
Fifteen minutes. Real numbers. Then you decide.
Tell me the scenario and I’ll tell you honestly whether this is the right tool. If it isn’t, you’ll leave the call knowing why, and I’ll point you at whatever is.
(818) 674-7284Prefer email?
Send a couple of sentences about your situation and I’ll reply personally, usually the same business day.
Contact Ken