Distinct from tapping equity in an already-owned home — a HECM for Purchase uses a reverse mortgage to buy a new home in one transaction.
How it works
The home price times the HECM principal limit factor (based on the youngest borrower’s age and current interest rates) gives the principal limit amount. Subtracting that from the home price gives the cash needed at closing.
What this does not include
The actual principal limit factor comes from a HUD-published table based on the borrower’s specific age and prevailing interest rates — this calculator uses whatever factor is entered as a simplified stand-in rather than looking up the exact HUD table value.
How to use this calculator
- Enter the home purchase price and principal limit factor.
Frequently asked questions
Are there monthly payments on a HECM for Purchase?
No required monthly mortgage payments on the reverse-mortgage portion — the loan is generally repaid when the home is sold, the borrower moves out permanently, or passes away.
Why would a senior buyer use a HECM for Purchase instead of paying cash?
It preserves more cash and other assets while still moving into a new home, useful for a senior who wants to right-size housing without depleting savings or investments.
Who is eligible for a HECM for Purchase?
Generally the youngest borrower or eligible non-borrowing spouse must be at least 62, the home must be the primary residence, and the borrower must complete HUD-approved counseling.
