Page 2 - AAG111_HECM for Purchase Consumer Booklet

What is a HECM for purchase loan?

A Home Equity Conversion Mortgage (HECM) is a type
of reverse mortgage insured by the Federal Housing
Administration (FHA) and offered exclusively to Americans 62
and older. Although HECM loans have been around since 1989,
the US Department of Housing and Urban Development (HUD)
approved and made this option available in January 2009 as a
way to purchase a home in addition to other options.

How does it work?

A HECM for Purchase loan combines your one time initial down
payment (typically 29-62%) with proceeds from the HECM loan
to buy your next primary home in a single transaction. The
down payment must come from assets you already own (such
as a savings, checking, retirement account or equity from the
sale of your previous home). As with any loan, you must meet
the loan terms such as paying property taxes, homeowners
insurance, HOA fees and the costs of home maintenance,
however, you now have the option to not have a monthly
mortgage payment.

How much could I qualify for?

The loan amount is based on the age of the youngest borrower
or eligible non-borrowing spouse, prevailing interest rates, and
the value of the home you wish to purchase.

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