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HECM for Purchase Loan

A Home Equity Conversion Mortgage (HECM) for Purchase loan is a reverse mortgage
that is specifically designed to assist people age 62 or older in purchasing a home with Example
no monthly mortgage payments*. Use the HECM for purchase to increase your sales HECM for Purchase
opportunities and move more inventory while offering a viable financial option to your Loan Example
senior clients. Use the charts below to determine how much your buyer can finance with a
HECM for purchase and how much money they would need to provide at closing.

*Borrower must continue to pay property taxes, homeowner’s insurance, and home Your client, age 65,
maintenance costs. sells their existing
home for $450,000.

Example
One
A couple with the youngest spouse aged 65 would like to buy a $300,000 house without Purchase a New
monthly mortgage payments*. How much of the home purchase could be financed by a Home
HECM and how much money would they need to provide at closing?
Your client finds a NEW
2
Step 1 Find the youngest spouse’s age in Chart 1 and then the value of the home they home for $300,000 .
want to buy. This will give you an estimate of the amount financed by the HECM Loan. In
this case the amount financed by HECM at age 65 for a $300,000 home would be $123,724. Use $176,276 as a down
payment.

Home Value $200,000 $300,000 $500,000 $600,000 Use $123,724 from a
HECM for Purchase loan
to complete purchase.
3
65 Years Old $80,997 1 $123,724 2 $210,427 $254,327
4
75 Years Old $92,997 5 $141,724 6 $240,427 7 $290,327 Two
8
+$176,276
85 Years Old $111,797 9 $169,924 10 $287,427 11 $346,727 12
DOWN PAYMENT
+$123,724
Chart 1. Amount Financed by HECM Loan**
HECM TO COMPLETE PURCHASE
Step 2 Find the youngest spouse’s age in Chart 2 and then the value of the home they
want to buy. This will give you an estimate of the amount the customer would need to
provide at closing. In this case the amount the couple with the youngest spouse age 65
would need to provide at closing for a $300,000 home would be $176,276. $300,000

Home Value $200,000 $300,000 $500,000 $600,000
Three
65 Years Old $119,003 $176,276 $289,573 $345,673 $273,724 at your
client’s disposal
75 Years Old $107,003 $158,276 $259,573 $309,673 and $0 monthly
mortgage
payments.
85 Years Old $88,203 $130,076 $212,573 $253,273
Borrower must continue
Chart 2. Amount Buyer Needs to Provide at Closing to pay property taxes,
homeowner’s insurance,
and home maintenance
costs.
For industry professionals only - not intended for distribution to the general public.
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