HECM for Purchase

  • You can buy a home with a Home Equity Conversion Mortgage (“HECM”)! The down payment will be higher, since depending on your age, and the interest rate selected, you may only get 45%-70% of the price of the home.  But still you get the option not to make mortgage payments. You can sell you existing home, and add that equity to a HECM to obtain a new home you might never have qualified for, in a place you never thought you could have retired to.
  • The fundamental requirements of a Traditional HECM in terms of residual income, age and Expected Interest rates, Maximum Claims and Principal Limits are all the same as described in the section “Basics” on this website.
  • Just like in the forward mortgage world you can get a preapproval from a HECM for Purchase lender.

Important things to know about…..

  • Only properties where construction is completed are eligible for FHA insurance under the HECM for Purchase program.
  • All repairs must be completed by the seller before closing.
  • The Maximum Claim Amount will be the least of: 1) the appraised value; 2) sale price; or 3) FHA mortgage limit for a one-family residence of $679,650.
  • At closing, HECM borrowers must provide a minimum monetary investment which will be applied to satisfy the difference between the HECM Principal Limit and the sale price for the property, plus any HECM loan related fees that are not financed into the loan, minus the amount of the earnest deposit.
  • HECM borrowers may not obtain interim financing to meet the investment requirement or payment of closing costs needed to complete the purchase transaction.
  • HECM borrowers may have only one principal residence at any one time.
  • When prospective mortgagors under the HECM for Purchase program intend to retain their existing home as a rental property, they must have sufficient income to meet all the normal property charges.
  • Bridge loans and other interim financing methods are prohibited unless the unpaid or outstanding obligation can be satisfied prior to or on the day of closing
  • Unlike a forward mortgage, when purchasing a new principal residence, the HECM borrower has 60 days to occupy the home.
  • Upfront inspections, if negotiated (termite, home inspection, etc.) must be paid by the buyer. Any findings must be negotiated between buyer and seller.
  • Repairs must be paid by the seller and completed before closing the loan.
  • Seller concessions are permitted provided they are normal and customary for the area on similar transactions. Each local HUD office will make this determination.

HECMs can really help. Go download the eBrochure and watch the Video.

Would you like to learn more?

  • Click here for eBrochures, eBooks, FAQs and Videos!
  • If you would like to know how much you potentially qualify for, and whether you possibly have adequate monthly cash flow, go to the HECM WIZARD and input your information.
  • If you would like to reach out and talk with me, fill out the information on Contact Me or email at st.john.bannon@JMCapGroup.com