• Single family home or 2-4 unit home with one unit occupied by the borrower
• HUD-approved condominium project
• Manufactured home that meets FHA requirements

All properties must meet FHA property standards and flood requirements.

In order to ensure borrowers will have financial resources to continue to make timely payment of property taxes, insurance and Homeowner Association fees, etc. a portion of the qualifications are based on:

• The borrower(s) income, assets, monthly living expenses, and credit history are required to be verified
• Verification of  timely payments of real estate taxes, hazard and flood insurance premiums

For adjustable interest rate mortgages, you can select one of the following payment plans:

• Tenure – equal monthly payments as long as at least one borrower lives and continues to occupy the property as a principal residence.
• Term – equal monthly payments for a fixed period of months selected.
• Line of Credit – unscheduled payments or in installments, at times and in an amount of your choosing until the line of credit is exhausted.
• Modified Tenure – combination of line of credit and scheduled monthly payments for as long as you remain in the home.
• Modified Term – combination of line of credit plus monthly payments for a fixed period of months selected by the borrower.

For fixed interest rate mortgages, you will receive the Single Disbursement Lump Sum payment plan.

• Age of the youngest borrower or eligible non-borrowing spouse
• Current interest rate; Call for quote
• Current loan balance
• Appraised property value
• Lesser of: appraised value; the HECM FHA mortgage limit of $970,800; or the sales price (only applicable to HECM for Purchase)

If there is more than one borrower and no eligible non-borrowing spouse, the age of the youngest borrower is used to determine the amount you can borrow.

You can pay for most of the costs of a HECM by financing them and having them paid from the proceeds of the loan. Financing the costs means that you do not have to pay for them out of your pocket. On the other hand, financing the costs reduces the net loan amount available to you.

Just like a traditional mortgage the HECM loan includes several fees and charges, which includes:

1. mortgage insurance premiums (initial and annual)
2. third party charges
3. origination fee
4. interest and
5. servicing fees.

The lender will discuss which fees and charges are mandatory.

To be eligible for a reverse mortgage purchase, you must be 62 years old at the time of closing. A couple can be eligible when one spouse is at least 62. The credit and income qualifications can be found here. If you are attempting to buy your next home before selling your existing one, you’ll have to qualify to carry both.

We are unable to publish the table of downpayment percentages, because that changes every week with long term interest rates, so you will have to reach out for a proposal, even if you don’t have a property in mind. HUD/FHA can also change the table at anytime with a formal announcement.

The downpayment is roughly 50-60% of the purchase price, so anyone looking to put less than that down would be better suited with another mortgage product. The older the person is, the more they can borrow. If married, we go by the younger age, due to that person’s longer life expectancy.

No matter the type of property you are looking to buy with a reverse mortgage purchase loan, it has to meet FHA minimum property standards before you can close the loan. The appraiser will cite any repair issues and they have to be corrected prior to closing, typically by the seller. Given this requirement, it’s difficult to purchase a home as-is that needs to be rehabilitated.

Acceptable property types include:

• 1-4 unit homes
• Townhomes
• Condos (must be FHA approved)
• Manufactured homes (must meet HUD’s guidelines)

The property types that are ineligible include:

• Co-op units
• Condos that aren’t FHA approved
• Manufactured homes on leased land
• Unique homes (berm, geodesic, Indian tribal land, log homes without similar comps)

The most common way for someone to use a reverse mortgage purchase loan is to sell their previous residence and use the proceeds as the down payment for the new home. The trick is getting the timing right with the previous sale versus the new purchase, so you aren’t homeless for a period of time. You can do a simultaneous close if you are comfortable with the risk involved.

If you are going to use your own assets, keep in mind that we will need 60 days of complete bank statements showing the funds in the account for that period of time, at a minimum. If there are any large deposits in those 60 days, we’ll need to document where they came from. Gift funds from friends and family are perfectly acceptable, but we’ll need to document them, just like we would your own funds. Part of this requirement is to make sure the funds aren’t borrowed and part of it is to meet federal anti-money laundering regulations.

Depending on the state of the market, you might need to focus on selling your existing home before looking into acquiring your next one. There are time periods where homes sell immediately and time periods when they take a year to sell. It also depends on where you live. Let’s focus on the steps you take once you are far along in the process and expect an offer soon.

1. Reach out for a proposal to see how much home you can buy based on what you will likely net from the sale of your home. If you don’t want to spend it all, or have a particular purchase price in mind, you can let us know that then.
2. If the terms are acceptable to you, get prequalified for the loan. That includes documenting your income, assets, and allowing us to pull your credit.
3. Complete the mandatory reverse mortgage counseling on the telephone with a HUD-approved counselor.
4. Figure out what property you want to buy and how much you are willing to offer. Assuming you are prequalified, we’ll give you a prequalification letter, so you can make an offer on that specific property.
5. Once under contract, we go through the typical reverse mortgage process and need approximately 30 days to do so (we can rush in certain circumstances).