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Reverse Mortgage For Purchase Loan
H4P

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The Financing You Need to Buy the Home You Really Want in Retirement.

If you are 62 or older, you may be thinking about buying a new home that better meets your needs in retirement. Maybe you have your sights set on a home that’s closer to your children, or one that will better accommodate your needs as you age, or one that is breathtakingly beautiful and near the ocean. 

You may also be thinking that you cannot afford to buy such a home, or that you don’t want to drain your nest egg to be able to afford it. Before you decide, consider the flexible financing option called a HECM for Purchase loan—which offers some distinct advantages over a traditional mortgage or paying all cash. 

What is a HECM for Purchase (H4P)?

A Home Equity Conversion Mortgage—also known as a reverse mortgage—for Purchase (H4P) is a Federal Housing Administration (FHA)-insured home loan that is designed to help homebuyers age 62+ to buy a new home that better meets their current lifestyle.

An H4P can potentially help you to:

  • Increase your purchasing power to buy the home you really want
  • Free up cash flow—you will not be obligated to make monthly mortgage payments. You still must maintain the home and pay taxes and homeowners insurance.
  • Extend the life of your productive retirement assets*
  • Qualify for a mortgage in retirement. There are minimal income and credit requirements.

Eligibility

  • You must be 62 years old or older
  • You must meet minimal credit and property requirements
  • You must receive reverse mortgage counseling from a HUD approved counseling agency
  • You must not be delinquent on any federal debt
  • Home must be a primary residence 
  • Property must be a single-family home, a 2- to 4-unit dwelling, or FHA-approved condo

How the product works

Down payment. The product allows you to combine a down payment from your own funds (e.g., proceeds from the sale of your current home) with the proceeds from the H4P loan to complete the purchase. The amount that you would be required to put down is roughly 40 percent to 60 percent of sales price of the home you are buying. The required down payment is determined by the age of the youngest borrower, the current interest rates, and the purchase price of the new home.

Repayment flexibility.  You have the option to repay as much or as little of the loan balance each month as you would like, or you can make no monthly mortgages payments at all. The FHA guarantees that as long as you meet your loan obligations (which include maintaining the home and paying for property taxes and homeowners insurance), no repayment of the loan is required until the last borrower moves out or passes away. When the loan becomes due, you or your estate has up to 12 months to repay the loan balance, which is typically achieved by selling the home.

Increase your purchasing power

This information is provided as a guideline and does not reflect the final outcome for any particular homebuyer or property. The actual reverse mortgage available funds are based on current interest rates, current charges associated with loan, borrower date of birth (or non-borrowing spouse, if applicable), the property sales price and standard closing cost. Interest rates and loan fees are subject to change without notice. Following the closing of the home purchase, no further principal or interest payments will be required as long as one borrower occupies the home as their primary residence and adheres to all HUD guidelines of loan. Borrower must remain current on property taxes, homeowner’s insurance (and homeowner association dues, if applicable), and home must be maintained.

Upsizing

James and Mary, who are 62 and 59, want to move to a newly constructed home to retire. They want to keep the same size home they currently have, but home values are more than double in the new community compared to where they live currently. A Realtor® recommended to them that with a reverse mortgage for home purchase, they could buy a house similar to the one that they currently live in.

 

CLIENTS COULD SELL THEIR HOUSE FOR $391,400 AND PURCHASE A NEWLY
CONSTRUCTED HOME FOR $600,000.

House and story are for illustration purposes only. House
may not be available for purchase.

Downsizing

Cindy, who is 62, is selling her current home that is owned free and clear to move closer to her grandchildren. She would like to downsize when she moves and be able to set up an annuity for her grandchildren to help pay for college*. The community she would like to move to is more expensive than her current one. A reverse mortgage can allow her to purchase a home in the new community and be able to have money left over from the sale of her current house.

CLIENT COULD DOWNSIZE HER $400,000 HOME, PURCHASE A $375,000 HOUSE AND HAVE $170,000 TO SPEND ON AN ANNUITY.

House and story are for illustration purposes only. House
may not be available for purchase.

To learn more about why a reverse mortgage loan can be an excellent choice for buying a new home, watch our video.


DID YOU KNOW? You may be able to close on an H4P loan from Fairway in as little as 17 days*

*17-day close is not available in all states and requires receiving a non-contingent appraisal
within ten days from the appraiser.


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