By Tyler Plack
Tyler Plack is the President of South River Mortgage. Tyler holds an active FHA Direct Endorsement (DE) underwriting certification and is the author of The Retirement Solution: Maximizing Your BenefitTyler is a seasoned entrepreneur and real estate investor renowned for his expertise in reverse mortgages and his commitment to addressing seniors' equity challenges. Tyler brings a unique perspective to his ventures, having built several successful companies throughout his career. His insights are frequently sought by industry publications, where he is recognized for his vast knowledge in the realm of reverse mortgages.
An avid investor in income-producing properties, Tyler is dedicated to helping seniors navigate their financial needs with compassion and expertise. When Tyler is not helping solve America's retirement crisis, he is a skilled pilot flying airplanes for fun.
Most people know what a reverse mortgage is.
What fewer people realize is that you can also use a reverse mortgage to buy a home.
It’s called a Reverse Mortgage for Purchase (sometimes called HECM for Purchase), and for the right person, it can be a powerful way to move, downsize, or relocate—without taking on a monthly mortgage payment.
Let’s break it down in simple terms.
What Is a Reverse Mortgage for Purchase?
A reverse mortgage for purchase lets you buy a new home using a reverse mortgage instead of a traditional loan.
That may sound backwards at first.
Normally, when you buy a home, you:
- Make a down payment
- Take out a loan
- Make monthly mortgage payments
With a reverse mortgage for purchase, it works differently.
You:
- Make a larger one-time down payment
- Do not make monthly principal or interest payments afterward
Once you buy the home, you live there like normal. The difference is how the loan is structured.
How This Compares to a Traditional Mortgage
Here’s the simple version:
With a traditional mortgage:
- Smaller down payment
- Monthly mortgage payments for years
- Income and credit matter a lot
With a reverse mortgage for purchase:
- Larger upfront down payment
- No monthly mortgage payments
- More flexible qualification rules
You’re essentially trading monthly payments for peace of mind.
Why the Down Payment Is Larger
Because there are no monthly payments, more money goes in upfront.
Most reverse mortgage purchases require about 25%–50% down, depending on:
- Your age
- Interest rates at the time
Two people buying the same house could have different down payments simply because one is older than the other.
That’s normal.
Do I Still Have Monthly Costs?
Yes—but not mortgage payments.
You are still responsible for:
- Property taxes
- Homeowner’s insurance
- HOA dues (if applicable)
- Keeping the home in good condition
As long as you live in the home and meet those responsibilities, there are no required mortgage payments.
When Does a Reverse Mortgage for Purchase Make Sense?
This option is often a great fit if:
- You’re selling a home and buying another
- You want to downsize or relocate
- You plan to stay in the new home long-term
- You don’t want monthly mortgage payments in retirement
It’s especially helpful for retirees who struggle to qualify for a traditional mortgage because their income dropped after retirement.
Reverse mortgages focus less on income and credit—and more on age, equity, and long-term housing stability.
When Might It Not Be a Good Fit?
A reverse mortgage for purchase may not make sense if:
- You’re a first-time homebuyer without much cash
- You plan to move again in a short period of time
- You’re looking for short-term or bridge financing
This is designed as a long-term housing solution, not a temporary stopgap.
Are You Eligible for a Reverse Mortgage?
(Find out in 60 seconds)
Pros and Cons
Pros
- No monthly mortgage payments
- More flexible qualification rules
- Can buy a home outright with a single transaction
- Seller concessions up to 6% may be allowed
Cons
- Larger down payment required
- Not ideal for short-term living plans
How Do I Know If I’m Eligible?
The easiest first step is to use a reverse mortgage for purchase calculator.
In seconds, it can show:
- Estimated interest rates
- Required down payment
- Whether this option is worth exploring
From there, a lender can confirm eligibility and walk you through the details.
How Does Pre-Approval Work?
Once your numbers are reviewed, you can receive a pre-approval letter—just like with a traditional mortgage.
This lets you:
- Shop for homes confidently
- Make offers knowing what you can afford
- Avoid surprises later
Where Can the Down Payment Come From?
Many people assume the funds have to come from one place—but HUD allows a wide range of sources, including:
- Savings or checking accounts
- Proceeds from selling a home
- Retirement accounts
- Investments (stocks or bonds)
- Gifts from family
- Disaster relief or employer assistance
What matters most is that the funds are legitimate and documented.
Are Seller Concessions Allowed?
Yes.
Seller concessions are allowed on reverse mortgage purchases, up to 6% of the purchase price. These can help offset closing costs and make the transaction smoother.
What Should I Look for in a Reverse Mortgage for Purchase Lender?
This type of loan is not something every lender handles well.
You’ll want a lender who:
- Specializes in reverse mortgages
- Has experience with reverse purchases specifically
- Can explain your options clearly—without pressure
- Has a proven track record helping retirees
This is a major financial decision. Experience matters.
Thinking About Buying a Home in Retirement?
A reverse mortgage for purchase isn’t for everyone—but for the right person, it can remove monthly payment stress and make a new chapter possible.
At South River Mortgage, we help homeowners explore this option clearly and honestly. If you’re curious whether this could work for you, we’re happy to walk through your numbers and give you a straight answer.
Call (844) 230-6679 or start with a quick eligibility check to see what may be possible.
