What is a Reverse Mortgage for Purchase (H4P)?

A Reverse Mortgage for Purchase (H4P) is a loan program that allows seniors 62 and older to buy a new primary residence using a reverse mortgage. It combines funds from the sale of your current home, savings, or other assets with a reverse mortgage to purchase the new property in a single transaction.

How does Reverse Mortgage for Purchase work?

• You contribute a down payment toward the purchase of your new home.
• The reverse mortgage covers the remainder of the purchase price.
• You won’t have monthly mortgage payments as long as you meet the loan terms, including living in the home as your primary residence and maintaining property taxes, insurance, and upkeep.

How is Reverse Mortgage for Purchase different from a traditional reverse mortgage?

A traditional reverse mortgage converts equity in your current home into cash. A Reverse Mortgage for Purchase, on the other hand, helps you buy a new home while eliminating the need for monthly mortgage payments on the home you just purchased.

What are the benefits of a Reverse Mortgage for Purchase?

• Downsize or right-size: Move into a home that better fits your needs (e.g., fewer stairs, more accessible features).
• Preserve savings: Free up funds for retirement by avoiding monthly mortgage payments.
• Stay close to family or amenities: Relocate to a preferred community or region while managing your cash flow.

What are the eligibility requirements for Reverse Mortgage for Purchase?

To qualify, you must:

• Be at least 62 years old (both spouses if married).
• Purchase a home that will be your primary residence.
• Have sufficient funds for the required down payment (typically 35–50% of the purchase price, depending on your age and the loan amount).
• Meet all FHA requirements for HECM loans, including property standards.
• Complete a HUD-approved counseling session.

How much do I need for a down payment?

The required down payment depends on:

• The age of the youngest borrower.
• The purchase price of the new home.
• Current interest rates. Typically, the down payment is between 35–50% of the home’s purchase price. The Reverse Mortgage for Purchase Calculator above can provide an estimate based on your inputs.

What types of homes are eligible for a Reverse Mortgage for Purchase?

Eligible properties include:

• Single-family homes.
• Multi-family properties with up to four units (as long as one unit is your primary residence).
• FHA-approved condos.
• Manufactured homes that meet FHA requirements.

What are the costs associated with Reverse Mortgage for Purchase?

• Down payment: Your contribution toward the purchase price.
• Mortgage insurance premiums (MIP): Required for FHA-insured HECM loans.
• Closing costs: Includes origination fees, appraisals, and title insurance.
• Ongoing costs: Property taxes, homeowners insurance, and maintenance.

These costs are typically folded into the loan balance, except for the initial down payment.

Can I use other funds for the down payment?

Yes, funds for the down payment must come from savings, proceeds from selling your current home, or other liquid assets. Unsecured borrowed funds are not permitted. Talk to a Reverse for Purchase Pro to make sure your down payment funds can be used.

What happens if I want to sell the home later?

If you sell the home, the loan balance (principal plus accrued interest) is repaid from the sale proceeds. Any remaining equity belongs to you or your heirs.

What happens to the loan if I pass away?

The loan becomes due, and your heirs can repay it by selling the home or using other funds. Since reverse mortgages are non-recourse loans, heirs will never owe more than the home’s value.

Is a Reverse Mortgage for Purchase right for me?

An H4P might be a good fit if you:

• Are looking to downsize or relocate.
• Want to avoid monthly mortgage payments.
• Have the required funds for the down payment and closing costs.
• Plan to stay in the home as your primary residence.

How can South River Mortgage help?

At South River Mortgage, we specialize in helping seniors make informed decisions about Reverse Mortgages for Purchase. Use our calculator above to see what you might qualify for and contact us to discuss your unique needs with our expert advisors.