Downsize, Up-size, or Right-Size with a Reverse Mortgage

When people hear “Reverse Mortgage,” they usually think of staying in their current home. But what if you want to move? Whether you’re looking to downsize to a manageable condo in Naples, right-size to a single-story home in Asheville, or even up-size to your final dream home, there is a specialized tool designed just for you: The HECM for Purchase.

This isn’t your parents’ reverse mortgage. This is a special program that allows you to buy a new primary residence and secure a reverse mortgage all in a single transaction.

What is a HECM for Purchase?

HECM stands for Home Equity Conversion Mortgage. When used for a purchase, it is designed specifically for homebuyers aged 62 or older.

The biggest game-changer? You are not required to make monthly principal and interest payments for as long as you live in the home. This allows you to preserve your cash flow and extend the life of your retirement savings significantly.

The Mechanics: The “Down Payment” Requirement

While the “no monthly payment” feature sounds like a dream, it’s important to understand how the transaction is structured:

• The Down Payment: You typically use funds from the sale of your previous home to make a large down payment—usually around 60% of the new home’s purchase price (this varies based on your age).

• The Loan: The remaining 40% of the cost is financed by the HECM loan.

• Ownership: You still own the home. Just like a traditional mortgage, you remain responsible for property taxes, homeowners insurance, and basic maintenance.

Why “Right-Sizing” Matters

Many retirees stay in homes that no longer fit their physical needs—too many stairs, too much yard work, or too far from family—simply because they don’t want the burden of a new monthly mortgage payment.

The HECM for Purchase removes that barrier. It allows you to move into a home that fits your current lifestyle perfectly while keeping your monthly “must-pay” expenses to a minimum.

---

FAQ: Buying a Home with a Reverse Mortgage

1. Can I use a HECM for Purchase to buy a vacation home?

No. The HECM for Purchase must be used for your primary residence. You must move into the new home within 60 days of closing.

2. Do I still have to pay property taxes and insurance?

Yes. One of the most important requirements of any reverse mortgage is that the homeowner stays current on property taxes, insurance, and HOA fees (if applicable). Failing to do so can put the loan at risk.

3. Why is the down payment so high (60%)?

The higher down payment is what allows the loan to function without monthly payments. Because the interest is added to the loan balance over time rather than paid monthly, starting with a large amount of equity ensures the loan remains sustainable for the long term.

---

Make Your Next Move Your Best Move

Retirement is about freedom—freedom from the daily grind and freedom from financial stress. If you’ve been waiting to move because of “mortgage math,” it’s time to look at the HECM for Purchase.

Ready to Find Your “Right-Size” Home?

Whether you’re moving to the Florida coast or the North Carolina mountains, I specialize in helping retirees navigate the HECM for Purchase process to secure their dream retirement.

Ruth Johaningsmeir

Retirement Mortgage Specialist | NEXA Mortgage

NMLS #2176345

---