What Is a HECM for Purchase, and Can It Help Me Downsize?

HECM stands for Home Equity Conversion Mortgage, the reverse mortgage insured by the Federal Housing Administration. The CFPB explains that a HECM for Purchase allows people 62 and older to buy a new principal residence with HECM loan proceeds. The program was introduced in 2008 for buyers who want to buy a home rather than borrow against the one they already own.

I'm Jeanette Nelson, a REALTOR® with Jeanette Nelson Real Estate, Keller Williams Realty, serving Orange County, Huntington Beach, Costa Mesa, Fountain Valley, and surrounding areas. Downsizing is often part of a bigger life transition, and I want your family to know every way the numbers can work before you decide.

This article is general information, not financial or tax advice. Please talk with a HUD-approved counselor, a reverse mortgage lender and your CPA before deciding.

Here's the basic idea. You sell your current home. You use part of that money as a down payment on the new home, and the HECM for Purchase covers the rest. The CFPB says you won't have to make monthly payments on the loan.

That can leave more of your sale proceeds in savings, or let you buy a home that fits your next chapter without a monthly mortgage payment. A reverse mortgage balance still has to be repaid later, so ask your counselor to show you how that works with your numbers.

A lot, compared with a regular loan. The CFPB says you'll need cash or equity from a prior home for a relatively large down payment. You'll also need cash to pay the difference between the HECM proceeds and the sales price, plus closing costs.

The amount the loan can provide depends on your age, interest rates and the home's value, up to a federal limit. HUD announced that the HECM maximum claim amount for 2026 is $1,249,125 for all areas. In Orange County, where many homes sell above that, it's one more reason to run the numbers carefully with a lender.

No monthly mortgage payment doesn't mean no costs. The CFPB explains that, like all reverse mortgages, you'll still need to meet the loan requirements:

• Live in the home as your principal residence.
• Pay property taxes and homeowners insurance on time.
• Keep the home in good condition.

Falling behind on these obligations can cause problems with the loan, so budget for them before you buy.

1. Counseling comes first. The CFPB says borrowers must receive counseling from a HUD-approved reverse mortgage counseling agency before getting the loan.
2. Not every home qualifies. The CFPB notes that cooperative units and some manufactured homes aren't eligible. If you're considering a condo, ask your lender whether that community qualifies.
3. Closing costs can be higher. The CFPB says closing costs on a HECM for Purchase can be higher than other reverse mortgages, and some may be paid by the seller depending on state law. Shop around and compare.
4. Think about your heirs. Talk with your family and your attorney about what happens to the home later.

Timing matters. Many downsizers sell first so the proceeds are ready for the down payment, then buy. Others need a short rent-back or a gap plan. Your lender, your escrow team and your agent can line up the dates so your move feels steady, not rushed.

You can learn more on my downsizing page.

If you're thinking about downsizing and want to understand your options, including whether a HECM for Purchase is worth a closer look, let's start with a private planning conversation with your family. Call or text me at 714.366.8575 | DRE: 01397168, or contact me. Jeanette Nelson is a REALTOR® with Jeanette Nelson Real Estate, Keller Williams Realty, serving Orange County, Huntington Beach, Costa Mesa, Fountain Valley, and surrounding areas.