Buying a home with a HECM for Purchase
How much cash a reverse mortgage purchase takes, read from HUD's factor at your age, with the rules on the appraisal, the 60-day move-in and the mortgage insurance.
Cash to put down
$271,440
The HECM pays $162,960 of the $434,400 price and costs; no monthly mortgage payment after.
| Factor at age 72, 6.625 % | 0.388 |
| Maximum claim amount | $420,000 |
| Principal limit | $162,960 |
| Upfront MIP | $8,400 |
| Origination fee | $6,000 |
| Price + costs | $434,400 |
| Down payment share | 65 % |
The home must become your residence within 60 days.
Worked out by Radif Partners · How we calculate · factors read on hud.gov · not a loan offer
A HECM for Purchase buys a home and opens a reverse mortgage in one closing, and the buyer brings the part the loan cannot cover: at 72, on a $420,000 home, that is $271,440, or 65 % of the price. The maximum claim amount (MCA) is the lesser of the price, the appraised value and the $1,249,125 limit of 2026; HUD's principal limit factor (PLF) for age 72 at an expected rate of 6.65 % is 0.388, so the loan lends $162,960. The price plus $8,400 of upfront mortgage insurance and a $6,000 origination fee come to $434,400; the difference is the down payment, before title and other third-party costs. The share falls with age, from $296,640 at 62 to $213,900 at 85 on the same home. After closing there is no monthly mortgage payment, and the home must become the borrower's residence within 60 days.
The down payment at each age on a $420,000 home
The loan pays the share of the price that HUD's factor allows, and the buyer pays the rest at closing. The table keeps the price and the appraisal at $420,000, the expected rate at 6.65 % (read in the 6.625 % column) and the origination fee at its legal maximum of $6,000.
| Age of the youngest buyer | Factor | Loan amount | Cash to bring | Share of the price |
|---|---|---|---|---|
| 62 | 0.328 | $137,760 | $296,640 | 71 % |
| 66 | 0.357 | $149,940 | $284,460 | 68 % |
| 70 | 0.386 | $162,120 | $272,280 | 65 % |
| 75 | 0.415 | $174,300 | $260,100 | 62 % |
| 80 | 0.461 | $193,620 | $240,780 | 57 % |
| 85 | 0.525 | $220,500 | $213,900 | 51 % |
Two things follow from the table. The cash required is large at any age: even at 85 the buyer covers about half the price. And each year of age helps less than a rate change: one point less on the expected rate moves the factor at 72 from 0.388 to 0.435, worth $19,740 on this home. The age used is that of the youngest buyer or eligible non-borrowing spouse.
Your age and price
Cash to put down
$271,440
| Factor at age 72, 6.625 % | 0.388 |
| Maximum claim amount | $420,000 |
| Principal limit | $162,960 |
| Upfront MIP | $8,400 |
Three amounts set the loan: price, appraisal, limit
For a purchase, the Handbook defines the maximum claim amount as the lesser of the appraised value, the national limit and the sales contract price (HUD Handbook 4000.1). When a second appraisal is required, the lower of the two values counts. The upfront premium is not part of the MCA, and closing costs do not enter the appraised value.
That rule cuts both ways. A buyer who negotiates the price down lowers the loan along with it, since the MCA follows the price. A buyer who pays above the appraisal pays the whole gap in cash: on a $420,000 contract appraised at $400,000, the cash due rises by $7,360 at 72. Above the limit, the loan stops growing. A $1,500,000 purchase is counted at $1,249,125, so the loan lends $484,661 and the buyer brings $1,046,322.
What the cash at closing pays for
On the HUD payment plan, the contract sales price has its own line (line 6) and is added to the costs paid at closing in line 10, the way a mortgage payoff is in a traditional HECM. The cash the buyer brings goes on line 11, the personal funds that cover what the principal limit cannot (HUD payment plan instructions). The upfront mortgage insurance premium (MIP) of 2 % of the MCA, $8,400 here, must be financed or paid in cash, and any part paid in cash is added to the cash due at closing. The origination fee follows the same cap as any HECM, $6,000 at most. A lender that waives it lowers the cash due at 72 to $265,440.
Title insurance, recording and other third-party charges come on top. The amounts depend on the place and the providers, so the calculator leaves them at zero: add the figures from the lender’s cost estimate in its closing cost field. The costs page lists the charges HUD allows.
Because the loan takes the whole principal limit to buy the house, nothing is left for a line of credit or monthly payments in the examples above. That is the trade the program offers: a large payment at the start against no monthly mortgage bill for as long as the home stays the principal residence.
When the appraisal comes in lower
Cash to put down
$278,800
| Factor at age 72, 6.625 % | 0.388 |
| Maximum claim amount | $400,000 |
| Principal limit | $155,200 |
| Upfront MIP | $8,000 |
The balance after moving in
The loan starts at its full size on the day of closing, since the principal limit went into the house, and it grows from there with no payment. At a note rate of 5.99 % plus 0.5 % of annual premium, held constant, the $162,960 borrowed at 72 becomes:
| Years after the purchase | Age | Loan balance |
|---|---|---|
| 5 | 77 | $225,232 |
| 10 | 82 | $311,300 |
| 15 | 87 | $430,257 |
Over the first ten years, $136,911 of interest and $11,428 of mortgage insurance are added. The buyer's $271,440 is equity from the first day; what remains of it later depends on the home's value against that balance. Property taxes, insurance and upkeep stay the buyer's to pay, as with any HECM, and the lender's financial assessment can require a set-aside for them, which would raise the cash due at closing.
The rules a purchase adds
- Every borrower, and any eligible non-borrowing spouse, must occupy the home within 60 days of closing.
- The home is a one- to four-unit residence where the borrower lives in one unit, existing or newly built.
- All purchasers on the sales contract must be borrowers; a non-borrowing spouse may be listed but need not sign.
- The seller must be the owner of record, and a home resold 90 days or fewer after the seller acquired it is not eligible, with exceptions such as inherited homes and HUD's own sales.
- The seller must complete the repairs needed for safety, soundness and marketability; the appraisal is made subject to them.
- At closing, the HECM liens must be the only liens on the property.
Counseling with a HUD-approved counselor comes before closing, as for any HECM, though the Handbook lets the lender take the application before or after it. The counseling page covers the session, and the full calculator shows what a traditional HECM would give on a home already owned.