HECM Purchase for Seniors?

Question

Earlier on as I began my REI studies, I discovered that HECMs (Home Equity Conversion Mortgages, a.k.a. "Reverse Mortgages") have a feature where by a senior can actually purchase a home using an HECM if they have enough cash on hand to make up the difference between the purchase price and the proceeds from the HECM.

The part I don't seem to be able to find is how much of the purchase can be paid with an HECM and how much cash equity is needed.

Looking for anyone on BP who is knowledgeable about HECMs and can provide some guidance. Otherwise, I'll to pay for a HUD Counselor to see if I can gather the numbers I need to see if it would be viable for me.

David J Dachtera

David Dachtera · Answer

After speaking to HECM Counselors, I have a partial follow-up on my own post...

The reason why such information is elusive is because the answer to the root question - what's the minimum LTV for a HECM - is, "It depends".

The greatest dependency seems to the age of the (oldest?) buyer since the HECM is based on the "reverse mortgage" concept: actually taking money out of the equity in a home rather than paying in to amortize a loan and increase equity.

Older home owners / prospective purchasers are allowed a greater LTV than those newly eligible for an HECM, for example. The thinking being, I'm sure, is that older folks won't receive benefits as long as younger folks will.

Income is a consideration, as well.

There are also limits on the value of a home which can be the subject of an HECM.

Hope that can be helpful to folks in search of similar information.