Many seniors believe reverse mortgages only apply to the home they currently own. What surprises many homeowners is that a reverse mortgage can also be used to purchase a new primary residence.
This option has become an increasingly popular solution for seniors who want to downsize, relocate, or move into a home that better fits their lifestyle without taking on monthly mortgage payments.
What Is a Reverse Mortgage for Purchase?
A reverse mortgage for purchase allows homeowners age 62 and older to buy a new primary residence using a combination of a down payment and a reverse mortgage loan.
Instead of making monthly mortgage payments, the loan balance increases over time. As long as the homeowner lives in the home as their primary residence, maintains it, and stays current on property taxes and insurance, no monthly mortgage payments are required.
Why This Option Makes Sense for Many Seniors
As people move through retirement, their housing needs often change. A large family home may no longer feel practical. Stairs may become difficult. Proximity to family, healthcare, or a preferred climate may matter more.
A reverse mortgage for purchase can help seniors:
• Downsize into a more manageable home
• Buy a single-level or accessible property
• Move closer to children or grandchildren
• Relocate to a more affordable or desirable area
• Eliminate monthly mortgage payments
This flexibility can significantly reduce financial stress in retirement.
How the Process Works
The process is straightforward:
• The senior provides a down payment using savings, proceeds from a home sale, or other assets
• A reverse mortgage covers the remaining purchase amount
• The home is purchased at closing
• No monthly mortgage payments are required
The required down payment depends on the borrower’s age, current interest rates, and the purchase price of the home.
Protecting Retirement Savings and Cash Flow
Many seniors hesitate to buy another home because they don’t want to drain retirement accounts or reduce their emergency savings. A reverse mortgage for purchase can lower the amount of cash needed upfront, helping preserve retirement income and investment assets.
This strategy can be especially helpful during periods of market volatility when selling investments may not be ideal.
Who Owns the Home?
The homeowner does.
With a reverse mortgage for purchase, the senior’s name is on the title, just like any traditional home purchase. The reverse mortgage is simply a lien on the property.
The loan is also non-recourse, meaning neither the homeowner nor their heirs will ever owe more than the home is worth.
What Happens Later?
The loan becomes due when the homeowner permanently leaves the home, sells it, or passes away. At that point, heirs can choose to sell the home, refinance the loan, or pay off the balance. Any remaining equity belongs to the homeowner or their heirs.
Why Real Estate Agents Should Understand This Option
Reverse mortgages for purchase can help prevent deals from falling apart when senior buyers worry about monthly payments. Agents who understand this option can better serve older clients and open the door to more successful transactions.
Final Thought: Buying Smarter in Retirement
A reverse mortgage for purchase is not about taking on unnecessary debt. It’s about using home equity strategically to buy the right home, at the right time, without adding monthly financial pressure.
For many seniors, it creates freedom, flexibility, and peace of mind in retirement.
Kevin Guttman, CRMP
Certified Reverse Mortgage Professional
Reverse Mortgage Specialist
NMLS #384936
719-302-5820
Kevin.Guttman@gmail.com
www.ReverseMortgageRevolution.com
