Can You Buy a Home With a Reverse Mortgage, and What Does It Cost?
Yes. A HECM for Purchase, a reverse mortgage from a private lender, lets a buyer 62 or older buy the home they'll live in. You bring a large part of the price to closing, and the loan covers the rest with no monthly mortgage payment required; interest and fees are added to the balance instead. You keep paying property taxes, insurance and upkeep.
Last updated November 3, 2026How a reverse purchase works
The youngest borrower has to be 62 or older, and the home you buy has to become your principal residence. You move in within 60 days of closing.
At closing you make a cash investment: the sale price minus what the loan makes available, plus any loan costs you don't finance, less any earnest money you've already paid. What the loan makes available depends on the youngest borrower's age, current interest rates and the home's value. If the home appraises for less than the price, the loan is based on the lower value, but the price you owe the seller stays the same, so you bring more.
Where the cash can come from
The lender has to document where it comes from. Accepted sources include:
- savings or other cash on hand,
- money from selling assets, such as the home you live in now, retirement accounts or stocks,
- a gift that meets the program's rules, and
- the seller or another party to the sale paying some of your loan and closing costs, up to a limit.
What you can't do is borrow it. The investment can't leave you with a new debt tied to the purchase, so a bridge loan, a credit card cash advance or seller financing doesn't count, and neither do sweat equity or rent credit. The lender also runs a credit check.
What it costs
A reverse purchase has the same costs as any Home Equity Conversion Mortgage (HECM), the most common kind of reverse mortgage:
- Upfront: an origination fee, an initial mortgage insurance premium, third-party closing costs such as the appraisal and title insurance, and the counseling fee. Buying also brings the usual purchase costs, such as inspections.
- Ongoing: interest, an annual mortgage insurance premium and any servicing fee, all added to the balance each month.
The CFPB says a reverse mortgage is typically more expensive than other home loans, so ask each lender to put every cost in writing. Because the loan goes into the purchase, there's usually little left to draw on later. If you want some available afterward, you can put more into the purchase at closing. See what a reverse mortgage costs for each cost in detail.
What you keep doing
You keep paying property taxes, homeowners insurance and any HOA dues, and you maintain the home. The balance grows over time. The loan comes due when the last borrower dies, sells the home or moves out for good, or falls behind on taxes, insurance or upkeep. A spouse who isn't a borrower may qualify as an eligible non-borrowing spouse and be able to stay after the borrower dies or spends more than 12 months in a row in a healthcare facility, though not every spouse qualifies. A reverse purchase also has no three-day right to cancel after closing, unless your state's law provides one.
Counseling comes first
HUD-approved counseling is required before a lender can process your HECM application. For a purchase, the counselor also walks through the buying steps: the real estate agent's role, home inspections, making an offer that depends on a good inspection and on financing, the appraisal, and repair costs. The counselor will also remind you that you don't have to use a reverse mortgage to buy, and that nobody should rush you.
The home itself
Single-family homes, homes with two to four units, HUD-approved condominiums, townhouses and some manufactured homes can qualify. Co-op units can't. Some homes resold soon after a prior sale don't qualify either, so ask the lender early. If the appraisal calls for repairs, the seller completes them before closing.
Reverse purchase or a traditional purchase loan?
- A traditional purchase loan usually needs less cash up front, and you make monthly principal and interest payments, so the balance goes down over time.
- A reverse purchase needs more cash at closing, and no monthly mortgage payment is required. The balance goes up over time, and you still pay taxes, insurance and upkeep.
Which fits depends on your savings, your income and how long you plan to stay. A HUD-approved counselor can compare the two with you.
| Who can borrow | Youngest borrower 62 or older at closing |
|---|---|
| The home | Your principal residence, moved into within 60 days of closing |
| Cash at closing | The sale price minus what the loan makes available, plus any costs you don't finance, less earnest money already paid |
| Where that cash comes from | Savings, sold assets, a qualifying gift or allowed seller-paid costs; new borrowing doesn't count |
| Seller help | Can pay some of your loan and closing costs, up to a limit, and completes required repairs before closing |
| Monthly mortgage payment | None required; interest and fees are added to the balance |
| What stays yours | Property taxes, homeowners insurance, HOA dues and upkeep |
| Counseling | HUD-approved, before the lender processes your HECM application |
| Canceling after closing | No three-day right to cancel on a purchase, unless state law provides one |
Related questions
Sources
- https://www.hud.gov/sites/default/files/Housing/documents/40001-hsgh-Update-18.pdf
- https://www.hud.gov/sites/dfiles/OCHCO/documents/2024-06hsgml.pdf
- https://www.hud.gov/sites/default/files/hudclips/documents/76101HSGHBK.pdf
- https://www.ecfr.gov/current/title-24/subtitle-B/chapter-II/subchapter-B/part-206
- https://www.consumerfinance.gov/ask-cfpb/how-much-does-a-reverse-mortgage-loan-cost-en-237/
- https://www.consumerfinance.gov/ask-cfpb/when-do-i-have-to-pay-back-a-reverse-mortgage-loan-en-236/
- https://www.consumerfinance.gov/ask-cfpb/what-happens-my-reverse-mortgage-when-i-die-en-2096/
- https://www.consumerfinance.gov/consumer-tools/reverse-mortgages/
Sourced from licensed loan officers and brokers in the FreeRateUpdate network.
Educational information only, not individualized financial or legal advice. Program details and rates change; verify current terms with a licensed loan officer before making a decision.