Buy your next home. Never make a monthly mortgage payment on it.
A real, FHA-insured way to buy — not refinance — a home using a reverse mortgage. Genuinely useful for downsizing, relocating near family, or buying a home with room for everyone. Here's exactly how the numbers work, and one honest complication worth knowing before you write an offer.
By Loi Tran, Licensed California Loan Officer, 11 years of mortgage experience, NMLS #454267
Before we start: this guide is educational and general. The scenarios below are illustrative, not real clients. Terms, down payment percentages, and rates change over time — verify current numbers directly with us before relying on them. This is not a decision to rush.
A HECM for Purchase (often called "H4P") lets you buy a new primary home using a reverse mortgage, instead of a traditional purchase loan or paying all cash. "HECM" stands for Home Equity Conversion Mortgage — the official name for a reverse mortgage insured by the FHA (the Federal Housing Administration). It's genuinely the reverse of how most people think about financing a purchase.
A traditional mortgage: small down payment, large loan, monthly payments for years.
H4P: a large down payment, the reverse mortgage covers the rest, and you make no required monthly mortgage payment going forward.
The seller is paid in full at closing, exactly like any other sale — nothing about how you're financing the purchase changes what they receive.
You must be 62 or older, and the home must become your primary residence — meaning the place you actually live most of the year, not a vacation home or rental.
If any of this feels like a lot to take in: that's genuinely normal — this is a less common way to buy a home, and the terminology alone takes some getting used to. Call or text (415) 610-7999 anytime and ask, in plain language, whatever's unclear. No question is too basic.
The real down payment math
This is the number everyone actually wants to know first, so here it is plainly: your required down payment typically runs 40% to 62% of the purchase price, depending mainly on your age — older buyers generally need a smaller down payment, the same age-based logic behind every HECM calculation.
A real, computed example
Say a 72-year-old is buying a $750,000 home. Using standard age-based HECM tables, the reverse mortgage could cover roughly $365,000 of the purchase price — meaning a required down payment around $385,000, or about 51%. That's a real, substantial amount of cash upfront, but from that point forward, there's no required monthly mortgage payment on the loan for as long as the home remains the primary residence.
The most common source for that down payment, by far, is the proceeds from selling a previous home — which is exactly why this product shows up so often in downsizing and relocation conversations.
Where the seller actually helps — closing costs, not the down payment
Sellers, builders, or agents can contribute up to 6% of the purchase price toward closing costs specifically — a real, negotiable part of the purchase offer. On a $700,000 home, that's up to $42,000 in real cost offsets. This cannot be used toward the down payment itself, which must come from your own eligible funds.
✓Proceeds from selling your previous home — the most common source
✓Personal savings, investment accounts, or retirement account distributions
✓Gift funds from family members
✗Funds from the seller, builder, real estate agent, or anyone with a financial interest in the sale
✗Cash advances from credit cards or personal loans taken out for the purpose of the down payment
A real, honest complication: not every agent knows this loan
This is worth knowing before you're mid-offer, not after. H4P is genuinely still uncommon enough that some real estate agents have never handled one. Confusion at the offer stage — over financing contingency language, timeline expectations, or how the transaction actually works — is one of the most common real friction points in this whole process, and it's entirely avoidable with the right preparation.
An illustrative scenario, not a real client
The offer that almost fell apart over a misunderstanding
Say a 74-year-old submits an offer on a single-story home, using generic financing contingency language her agent had used on dozens of conventional deals. The listing agent, unfamiliar with H4P, flags the offer as unusual and asks for proof of funds equal to the full purchase price — mistakenly assuming this is a cash-adjacent transaction with unclear financing. A short, direct conversation between the loan officer and both agents resolves it in a day, once the H4P-specific financing contingency language is added and the actual mechanics are explained. Nothing about the buyer's qualifications was ever in question — the friction was entirely about unfamiliarity with the product, not the buyer's readiness.
The real, practical fix: your offer should include financing contingency language that specifically references HECM for Purchase, not generic "conventional financing" terms — and it genuinely helps to work with an agent who has handled this transaction type before, or at minimum, one willing to have a short conversation with your loan officer before offers go out.
What kind of home actually qualifies
One quick term before the table: an "ADU" (accessory dwelling unit) just means a separate, smaller living space on the same property — sometimes called an in-law unit or granny flat.
Property type
Eligibility
Single-family home
Fully eligible, the most straightforward case
Single-family home with an ADU or in-law unit
Eligible, as long as the entire property meets FHA standards and is appraised as a single property — genuinely relevant for multigenerational households
FHA-approved condo
Eligible — the specific building must be on the FHA's approved list, or receive individual unit approval
Townhouse
Eligible if it meets FHA property standards
2-4 unit property
Eligible if you occupy one unit as your primary residence
Manufactured home
Eligible only if on a permanent foundation and meeting FHA requirements
An illustrative scenario, not a real client
A home that almost got overlooked
Say a 69-year-old is house-hunting and finds the perfect single-story home — except it has a small ADU in the backyard, which she initially assumes will complicate financing or disqualify the property entirely. In reality, since the whole property gets appraised together and meets FHA standards, the ADU doesn't cause any issue at all. If anything, it becomes a real bonus — a space her visiting grandchildren use every summer.
Three real scenarios this fits
An illustrative scenario, not a real client
Downsizing without giving up cash flow
A couple in their late 70s sells the large family home they raised their children in and wants to move into a smaller, single-story home closer to their daughter. Rather than tying up all their sale proceeds in the new home, an H4P lets them make a substantial down payment from those proceeds, keep the rest invested for retirement, and never take on a new monthly mortgage payment — genuinely preserving more of their financial flexibility than paying all cash would.
An illustrative scenario, not a real client
Relocating to be near grandchildren
A 68-year-old widow decides to relocate from the Midwest to be near her son's family in California. She's never owned property here before, and California home prices are a real adjustment. An H4P lets her use the proceeds from her prior home's sale as a down payment on a California home, without needing to qualify for — or make payments on — a traditional 30-year mortgage at an age when a new multi-decade payment obligation feels genuinely unappealing.
An illustrative scenario, not a real client
Buying a home built for multigenerational living
A 65-year-old wants to buy a home with a legal ADU, so her adult son's family can live nearby while maintaining separate living space. An H4P on a property like this works the same way as any other eligible purchase — the ADU itself doesn't complicate the loan, as long as the full property meets FHA standards. This is a genuinely common, real want among California families navigating high housing costs across generations.
How it's genuinely different from paying cash
If you have enough from a home sale or savings to simply pay cash for your next home, it's worth asking honestly why H4P might still make sense.
The real answer: H4P lets you put down roughly half the purchase price instead of the full amount, keeping the remaining cash invested, in savings, or available for emergencies and healthcare costs — while still never taking on a monthly mortgage payment. For many retirees, preserving that liquidity is worth more than the psychological comfort of owning a home fully "free and clear" on day one.
An illustrative scenario, not a real client
The couple who almost paid all cash
Say a couple sells their longtime home for $900,000 and plans to buy a $700,000 retirement home with cash, since they've always preferred to owe nothing. After talking it through, they realize that paying cash would leave them with very little set aside for the unexpected — a health scare, a major repair, helping a grandchild. Using an H4P instead, they put down about $380,000, keep roughly $520,000 invested and accessible, and still never make a monthly mortgage payment. They end up in the exact same home, with meaningfully more financial breathing room.
Plain-English Glossary
HECM
Home Equity Conversion Mortgage — the official name for a reverse mortgage insured by the FHA. "H4P" is the version used to buy a home rather than access equity in one you already own.
FHA
The Federal Housing Administration — the federal agency that insures HECM loans and sets the property standards this page refers to.
HECM for Purchase (H4P)
An FHA-insured reverse mortgage used to buy a new primary home, rather than access equity in a home you already own.
Financing contingency
Language in a purchase offer specifying the type of financing the buyer will use — needs to specifically reference H4P to avoid confusion.
Interested party contribution
Funds a seller, builder, or agent contributes toward closing costs — capped at 6% of the purchase price, and cannot be applied to the down payment.
Questions
Typically 40-62% of the purchase price, depending mainly on the youngest borrower's age — older buyers generally need a smaller down payment. This is far higher than a conventional mortgage's down payment, but it replaces a monthly mortgage payment entirely.
Yes, up to 6% of the purchase price toward closing costs specifically — not the down payment itself. On a $700,000 home, that's up to $42,000 in real cost offsets, and it's fully negotiable as part of the purchase offer.
It genuinely helps. Not every agent has handled this transaction type before, and confusion at the offer stage is one of the most common real friction points — your offer needs financing contingency language that specifically references HECM for Purchase, not generic financing terms.
Often yes. Single-family homes with accessory dwelling units are eligible as long as the entire property meets FHA standards and is appraised as a single property — a genuinely relevant option for multigenerational California households.
Not necessarily. Paying all cash ties up money that could otherwise stay invested or available for emergencies and healthcare costs. An H4P lets you put down roughly half the purchase price instead of the full amount, while still never making a monthly mortgage payment — many retirees find that flexibility worth more than owning the home fully outright on day one.
It means the home you actually live in most of the year — not a vacation home, not a rental property. This is a firm requirement for any HECM, including H4P.
This page covers buying a new home. Already own your home and want to access its equity instead? Our main reverse mortgage guide covers that, with a free range calculator. For homes above California's federal cap, see our jumbo reverse mortgage guide. H4P is still a real HECM, so the same required HUD counseling and appraisal process apply — our qualifying & process guide covers both in depth. And once the loan is in place, the same eventual maturity timeline applies too — our what happens later guide covers what that actually looks like for your family.
See what your down payment would actually look like
No pressure, no obligation. A real conversation about the specific home and price range you're considering.