HECM for Purchase (H4P) Loans
What is a HECM for Purchase (H4P)?
The Home Equity Conversion Mortgage for Purchase (H4P) is a reverse mortgage program that allows homeowners aged 62 and older to buy a new primary residence without taking on monthly mortgage payments. By combining a substantial down payment (typically 40–60%) with HECM financing, buyers can preserve more of their retirement assets and increase their purchasing power compared to paying all cash.
Benefits of a H4P Loan
- Buy a new home without monthly mortgage payments
- Increase purchasing power — often buy “more home” with the same funds compared to an all-cash purchase
- Flexible payout structure: your equity works for you in retirement
- Retain title and ownership of the property
Who Should Consider a H4P Loan?
- Retirees looking to downsize or move closer to family
- Homeowners seeking a low-maintenance or single-story home for aging in place
- Buyers wanting to free up cash for retirement expenses, investments, or travel
- Individuals planning to buy a retirement home without draining liquid assets
Eligibility
- At least one borrower must be 62 years or older
- Home must be a primary residence (no vacation or investment properties)
- Requires a significant down payment (generally 40–60%)
- Borrowers must complete HUD-approved reverse mortgage counseling
- Home must meet FHA standards and be an eligible property type
Is It Right for You?
H4P can be an excellent option for retirees who want to purchase a new home while keeping more of their retirement funds intact. If you have cash available for a down payment but want to avoid monthly mortgage payments and maintain financial flexibility, this program may be right for you.
Key Requirements
- Borrowers must continue paying property taxes, homeowner’s insurance, and HOA dues (if applicable)
- Must maintain the property in good condition
- Complete required HUD counseling before closing
- Meet FHA property eligibility standards
Types of Income Used
Income is not the primary factor for qualification, but lenders will review:
- Residual income to ensure the borrower can meet ongoing property charges
- Credit history to assess financial responsibility
Documents Needed
- Proof of age (driver’s license, passport, or birth certificate)
- Proof of funds for down payment
- HUD counseling certificate
- Property purchase contract
- Bank statements, insurance, and credit history documents
Advantages Over Paying All Cash
- Potential to buy a more expensive home with the same funds
- Keeps more retirement assets liquid for other needs or investments
- No required monthly mortgage payments
- Provides housing stability while preserving cash reserves
Considerations
- Significant upfront down payment required
- Loan balance grows over time as interest accrues
- Reduces home equity available for heirs
- Only available for primary residences (not second homes or investment properties)
FAQ
Q: How much down payment is required for a H4P loan?
A: Typically 40–60%, depending on your age, interest rates, and home value.
Q: Do I still own my home?
A: Yes, you keep the title just as with a traditional mortgage.
Q: Are monthly mortgage payments required?
A: No. You are only responsible for property taxes, insurance, and maintenance.
Q: Can I use H4P to buy any type of property?
A: Eligible properties include single-family homes, FHA-approved condos, and some multi-unit properties (if you occupy one unit).
Get started today!
Fill out the questionnaire on this page to start a discussion about your mortgage needs today!
