HECM for Purchase in California

I’m Michael DiVita — DRE #01372066 | NMLS #241655, DiVita Home Finance (DRE #01818285 | NMLS #323700), Tiburon, CA. I’ve been in California mortgage lending since 2000 and founded DiVita Home Finance in 2007. I’m known as a creative mortgage broker: when a bank says no, I find the lender and the loan structure that can say yes. I help homeowners 62+ compare buying their next home with cash, a traditional mortgage or a HECM for Purchase. Call (800) 239-1103.

A HECM for Purchase (H4P) is an FHA-insured reverse mortgage that lets buyers 62 and older purchase a new primary residence with no monthly mortgage payment. You make a larger down payment — often around half or more of the price, depending on age and rates — and the reverse mortgage covers the rest in a single closing.

How HECM for Purchase Works

1. Complete HUD-approved counseling (and, in California, wait seven days before the lender takes a final application).
2. Find the home — it must be your primary residence and meet FHA property standards.
3. Bring the down payment from your own funds — usually proceeds from selling your current home, savings or other assets. It can’t be borrowed.
4. Close once. The HECM funds the rest of the price. You own the home, and no monthly mortgage payment is required.
5. Move in within 60 days of closing.
6. The loan is repaid when the last borrower sells, moves out permanently or passes away.

You still pay property taxes, homeowners insurance and any HOA dues, and maintain the home.

How Much Down Payment?

The HECM’s principal limit — the most it can lend — depends on the age of the youngest borrower (or eligible non-borrowing spouse), current rates and the lower of the price or appraised value, up to the 2026 HECM limit of $1,249,125. Your down payment is the difference, plus any costs not covered by the loan.

As a rough guide at today’s rates, HUD’s factors range from about 34% of value at age 62 to about 47% at 80, so buyers commonly bring roughly half to two-thirds of the price. Older buyers need less down; younger buyers need more.

California example

A 72-year-old couple sells a Marin County home for $1.8 million and nets about $1.4 million. They want a $900,000 home in Sonoma County.

• HECM principal limit at age 72 (about 41% at a 6.375% expected rate): about $368,000, before costs
• Upfront FHA mortgage insurance (2% of $900,000): $18,000, plus origination (capped at $6,000) and other closing costs
• Down payment: roughly $532,000 plus closing costs — about 60% of the price
• Monthly mortgage payment: $0
• Sale proceeds left over: roughly $840,000–$870,000, depending on final costs

Paying cash would leave them about $500,000 instead. The trade-off: the HECM balance grows over time, so less equity remains in the new home for heirs.

H4P vs. the Alternatives

	Pay cash	Traditional mortgage	Buy, then reverse-mortgage refinance	HECM for Purchase
Monthly payment	None	Yes	Yes until refinance	None
Cash kept in reserve	Least	Most	Varies	Substantial
Closings	1	1	2 (two sets of costs)	1
Income needed to qualify	None	Full debt-to-income review	Both	Financial assessment
Equity left to heirs	Most	Grows as you pay down	Shrinks over time	Shrinks over time

Who It’s Right For

• Downsizers who want to keep a large share of their sale proceeds invested
• Retirees relocating closer to family or to a lower-cost area
• Buyers who’d rather not carry a monthly mortgage payment in retirement
• Buyers who want a home that better suits aging in place — single-level, closer to care — without paying all cash

It fits poorly if you may move again within a few years (upfront costs are significant) or if leaving the home free and clear to heirs is the top priority.

Requirements

• Youngest borrower 62 or older
• The new home is your primary residence; occupy it within 60 days of closing
• HUD-approved counseling before applying
• Down payment from verified funds — not borrowed
• Financial assessment of credit and ability to keep paying taxes, insurance and HOA dues
• Property must meet FHA standards

Eligible properties

• Single-family homes
• 2–4 unit homes where you live in one unit
• Condos in an FHA-approved project (or with FHA single-unit approval)
• Manufactured homes that meet FHA requirements (built after June 15, 1976, on a permanent foundation, titled as real property)
• New construction once a certificate of occupancy is issued

Timing Your Sale and Purchase

Most buyers sell their current home first and use the proceeds as the down payment, or close both on the same day. If you need to buy before you sell, check with me first: HUD restricts borrowed funds for the H4P down payment, so a typical bridge loan strategy may not work. Often the cleaner path is closing on your sale first with a short rent-back.

Homes Above the HECM Limit

If the home you’re buying costs well over $1,249,125, the HECM only counts value up to the limit, which pushes the down payment up. Some private jumbo reverse mortgage programs also offer purchase options and may lend more on higher-priced homes.

Frequently Asked Questions

What is HECM for Purchase?

It’s an FHA-insured reverse mortgage that lets buyers 62 and older purchase a new primary residence with no monthly mortgage payment. You make a larger down payment and the reverse mortgage covers the rest in one closing; the loan is repaid when the last borrower sells, moves out or passes away.

How much down payment does HECM for Purchase require?

It depends on the youngest buyer’s age, current rates and the price. At today’s rates, buyers commonly bring roughly half to two-thirds of the price plus closing costs; older buyers need less. For example, a 72-year-old buying a $900,000 home would bring about 60%.

Can I use HECM for Purchase anywhere in California?

Yes, for a primary residence that meets FHA standards — including single-family homes, 2–4 unit homes where you live in one unit, FHA-approved condos, qualifying manufactured homes and new construction with a certificate of occupancy.

What if I haven’t sold my current home yet?

The down payment has to come from your own funds, not a loan, so most buyers sell first or close both transactions the same day. HUD restricts borrowed funds for the down payment, so we plan the timing of your sale and purchase up front — often selling first with a short rent-back.

Does HECM for Purchase affect my heirs?

The balance grows over time, so less equity will remain. Heirs can sell the home and keep any remaining equity, or keep it by paying off the lesser of the balance or 95% of appraised value. Because it’s non-recourse, heirs never owe more than the home is worth.

Related Resources

• Reverse Mortgages in California: Complete Guide
• Jumbo Reverse Mortgages
• Reverse Mortgage vs. HELOC
• Proposition 19 Property Tax Transfers
• Propositions 60 and 90
• Coachella Valley Mortgages

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