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    Why Active Adult Home Buyers Should Consider A HECM Mortgage

    Active Adult home buyers who work with us often have the same question: Should we or shouldn’t we get a HECM Mortgage?

    In fact, there are a number of advantages and disadvantages attached to this type of loan.

    So today, we thought we would take a few moments to share with you what you can expect from getting this type of loan as a active adult home buyer. That way, when it comes time for your to decide whether or not a HECM mortgage is for you, you’ll have all of the information you need right at your fingertips.


    7e8185d7-dcff-4dae-aa5f-91d8af9b6c87 HECM Mortgages 101

    A HECM mortgage offers financial assistance to qualified buyers by utilizing a variety of methods:

    • No down payments
    • Converting equity in the home into income or a line of credit
    • Paid back when the homeowner no longer occupies the property
    • Borrower can receive money by monthly payments, a line of credit or a combination of payments and credit


    An FHA reverse mortgage (HECM Mortgage) is designed for homeowners who are 62 or older who would like to convert the equity of their home into income or a line of credit. When receiving this type of loan the borrower does not pay on the loan until the house is sold, the loan is then repaid from the proceeds of the property including the interest. Any remaining equity in the home after the loan has been repaid belongs to the homeowner.

    If there is not enough money from the sale of them home to repay the loan in full, FHA insurance is used to pay the difference.

    Other Advantages:

    • Unlike other FHA loans, there are no income or credit qualifications for this type of loan
    • Allows closing costs to be financed in the reverse mortgage
    • Is for single-family homes or up to a four-unit home, but is also permitted for FHA-approved condominiums and manufactured homes.

    Be mindful that with these types of loans, certain restrictions may apply in order to qualify. Thus, it’s important to research beforehand whether you meet those restrictions.

    Those interested in reverse mortgages should also be aware of the specific restrictions attached to using the loan. These may or may not include:

    • Must be 62 or older
    • Requires the home to conform to FHA property standard and flood requirements
    • The loan is based on the age of the youngest borrower if there are co-signers
    • Borrowers must own and live on the property as their primary residence
    • Prohibits renting the home to others

    These types of loans are certainly great for those buyers who need an extra source of income. But there are some disadvantages to this type of loan.

    Some of those drawbacks include:

    • Homeowners are required to get consumer counseling and education before a HECM loan is approved.
    • You will be required to have a current appraisal on the property as the amount of an FHA reverse mortgage is based on the home’s value or the FHA insurance limit, whichever is lower.

    For these reasons, some home buyers may find it just as beneficial to get a traditional loan, although this should be considered on a case by case basis.

    We’ll Help You Through Getting Your First HECM Mortgage!

    Contact us today to learn even more valuable information that is sure to help you decide if a reverse mortgage is for you. We are glad to offer you our expert assistance, which includes straight-forward advice and user-friendly resources.

    Until next time!

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