Step 1: Talk to a Qualified HECM Lender
Before shopping seriously, determine the approximate HECM proceeds, required cash, realistic price range, property requirements and estimated closing costs for your situation.
A licensed HECM lender determines eligibility, proceeds, required cash investment, interest rate and loan terms. HUD-approved reverse mortgage counseling is also required.
Step 2: Complete Required Counseling
HUD-approved HECM counseling helps the buyer understand the obligations and alternatives before any home is selected.
Step 3: Determine the Real Purchase Range
This is not “I have $500,000, therefore I'll buy a $500,000 home.”
Instead, the buyer may ask: “What home price can I comfortably purchase while keeping the amount of liquidity I want?” The purchase range flows from the lender's actual HECM calculation, not from total cash on hand.
Step 4: Lisa Searches for the Property
The search should account for price, HOA, insurance, taxes, maintenance, property eligibility, lifestyle and long-term suitability for the buyer.
Once the lender provides an actual financing range, Lisa can build the search around it.
Step 5: Make the Offer
Lisa coordinates offer terms with the HECM financing. Seller or interested-party contributions may sometimes be relevant under current HECM rules, and the seller-contribution area is a changing technical area that should be verified at the time of the transaction.
Step 6: Appraisal
The property needs to satisfy applicable FHA valuation and property requirements.
Step 7: Financial Assessment
The HECM lender evaluates the borrower's ability to continue meeting property charges such as taxes, insurance and maintenance.
Step 8: Buyer Brings Required Cash
HUD states that HECM-for-Purchase borrowers need cash to cover the difference between HECM proceeds and the purchase price plus applicable closing costs. This is a required cash investment, not a universal percentage rule; the amount depends on the buyer's age, the property value, interest rates and current principal-limit factors.
Step 9: Close
Title transfers to the buyer and HECM financing is established in the same transaction.
Step 10: Live in the Home and Meet HECM Obligations
The buyer does not make traditional required monthly mortgage payments but continues paying taxes, insurance, HOA dues and maintenance, and occupying the home as the principal residence.
A Worked Example
Hypothetical example
Buyer age
74
Net sale proceeds from old home
$650,000
New home price
$550,000
Instead of automatically paying $550,000 cash, the buyer has a lender compare a HECM-for-Purchase scenario. If eligible, the buyer may contribute less cash and preserve additional assets while still owning the new home.
Figures are hypothetical for illustration only. The required cash investment depends on age, interest rates, home value and current principal-limit factors.
How Lisa Helps
Lisa can help you find and negotiate the home. Once a licensed HECM lender provides a real financing range, Lisa searches properties in the right price range, evaluates HOA and total ownership costs, coordinates appraisal and closing timing, and can help with seller-contribution negotiations under current rules. She is a REALTOR®, not a reverse-mortgage loan originator: a licensed HECM lender determines eligibility, proceeds, required cash investment, interest rate and loan terms, and HUD-approved reverse mortgage counseling is required.
