ABOUT HECM

1. What is a HECM?

A HECM for purchase allows seniors ages 62+ (and their spouse) to purchase a primary residence using the loan proceeds from a HECM (Home Equity Conversion Mortgage) and a cash down payment of between 40% and 60%.

2. Why is counseling required?

Independent counseling from a HUD-approved agency is mandatory as a safeguard to be certain that all borrowers fully understand the reverse mortgage program. During the counseling session, the counselor will also review options other than a reverse mortgage that may be beneficial to the senior.

3. Can gifts be used for down payment?

Yes. Gift funds from family members are acceptable forms of down payment.

4. What are acceptable sources for down payment?

Prospective mortgagors must use their own money (money obtained from sale of assets, and/or sale of current home) for the required monetary investment. Examples include:

  • Checking / Savings account
  • Sale of real estate including former home
  • Gift from family
  • Sale of assets such as investments

5. How will assets used for down payment be verified?

The three most recent, consecutive original bank statements, belonging to the borrower, which cover the most recent three-month period and previous month’s balance. (Note: must provide all pages of the bank statement even if blank). If there is a large increase in an account, or the account was opened recently, a credible explanation of the source of those funds is required.

6. How much down payment is required?

The amount of down payment required is based on several factors including the age of the youngest homeowner, the appraised value or max claim amount of the property and current interest rates. It’s best to use our reverse mortgage calculator or contact us directly to determine the required investment amount.

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