Reverse mortgages have traditionally been used as a way for older homeowners to access the equity in their home and receive regular payments, either as a lump sum, tenure or term payment, or through a line of credit, all without having to sell their property or make monthly mortgage payments. * But what if your client wants to sell their home and purchase a new one? Can a reverse mortgage be used for that? In short, yes, but let’s take a deeper look into how a reverse mortgage can be used to purchase a home.

The Reverse Mortgage Purchase Process

In a reverse mortgage purchase, the homeowner can use the proceeds from the sale of their existing home for the down payment on the new home. This, coupled with the reverse mortgage, can cover the purchase cost of the new home, allowing the borrower to keep more funds on hand. Plus, the borrower gets all the usual benefits of a reverse mortgage, including no required monthly mortgage payment.* With a reverse mortgage for purchase, selling the existing property and buying a new home can be done simultaneously. This type of reverse mortgage can be an attractive option for seniors who want to right-size or relocate and want to maintain a healthy cash flow.

Qualifying for a Reverse Mortgage for Purchase

To qualify for a reverse mortgage for purchase, there are some important considerations to keep in mind. Firstly, the homeowner must have sufficient equity in their current home or liquid assets to pay off any outstanding mortgage debt and provide a down payment for the new home. Secondly, the new home must meet the requirements for a reverse mortgage, including being the borrower’s primary residence, meeting FHA or product specific guidelines, and being an eligible property, such as a single-family home or approved condominium. Additionally, the borrower must meet the reverse mortgage requirements, including being age eligible and meeting a financial assessment.


In conclusion, a reverse mortgage can be used to purchase a home and can be a good option for senior homeowners who are interested in rightsizing or relocating. It can help them keep money in savings by using the sale proceeds as a down payment and letting the reverse mortgage cover the rest of the purchase. It comes with the same benefits that a reverse mortgage typically has, including being a non-recourse loan and having no required monthly mortgage payment.* A reverse mortgage for purchase takes some additional planning and consideration to ensure it is the right fit for the borrower, but it can be well worth it in the end. We recommend your clients speak with their financial advisor or reverse mortgage specialist to help them determine if it is the best option for their particular situation.

Smartfi Contributor

Our Smartfi Contributors are made up of a collective group of mortgage industry professionals, who share their personal opinions of the mortgage industry, topics, and various products. These are the express opinions of the Smartfi Contributor, and the article is based on their opinion and recommendations alone. It may not have been reviewed, commissioned or otherwise endorsed by Smartfi Home Loans, LLC.

Reverse mortgage proceeds may affect the eligibility and payments of Medicaid, SSI and similar program benefits. All clients should be advised to seek guidance on their financial situation with their financial planner/advisor. A reverse mortgage is not suitable for all clients in all situations.

All loans are subject to loan underwriting and must meet all product requirements. Programs can change at any time, please see product handbooks for full underwriting guidelines.

*Borrower must pay property taxes, insurance, any HOA fees and maintain the property.