HECM for purchase and Jumbo non-HECM for purchase are creative alternatives on how to buy a home with a large down payment and then use a reverse mortgage for the balance of the purchase price and have no monthly mortgage payments. Very few people know this option is available. Most Realtors do not know these options are available as well.
Your loan amount is determined by the amount of your down payment, typically 50% or more, prevailing interest rates, age of the youngest borrower and your credit rating, which doesn’t need to be stellar.
You need to be at least 62 years of age for the HECM for purchase loan, and a minimum of 55 years of age for the non-HECM jumbo purchase loan. But don’t be fooled by the word “jumbo”. If a HECM reverse mortgage loan is denied than the jumbo non-HECM, regardless of loan amount may be an option if it fits the more flexible lending guidelines.
Income qualifying for a reverse for purchase loan is much different and less stringent than a conforming loan. There are many people who have a large down payment but can’t income qualify for a conventional home loan for the balance of the purchase price. The reverse mortgage purchase loans can turn a conventional loan denial into an approval. Here’s why. When income qualifying for a reverse mortgage, the new mortgage loan principal and interest payment is not included into your monthly debts when qualifying since on a reverse mortgage since you are not required to make a monthly payment. Purchasing power goes up significantly for this reason. It’s basically 50-60% down payment, and no payments on the balance.
Credit report monthly debts such as credit card payments, auto loans as well as property tax and homeowner’s insurance in the form of a monthly payment are part of qualifying and a certain amount of residual income needs to be left over at the end of each month. The amount of residual income depends on how many people are to be living in the home, and the area in which you live. There is no debt to income ratio like a conventional loan.
You can go to the Loan Scenarios button on my website for reverse mortgage purchase examples or go to the Educational Videos and watch my reverse for purchase home loan video for more information or type your scenario into the contact form below and I can make a video for your unique situation. If more people knew about the reverse mortgage purchase loan programs, more people 55+ could move into homes that fit their needs or the home of their dreams. Let me know your situation below!
Warm regards,
KW