Buying a Home With a Reverse Mortgage: HECM for Purchase in Florida

Buying a home with a reverse mortgage lets a homeowner 62 or older sell the old house, buy the next one, and skip a monthly mortgage payment. The federal program behind it is called HECM for Purchase. Many Palm Beach County retirees have never heard of it, yet it fits a common plan: sell the big house, then move to a smaller home, villa or condo closer to family. This guide explains how the loan works, how much cash you bring to closing, the condo rules that trip up many buyers, the real costs, and what happens to your heirs.

Key takeaways

• A HECM for Purchase is an FHA-insured reverse mortgage used to buy a new main home. At least one borrower must be 62 or older, and you must move in within 60 days of closing.
• You pay the gap between the loan amount and the price, plus costs, in cash at closing. That cash can come from savings or the sale of your old home, but not from a bridge loan, credit card or seller financing.
• For 2026, FHA caps the home value a HECM can use at $1,249,125.
• FHA charges an upfront mortgage insurance premium of 2% of the maximum claim amount and an annual premium of 0.5% of the balance.
• You still pay property taxes, insurance and HOA dues. When the last borrower dies or moves out, the loan comes due, and heirs can sell for 95% of appraised value if the home is worth less than the balance.

How buying a home with a reverse mortgage works

A regular reverse mortgage lets you tap equity in a home you already own. The purchase version does the same thing in one step, at the moment you buy. Congress created it in the Housing and Economic Recovery Act of 2008, and HUD set the first rules in Mortgagee Letter 2008-33.

Here is the basic idea. You make a large down payment. Then the reverse mortgage covers the rest of the price. After closing, you owe no monthly principal and interest payment for as long as you live in the home and keep up with taxes, insurance and upkeep. Interest and mortgage insurance are added to the loan balance instead, so the balance grows over time.

For many downsizers, the math works like this. You sell your current house, and part of the proceeds goes into the new home. The reverse mortgage pays the remaining part, so you keep more cash in the bank than you would with an all-cash purchase.

Who qualifies

At least one borrower must be 62 or older. The home must be your principal residence, and HUD requires you to occupy it within 60 days of closing. You must also complete counseling with a HUD-approved counselor before the lender processes the application. Since 2015, lenders also run a financial assessment of your credit and income. They want to see that you can keep paying property taxes and homeowners insurance.

The down payment when buying a home with a reverse mortgage

The required cash is the biggest surprise for most buyers. A HECM does not lend the full price. Instead, the lender works out a principal limit based on the age of the youngest borrower, current interest rates and the home's value or the FHA limit, whichever is lower. Older borrowers get a larger principal limit, and higher rates mean a smaller one.

You then pay the difference between that principal limit and the price, plus any loan fees you do not finance. HUD's own example in Mortgagee Letter 2008-33 used a $300,000 home and a 67-year-old borrower. In that example the borrower brought $116,000 to closing. Today's factors and fees differ, so treat that only as an illustration. Your lender and counselor will run your real numbers.

So in practice, plan on a down payment of roughly half the price or more, depending on age and rates. That is why this loan pairs well with the sale of a paid-off or nearly paid-off house.

Where the cash can and cannot come from

HUD's rules are strict here. The money must come from cash on hand or from selling or cashing out your own assets. Proceeds from selling your current home qualify, and so do savings and investment accounts. However, the following do not count:

• Bridge loans or other gap financing
• Personal loans and second mortgages
• Cash advances from credit cards
• Seller financing

Lenders verify the source of every dollar, so a large recent deposit will need a paper trail. Because of this, most buyers sell first and buy second. Your listing agent and lender should line up the two closing dates.

Loan limits and costs in 2026

For FHA case numbers assigned in 2026, the HECM maximum claim amount is $1,249,125 everywhere in the country. HUD announced the figure in December 2025. If you buy a home priced above that, the loan is based on $1,249,125, and you cover the rest with a bigger down payment.

Costs are higher than on a typical forward mortgage. FHA charges an upfront mortgage insurance premium of 2% of the maximum claim amount. It also charges an annual premium of 0.5% of the outstanding balance, which is added to the loan each month. On top of that you pay the lender's origination fee, title, appraisal, recording and other normal closing costs.

The insurance does buy something real. It makes the loan non-recourse, which means neither you nor your heirs will owe more than the home is worth when it sells. It also backs the lender's promise to keep paying any line of credit you set up.

Condo rules for buying a home with a reverse mortgage

This is where many South Florida plans stall. A condo must meet FHA's project rules before a HECM can be used there. Many buildings in Palm Beach County are not on FHA's approved list, and an approval can lapse if the association does not renew it.

Before you fall in love with a unit, ask your agent to check the building on HUD's condominium lookup. Ask the lender, too, because some units may qualify through other FHA paths. HUD's rules also bar co-ops from this program, along with new construction that lacks a certificate of occupancy.

Villas, townhomes and small single-family homes in 55+ communities often avoid the condo approval issue. Still, read the HOA documents. Your lender will want proof that the association's fees and rules fit the loan.

What the 55+ market looks like right now

Prices matter because they set your down payment. The Miami Realtors report for August 2026 put the Palm Beach County condo and townhouse median at $300,000, with 69 median days to contract and 6.7 months of supply. Single-family homes had a $650,000 median, 40 days to contract and 3.5 months of supply. In other words, the house you sell is in a tighter market than the condo or villa you may buy.

Many retirees look in Boynton Beach and Delray Beach, where 55+ communities are common. According to Pure Equity's MLS data as of October 1, 2026, the median list price of active listings in Boynton Beach was $334,500, and in Delray Beach it was $278,000. Those are asking prices for condos and houses mixed together, not sale prices. Others look north to Port St. Lucie, where the same data showed a $429,000 median list price.

What happens to your heirs

The loan comes due when the last borrower dies, sells or stops living in the home as a main residence. At that point the estate or heirs have choices. They can sell the home, pay off the loan and keep it, or sign the home over to the lender with a deed in lieu of foreclosure.

HUD's guidance for heirs says the loan should be settled within 30 days of the borrower's death. Still, the lender may approve 90-day extensions while the family is actively selling or arranging payoff. If the balance is higher than the home's value, heirs can sell for at least 95% of the current appraised value. The lender then accepts the net proceeds in full.

A spouse who is not on the loan has extra protection in some cases. However, that spouse must meet HUD's conditions and send a certification to the lender within 30 days of the borrower's death. Our post on reverse mortgage vs selling compares how each choice affects what you leave behind.

Pros and cons of buying a home with a reverse mortgage

The main benefit is cash flow. You buy a home that fits your next chapter without a monthly payment, and you keep more of your sale proceeds. You can also buy a nicer or better-located home than an all-cash budget would allow.

The trade-offs are real, though:

• Upfront costs are high, so the loan makes less sense if you might move again in a few years.
• The balance grows over time, which leaves less equity for you and your heirs.
• You still owe taxes, insurance and HOA dues, and missing them can trigger a default.
• Condo approval rules narrow the list of buildings you can buy in.

So it tends to fit buyers who plan to stay put for many years and want to protect their cash reserves.

Steps to buy a home with a reverse mortgage

1. First, talk with a HECM lender to estimate your principal limit and required down payment.
2. Next, complete counseling with a HUD-approved counselor.
3. Then get a value on your current home and list it, since its proceeds usually fund the down payment.
4. Shop for homes that meet FHA rules, and check condo approval before you write an offer.
5. Write a contract that gives you time for the appraisal and the HECM approval.
6. Close on the sale and the purchase in order, and move in within 60 days.

Frequently asked questions

Can I use a reverse mortgage to buy a condo in Florida?

Yes, if the condo meets FHA's project rules. Many South Florida buildings are not approved, so check before you make an offer. Co-ops are not eligible.

How much do I need to put down?

It depends on your age, current rates, the price and fees. The gap between the principal limit and the price is often around half or more of the price. A lender can give you an estimate before you shop.

Do I have to make monthly payments?

No monthly principal and interest payment is required while you live in the home. However, you must still pay property taxes, homeowners insurance, flood insurance if required, and HOA dues.

Can my children inherit a home I buy with a reverse mortgage?

Yes. They can pay off the loan and keep the home, or sell it. If the home is worth less than the balance, they can sell for 95% of appraised value and owe nothing more.

Can I buy a home with a reverse mortgage before I sell my current house?

Usually not. The down payment cannot come from a bridge loan, so most buyers sell first or use savings they already have.

Sources

• HUD, Mortgagee Letter 2008-33: HECM for Purchase
• HUD, FHA announces 2026 loan limits
• HUD, Mortgagee Letter 2017-12: HECM mortgage insurance premiums
• HUD, Inheriting a home secured by a HECM
• Congressional Research Service, HUD's reverse mortgage insurance program
• CFPB, What is a reverse mortgage?
• Miami Realtors, Palm Beach County August 2026 market report

This article is general information, not legal, tax or financial advice. Reverse mortgage rules and costs change, so talk with a HUD-approved counselor, a licensed lender and your own advisors before you decide.

Planning to sell and buy your next home? Start with what your current house would sell for, since that sets your down payment. Pure Equity offers a free home valuation and a sale plan timed to your purchase. Buying too? Ask us for a curated shortlist of 55+ communities that fit your budget and loan. Talk with our team.