Want to Buy a $400,000 Retirement Home for $200,000? The 'HECM for Purchase' Secret

The 'HECM for Purchase' Secret

You want to downsize. Maybe you want to move closer to the grandkids, or you need a single-story house because the stairs are killing your knees.

You sell your old family home and net $200,000 cash. But the new condo you want costs $400,000.

You think: "I can't afford a mortgage payment in retirement." So you give up.

Stop! There is a federally insured program called HECM for Purchase that lets you buy that $400,000 home using your cash down payment—with NO monthly mortgage payments.

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How It Works: The "Half-Price" House

Most people know a "Reverse Mortgage" as a way to get cash from a house you already own. But you can also use it to buy a NEW house.

• Step 1: You put down a large down payment (typically 50% to 65% of the purchase price, depending on your age and current interest rates).
• Step 2: The HECM loan covers the rest of the price.
• Step 3: You move in. You own the house.
• The Magic: You make ZERO monthly mortgage payments for as long as you live in the home. (Note: You must still pay property taxes, insurance, and HOA fees).

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The Math Example (Age 70)

💰 Buying Power Boost (Estimate)

Goal: Buy a $400,000 Condo.

• Standard Way: Pay $400,000 cash. (Impossible if you only have $200k).
• HECM Way: You pay approx. $220,000 down (varies by rate). The bank pays the remaining $180,000.

Result: You move into the better house without draining 100% of your savings, and you never write a check to the bank for principal or interest.

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The Catch? (Read Carefully)

It is a loan, not free money. The loan balance grows over time with interest.

• Maintenance Required: To keep the loan valid, you MUST stay current on property taxes, homeowner's insurance, and HOA dues. If you default on these, the home can be foreclosed.
• Inheritance: When you pass away, the house is sold to pay off the debt. Your heirs get whatever equity is left.
• Good News: It is a "Non-Recourse Loan." If the house value drops, your heirs never owe more than the home is worth.

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Conclusion

Don't stay stuck in a house that doesn't fit your needs just because you are "cash poor."

The HECM for Purchase is the ultimate downsizing hack. It essentially doubles your buying power without adding a monthly mortgage bill. Talk to a HUD-approved counselor to see exactly how much you qualify for based on today's rates.

Disclaimer: This article is for informational purposes only. HECM loans are subject to FHA guidelines. You must maintain the home and pay all property charges (taxes, insurance, HOA). Failure to do so may result in foreclosure. Consult a HUD-approved housing counselor and a financial advisor before proceeding.