On January 1, 2009, the U.S. Department of Housing and Urban Development made available the Home Equity Conversion Mortgage (HECM) for Purchase Program, which allows seniors age 62 and older to purchase a new principle residence using the loan proceeds from a HECM.

By making a down payment and applying the proceeds from their reverse mortgage toward the home purchase, seniors can buy a new home and move closer to family without making any monthly reverse mortgage payments. We will look at an example of a homeowner selling an existing home, since such sellers may have the greatest need for the assistance of a real estate professional.

Ed, a 62-year-old homeowner whose home was recently appraised for $250,000, still has an existing 30-year mortgage with a balance of $50,000; based on his specific situation, he is eligible to receive $100,000 (after subtracting origination fee and closing costs) from the HECM for Purchase Program. Ed decides to sell the home and use the proceeds as a down payment on the purchase of a new home with a sale price of $300,000. He applies the $100,000 proceeds from the HECM and $200,000 from the net proceeds of his home sale to cover the rest of the cost of the new home. ($300,000 less the $100,000 in HECM proceeds less the $200,000 from the sale of his prior home). Ed is able to move into his new home with no monthly reverse mortgage payments¹.

¹ This example is for illustrative purposes only. Please contact Bank of America for more information. Property Insurance is required, flood insurance when necessary. Borrower is still responsible for paying ongoing property taxes. Credit is subject to age and property qualifications. Program, rates, fees, terms and conditions are not available in all states and subject to change. Please contact Bank of America for more information.