Buying overview -> Reverse mortgage for buyers

Reverse mortgage for buyers

A reverse purchase mortgage allows senior home buyers to
dramatically increase their purchasing power.

A reverse mortgage should only be considered as a part of a larger financial plan after consulting with an independent, and experienced, financial advisor. Used carefully, a reverse mortgage can be very beneficial. Now under strict regulations adopted since the financial crisis, a reverse mortgage will never have monthly payments, and the lender cannot demand a payment or payoff as long as the borrower is still living in the home, no matter how long the loan has been in force, or how much is owed on it.

A reverse mortgage allows a senior homebuyer to:
  • use the proceeds of a reverse mortgage to pay a portion of the purchase price of a new home
  • increase their purchasing power without saddling them with a monthly mortgage payment

A reverse mortgage can often be used for 50% or more of the purchase price of a home. For example, a senior with $200,000 to use for a home purchase and the intention of having no mortgage payment could simply pay cash for a $200,000 home. Another option would be to purchase a more expensive home using a reverse mortgage. For example, if the borrower qualified, a $425,000 home could be purchased using the $200,000 as a down payment, and getting a $225,000 reverse mortgage. The reverse mortgage of $225,000 would have no monthly payment; the only increased monthly expense to the borrower when buying a $425,000 home instead of a $200,000 home would be property taxes on the additional $225,000.


It is possible to qualify for a large reverse mortgage even with a very modest income. When qualifying for a loan, lenders normally verify the income necessary to make the mortgage payment. But since there are no monthly mortgage payments with a reverse mortgage, the lender looks at income only to verify that the borrower can afford to pay property taxes and homeowner’s insurance.

The amount of the reverse mortgage that you qualify for on a purchase will vary depending on your age. Please contact me if you would like to know how much you qualify for, or if you have any other reverse mortgage questions.