If you’re 62 or older and planning to build or buy a newly constructed home, you may be surprised to learn that you can use a reverse mortgage to finance that purchase. It’s called a Reverse Mortgage for Purchase or a HECM for Purchase (Home Equity Conversion Mortgage for Purchase), and it offers a unique opportunity to buy your next home—custom or otherwise—without the burden of monthly mortgage payments.

Buying a New Build with a Reverse Mortgage

A reverse mortgage for purchase lets qualified buyers put down a one-time investment (similar to a large down payment), and use the reverse mortgage to finance the rest. The homeowner moves in once the property is complete and lives mortgage payment–free for as long as they remain in the home.

Unlike traditional financing, repayment isn’t due until the last borrower moves out permanently or passes away. The homeowner always retains the title, just like with any other home purchase.

This type of reverse mortgage can be used for:

• A custom-built home on your own lot

• A newly constructed home in a retirement community

• A new home in a subdivision or development

• Townhomes or FHA-approved condos, including brand-new units

What to Know About the Process

You can begin the reverse mortgage application process before construction is completed—as long as you’re working with an experienced lender familiar with reverse mortgage loans. While the loan won’t close until the home has received a Certificate of Occupancy from local authorities, starting the paperwork early can help streamline your timeline and lock in your plans.

Once construction is complete and the home is deemed move-in ready, the reverse mortgage can be finalized. You’ll bring your “required investment” to the closing table. After closing, there are no monthly mortgage payments required. You’ll just need to continue covering property taxes, homeowners insurance, utilities, HOA fees (if applicable), and routine maintenance.

Why This Option is a Fit for Retirees

Many older adults are choosing to build homes that fit their long-term needs—single-level layouts, wider hallways, minimal stairs, and energy-efficient features. A reverse mortgage for purchase makes that dream possible without draining retirement savings or relying on traditional financing.

It also supports aging in place by giving seniors the flexibility to move into a home designed for comfort and accessibility while preserving cash flow. This is especially helpful in places like Northern Colorado, where housing demand and construction of retirement-oriented communities continue to grow.

Jan Jordan and Kelsey Jorck are Reverse Mortgage Specialists serving Fort Collins, Loveland, Greeley, Longmont, Dacono, Erie, Boulder, and surrounding areas across Colorado’s Front Range.  Click here to contact them and learn if reverse mortgage is right for you.