It might come as a surprise, but only about 2–3% of older Americans use the Reverse Mortgage for Purchase option when buying a home. Even though this program is available, most seniors still rely on traditional financing or choose to pay in cash. So what’s holding them back?

Surveys and studies have identified three primary reasons:

1. They Don’t Know It’s an Option

Many seniors simply don’t know that a reverse mortgage can be used to purchase a home. Unfortunately, this is common. Real estate agents and lenders often aren’t familiar with the program or don’t know enough about it to recommend it. If you’re over 62 and thinking about buying a home, be sure to ask about the Reverse Mortgage for Purchase option. And if your current lender or agent can’t provide clear information, reach out to a reverse mortgage specialist who can.

2. Lack of Guidance from Real Estate Agents

Even when the option is mentioned, many real estate agents don’t have enough knowledge to walk a buyer through how it works. If you find yourself in this situation, don’t hesitate to ask for a referral to someone who specializes in reverse mortgages—or take the initiative to find a trusted expert yourself. You can still work with your real estate agent. 

3. Concerns About the Down Payment

Another reason some seniors pass on this option is the required down payment. The amount depends on a few factors, including the home’s purchase price, the borrower’s age, and current interest rates. While the idea of a larger down payment might seem like a hurdle, it’s important to remember that with a reverse mortgage, there are no monthly mortgage payments, which can offer substantial financial relief in the long term.

Basic Requirements to Qualify

To be eligible for a Reverse Mortgage for Purchase, you must:

• Be 62 or older (each borrower listed on the title must meet this requirement)

• Be purchasing a primary residence

• Have your down payment (“required investment”) from a HUD-allowable source — such as the sale of another home, personal savings held for 90+ days, a gift, or inheritance (borrowed funds are not allowed)

If you’re considering purchasing a new home in retirement, don’t overlook this powerful financing tool.

Jan Jordan and Kelsey Jorck are Reverse Mortgage Specialists serving Erie, Dacono, Fort Collins, Loveland, Greeley, Longmont, Boulder, and surrounding areas across Colorado’s Front Range, as well as the Cheyenne and Laramie communities in Wyoming. Reach out today to learn more about how a reverse mortgage could help you purchase your next home.