HECM for Purchase in California for Buyers 62 and Older

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Key facts first

For buyers aged 62 or older purchasing a home they will live in as a principal residence.
You bring a cash investment at purchase and no monthly mortgage payment is required afterward — while taxes, insurance, and upkeep on the new home stay yours from day one.
Counseling with a HUD-approved counselor comes before any application; California adds its own notice, worksheet, and waiting period, set out in the California borrower rights part of this guide.
The claim amount is the lesser of the price, the appraised value, or $1,249,125 in 2026; a purchase carries no right to cancel after closing.

In this guide

Key numbers
Who it fits, and who should look elsewhere
Requirements
Real costs
California specifics
California borrower rights
Worked example: a $700,000 purchase, costs and structure
How the process runs
Mistakes and downsides, with numbers
Questions people ask

Helping a parent buy with a HECM? Jump to What happens to my heirs?

HECM for Purchase lets a California buyer aged 62 or older buy a principal residence with a reverse mortgage in one transaction: you bring a cash investment, the HECM covers the rest up to its principal limit, and no monthly mortgage payment is required afterward. Taxes, insurance and upkeep remain yours.

Key numbers

Item	Figure	Source
Minimum age, youngest borrower, at closing	62	24 CFR 206.33
Maximum claim amount, 2026	$1,249,125, one national figure; the claim amount is the lesser of appraised value, sales price, or that limit	HUD News Release 25-145, December 11, 2025; HUD HECM page
Cash you bring (Monetary Investment)	Sale price, plus HECM fees not financed into the loan, minus the principal limit, minus earnest money already paid	HUD Mortgagee Letter 2024-06, Handbook 4000.1 II.B.8.a.xii(C)(2)(a)
Upfront mortgage insurance premium	2.00% of the maximum claim amount	HUD Mortgagee Letter 2017-12
Annual mortgage insurance premium	0.50% of the outstanding balance	HUD Mortgagee Letter 2017-12
Origination fee cap	Greater of $2,500 or 2% of the first $200,000 of claim amount plus 1% above that, never more than $6,000	24 CFR 206.31
Seller and other interested-party help	Up to 6% of the sales price, toward origination fees, closing costs, prepaids and the upfront insurance premium only	HUD Mortgagee Letter 2024-06, II.B.8.a.xii(C)(3)(b)
Earnest money that must be documented	Any deposit above 1% of the sales price	HUD Mortgagee Letter 2024-06, II.B.8.a.xii(C)(1)
Move-in deadline	Occupy the home within 60 days of closing	24 CFR 206.39(b)
Right to cancel after closing	None — purchase transactions are exempt	12 CFR 1026.23(f)(1)

Figures checked October 14, 2026.

Who it fits, and who should look elsewhere

Fits: you are 62 or older, selling or have sold a home, and can bring a large cash investment — commonly the biggest part of the price — while keeping enough liquid savings for taxes, insurance and life after closing. You want the next home to be the long-term home, without a monthly mortgage payment.

Look elsewhere: you cannot fund the cash investment without borrowing it — the money must come from acceptable sources and you cannot owe anyone for it after closing. You might move again within a few years: the upfront insurance and origination stack is paid once, at the start, and a short stay wastes it. You are buying a second home or a rental: a HECM must be on your principal residence, and you must move in within 60 days.

Requirements

Program rules (HUD / FHA)

It is a loan from a private, FHA-approved lender that FHA insures — not a loan from HUD or the government. You keep title: title transfers to you at closing and stays in your name, with the HECM as a lien.
Counseling comes before the application. At first contact the lender must give you a list of HUD-approved HECM counselors; you, any eligible or ineligible non-borrowing spouse, and any non-borrowing person on title must receive counseling and obtain the certificate before the lender proceeds.
The cash investment (Monetary Investment) may come from cash on hand, the sale or liquidation of your assets, HECM proceeds, interested-party contributions within the 6% cap, and other acceptable sources such as a properly documented gift. Sweat equity, trade equity, rent credit and premium pricing are unacceptable sources, and the lender must document that no unpaid obligation from the transaction hangs over you afterward.
The seller, agents or builder may contribute up to 6% of the sales price toward origination fees, other closing costs, prepaids and the upfront insurance premium — and nothing else. The lender and any third-party originator may not contribute at all. Fees a seller must pay under state law or local custom, including agent commissions, sit outside the 6%.
Discount points may not be charged, and interest rate buydowns are not permitted on a HECM for Purchase.
A financial assessment tests whether you can carry the new home's taxes, insurance and upkeep; a set-aside for property charges can be required, and it comes out of the principal limit. If the assessment falls short, part of the principal limit can be set aside for property charges (a Life Expectancy Set-Aside), reducing what you can draw.
A newly built home must have its certificate of occupancy before the loan can be insured.

What is not a rule

There is no fixed down payment percentage. Figures like "45–62% down" quoted online are outcomes of age, expected rate and price run through HUD's principal limit factors — not a schedule anyone can promise before those inputs are known.

Real costs

Upfront mortgage insurance: 2.00% of the maximum claim amount — $14,000 on a $700,000 purchase (worked below). It can be financed, but financing it uses principal limit that would otherwise go toward the price, so the cash you bring rises either way.
Origination fee: capped at $6,000 by HUD's formula.
Annual mortgage insurance: 0.50% of the outstanding balance, every year the loan runs.
One transaction, not two: buying with a regular mortgage and taking a reverse mortgage afterward pays two sets of origination and closing costs; the purchase HECM pays one. Against that, the same upfront insurance and fee stack is lost if you sell again quickly.
Purchase-side costs remain: inspections, appraisal, title and escrow, plus California's supplemental property tax bill after the purchase price resets the assessed value.

California specifics

The claim amount ceiling is the same $1,249,125 in every California county — there is no county HECM limit to shop around. What California changes is the cash around the loan: purchase prices that put the claim amount at the price itself, Proposition 13 taxes set from the new purchase price (with a supplemental bill for the difference in the first year), and fire-zone insurance pricing that the financial assessment will test against your income. California law adds its own layer of borrower protections for reverse mortgages on top of the federal rules; the lender is required to give you the state notices and worksheet materials that go with them, and you should receive that packet before counseling.

Your California protections, in plain words

Counseling comes first on a purchase too: you talk with an independent, HUD-approved counselor before any application is taken.
Before that counseling, the lender must give you the state-required notice and worksheet that explain the loan.
Once counseling is done, 7 days must pass before a lender can take your final application or charge you a fee.
The worksheet asks about who else will live in the home, how taxes, insurance and upkeep will be paid, what other options you have, whether proceeds would buy a financial product, and whether government benefits could be affected.
On a purchase, you sign the worksheet guide and send it back to the lender together with your counseling certificate, and the loan cannot be approved until the lender holds that signed guide.
The lender must also give you a counseling agency list naming 10 or more HUD-approved agencies before it takes your final application.
No one may make you buy an annuity as a condition of getting the loan.
And no one who takes part in the loan may refer you to buy an annuity or another financial or insurance product before the loan closes.

The full legal wording for a purchase follows below.

California borrower rights

California Civil Code sections 1923.2 and 1923.5 add specific steps and prohibitions that go beyond a general promise of state notices.

Under California Civil Code section 1923.5(a), no reverse mortgage application may be taken unless, before counseling, the lender has given you the plain-language “Important Notice to Reverse Mortgage Loan Applicant” in conspicuous 16-point type or larger.

That notice warns that a reverse mortgage is a complex transaction involving binding legal documents with important legal and financial implications for you and your estate, that you are required to consult an independent reverse mortgage counselor about whether it is right for you, that a list of approved counselors will be provided by the lender, and that senior citizen advocacy groups advise against using reverse mortgage proceeds to buy an annuity or related financial products.

Under section 1923.2(j), before accepting a final and complete application the lender must give you a list of not fewer than 10 counseling agencies that are approved by the United States Department of Housing and Urban Development to engage in reverse mortgage counseling.

Under section 1923.2(k), the lender may not accept a final and complete application, or assess any fees, until seven days have passed from the date of counseling shown on the counseling certification, and the lender must first receive a signed certification that you received counseling, conducted in person unless you elected to receive it in another manner.

Under section 1923.5(b), before your meeting with a counseling agency the lender must also give you the Reverse Mortgage Worksheet Guide, a five-question self-evaluation covering who else lives in the home, default on taxes, insurance and maintenance, other options, using proceeds to buy a financial product, and effects on government assistance eligibility.

The signed worksheet guide must be returned to the lender with the counseling certification, a copy of the worksheet guide must be provided to you, and the application may not be approved until the lender has the signed worksheet guide.

Under section 1923.2(i), no lender or other person who participates in originating the loan may require you to buy an annuity as a condition of obtaining a reverse mortgage loan.

Under section 1923.2(i), a person who participates in origination may not refer you to anyone for the purchase of an annuity or other financial or insurance product before the loan closes or before your right to rescind the reverse mortgage expires.

Worked example: a $700,000 purchase, costs and structure

Price: $700,000. The maximum claim amount is the lesser of the price, the appraised value and $1,249,125, so here it is $700,000.

Upfront mortgage insurance: 2.00% × $700,000 = $14,000.
Origination fee cap: 2% of the first $200,000 = $4,000, plus 1% of the remaining $500,000 = $5,000, a formula total of $9,000 — capped at $6,000.
Insurance and origination at the cap: $14,000 + $6,000 = $20,000, before appraisal, title, escrow and recording.
Earnest money of $7,000 is exactly 1% of the price; any deposit above $7,000 must be documented to its source.
The seller offers a $50,000 credit. The cap is 6% × $700,000 = $42,000, and it can only pay origination fees, closing costs, prepaids and the upfront insurance — not the price. The remaining $8,000 of the offer cannot be paid by the seller under the program.

Your cash to close is then built by the formula: $700,000, plus the HECM fees you do not finance, minus the principal limit the lender calculates from your age and the expected rate, minus the earnest money already paid. That is why two buyers of identical $700,000 homes bring different amounts: the older buyer's principal limit is larger, so the cash gap is smaller. Any quote of a cash figure without your age, the expected rate and the full cost list is a guess.

How the process runs

Education and counseling. Counseling with a HUD-approved agency comes first, before the application, and covers the purchase structure as well as standard HECM obligations.
Purchase contract and escrow. The contract is written with the HECM for Purchase named as the financing, so the seller and escrow understand the counseling, appraisal and assessment steps in the timeline.
Application, appraisal and financial assessment. The lender underwrites your capacity to carry taxes, insurance and upkeep on the new home, and documents the source of every dollar of the cash investment, including earnest money above 1% of the price.
Closing into the purchase. The cash investment and the HECM proceeds together pay the seller at closing, and title transfers to you. Reverse mortgage disclosures apply — a truth-in-lending disclosure, a Total Annual Loan Cost table and a HUD-1 settlement statement — not a Closing Disclosure.
No cancellation window. A purchase carries no right of rescission: once the loan closes, it cannot be cancelled under the three-day rule that applies to a refinance of a home you already occupy.
Move in within 60 days. You, and any eligible non-borrowing spouse, must occupy the home as your principal residence within 60 days of closing.
While the loan runs. No monthly mortgage payment is required. Taxes, insurance and maintenance remain yours, and the loan becomes due when the last borrower dies, sells, or moves out permanently, unless an eligible non-borrowing spouse qualifies to stay.

Mistakes and downsides, with numbers

Budgeting from a percentage slogan. "Half down" is not a program figure. On the $700,000 example, the cash needed is whatever the formula leaves after the principal limit — and financing the $20,000 insurance-and-origination stack raises the cash needed, dollar for dollar, because that part of the principal limit no longer reaches the price.
Spending the reserve cushion to close. The financial assessment assumes you can carry the new home's taxes and insurance for years. A buyer who drains savings to meet the cash investment can pass closing and fail the assessment — or pass both and be one tax bill from trouble.
Counting a seller credit toward the price. The 6% contribution can pay costs and upfront insurance only; on a $700,000 purchase it cannot touch the remaining $658,000 of price.
Assuming you can change your mind. There is no rescission on a purchase. The time to walk away is before closing, not in the three days after.
Buying a home you will leave soon. The $20,000-plus upfront stack on day one, plus interest and 0.50% annual insurance on a growing balance, is a poor trade for a two-year stay.

Questions people ask

How much cash do I actually need to bring?

The sale price, plus any HECM fees you do not finance, minus the principal limit, minus earnest money already paid. The principal limit depends on the youngest borrower's or eligible spouse's age, the expected rate, and the lesser of price, appraised value and the $1,249,125 limit — so the honest answer is a formula and a lender calculation, not a percentage.

Where can the cash come from?

Cash on hand, the sale or liquidation of your assets, a documented gift, and interested-party contributions within the 6% cap for costs. Sweat equity, trade equity, rent credit and premium pricing do not count, and you cannot owe anyone for the money after closing.

Can the seller pay my closing costs?

Up to 6% of the sales price, toward origination fees, other closing costs, prepaids and the upfront mortgage insurance premium. The lender and any third-party originator may not contribute.

Can I buy a newly built home?

Yes, if it meets FHA property standards and its certificate of occupancy is in place before the loan is insured. The builder's completion schedule and the loan timeline have to be planned together.

Do I own the home?

Yes. Title transfers to you at closing and stays in your name; the HECM is a lien against the home, the same as any mortgage.

Can I cancel after closing if I change my mind?

No. The three-day right of rescission does not apply to a purchase transaction. Review the truth-in-lending disclosure, the Total Annual Loan Cost table and the HUD-1 statement before closing, because afterward the decision is final.

What if I need to sell my current home first?

You can sell first and then buy, or run the two transactions at the same time. Selling first means the sale proceeds are in hand and documented as the source of your cash investment before the purchase closes, at the cost of a gap between homes that you must cover yourself. Running them together means the purchase closing depends on the sale closing, because the purchase HECM closes on the new home only — it does not finance, carry, or wait on the home you are selling, and the cash investment may come from the sale of your assets only once that sale has actually happened. If the sale slips, the cash investment may not be funded on schedule, and the purchase can be delayed or fall through under its contract deadlines even though the HECM itself was approved, so the two closings need one shared timeline agreed with both escrows before you commit.

What if my spouse is under 62?

Your spouse can be named at closing as an eligible non-borrowing spouse, must attend counseling, and may be able to stay in the home after your death if the conditions are met, including keeping up property charges. Their younger age lowers the principal limit, which raises the cash you bring.

What happens to my heirs?

Buying with a HECM does not change what your family faces later: once the purchase has closed, the loan comes due when the last borrower dies, sells, or moves out permanently, and your heirs then deal with the balance the same way as on any HECM. When the loan comes due, your heirs generally get 30 days after the due-and-payable notice — a period that can stretch to about six months — to sell the purchased home, pay the balance off, or turn the home over to the lender. If what is owed has grown past the home's value, your heirs can sell for at least 95% of the appraised value and let the FHA insurance cover the rest, because heirs never owe more than the home is worth. Heirs who want to keep the purchased home when the balance is larger than its value won’t have to pay more than 95 percent of the appraised value.