Help A Parent Buy With A HECM
A HECM for Purchase lets a parent buy a new principal residence and get a reverse mortgage in one transaction. Here is what an adult child can give, sign, and do along the way.
What a child can contribute
Your parent must cover the gap between the sale price and what the HECM provides, plus any HECM fees not financed, and a gift is one accepted source.
- FHA accepts gifts from a borrower’s family member, employer or labor union, a close friend with a documented interest, a charitable organization, or a qualifying government agency.
- A gift is cash given with no expectation of repayment.
- The gift letter is signed and dated by you and your parent and lists your name, address, phone number, relationship, the dollar amount, and that no repayment is required.
- Cash on hand is not an acceptable source of the gift funds you give.
- If you are the licensed real estate agent on the purchase and are entitled to the commission, you may give it to your parent as a gift.
- Sweat equity, trade equity, rent credit, and premium pricing cannot be used toward your parent’s required investment.
Your gift can close the gap
Your parent owns the home
Your commission can help
You can hold power of attorney
Counseling stays independent
The seller handles required repairs
What Can A Child Do?
You can fund and support the purchase, but your parent is the borrower and the owner.
A HECM for Purchase finances a one- to four-unit home where the borrower will live in one unit as their principal residence. Every borrower must be at least 62 years of age as of the closing date. Each borrower must take title in their own name or a living trust, be obligated on the note, and sign all security instruments.
Our reverse mortgage program lists non-occupant co-borrowers as ineligible, and every borrower must be at least 62. So an adult child who is under 62 or will not live in the home cannot be a borrower. FHA also requires that everyone listed as a purchaser on the sales contract is a borrower, and only borrowers may sign it.
Where you can help is money, paperwork, and support. A gift can count toward your parent’s required investment, and a family member may sign closing documents as attorney-in-fact under a power of attorney. If you will live in the home with your parent but are not on the loan, our reverse mortgage program says the lender should talk with you about what that means and document the conversation.
Why choose Saxton for a family home purchase
This page is for adult children helping a parent buy a home with a HECM for Purchase, and for parents who want family involved.
Gift Records Done Right
FHA requires proof the gift moved from your account, such as your bank statement showing the withdrawal and evidence of the deposit into your parent’s account. Gifts can also be verified at settlement by electronic transfer, certified check, or cashier’s check.
Counseling Stays Independent
Interested parties to the transaction must not be present during HECM counseling. The counseling itself must come from a third party other than the HECM lender.
Title Stays With Your Parent
Title must transfer to the borrower at closing, and the HECM liens must be the only liens on the home. Our reverse mortgage program does not allow subordinate financing.
Move-In Timing Is Clear
Your parent must occupy the home within 60 days from the date of closing. Strong evidence of intent to occupy is required.
Seller Completes The Repairs
Where major deficiencies threaten health, safety, or soundness, the seller must complete the repairs before closing. A repair set-aside is not permitted.
One HECM At A Time
If your parent already has a HECM on their current home, it must be paid off before the new HECM for Purchase can be insured. A borrower may have only one principal residence at a time.
Hear From Homeowners Like You
Frequently Asked Questions
Questions adult children ask when a parent wants to buy a home with a HECM for Purchase.
Not as a non-occupant. Our reverse mortgage program lists non-occupant co-borrowers as ineligible, and every borrower must be at least 62 years of age as of the closing date.
Only borrowers can be listed as purchasers and sign the sales contract. A non-borrowing spouse may be listed but does not have to sign.
Yes. FHA accepts gifts from the borrower’s family member. The gift must be cash with no expectation of repayment, and cash on hand is not an acceptable source of the money you give.
A gift letter signed and dated by you and your parent, plus proof of the transfer. Regardless of timing, the lender must be able to reasonably determine the gift did not come from an unacceptable source.
A borrower may designate an attorney-in-fact under a power of attorney to sign at closing, and a family member may serve in that role. If you sign the application or closing documents for a legally competent parent under a durable power of attorney, you must complete HECM counseling too.
Our reverse mortgage program lists non-arm’s length transactions, where there is a relationship or business affiliation between the buyer, seller, loan agent, or originator, among its ineligible borrowers. A sale from a child to a parent may fall under that rule, so talk with us before anyone signs a contract.
Yes. All borrowers must receive HECM counseling from a counselor on the HECM Roster before the loan application is processed. The counseling certificate stays valid for 180 days from the date counseling was completed.
Saxton Mortgage does. A HECM for Purchase lets a parent buy a new principal residence and get a reverse mortgage in one transaction, and FHA accepts gifts from the borrower’s family member toward it.
Find out what you qualify for
Tell us about the home your parent wants to buy and how you plan to help, and we will check how it fits our program.
Get Pre-Qualified- U.S. Department of Housing and Urban Development, FHA and housing resources
- U.S. Department of Housing and Urban Development, FHA mortgage insurance premiums
Loan amounts, rates, terms, and eligibility are subject to credit approval, asset and income verification, appraisal, and program guidelines. Program availability varies by state. Not all applicants will qualify. Saxton Mortgage, LLC is an Equal Housing Lender.