HECM for Purchase Has Never Reached Its Potential — But That May Be About to Change
For decades, Home Equity Conversion Mortgages (HECMs) have been considered the gold standard in reverse mortgage lending. Yet one of the program's most compelling offerings — HECM for Purchase — has remained stubbornly underused since its creation in 2009. Industry professionals are now rallying together to give this powerful but overlooked program the attention it deserves, and the timing could not be more urgent.
What Is HECM for Purchase and Why Does It Matter?
HECM for Purchase is a federally insured program administered by the U.S. Department of Housing and Urban Development (HUD) that allows senior homeowners aged 62 and older to sell their existing property, use the proceeds along with home equity, and purchase a new primary residence — all without taking on monthly mortgage payments. It is, in essence, a way for older Americans to right-size their housing situation while preserving their cash flow and retirement savings.
The appeal is obvious. A retired couple sitting on decades of home equity can downsize, relocate closer to family, or move into a more accessible single-story home without the financial burden of a traditional mortgage payment. The program essentially merges the power of a reverse mortgage with the flexibility of a home purchase transaction.
So why has it never caught on in a meaningful way?
By the Numbers: A Program Stuck in Single Digits
According to HUD data for fiscal year 2025, HECM for Purchase transactions accounted for roughly 5% of all HECM endorsements. That number is striking not just because it is low, but because it has never crossed into double digits in the entire history of the program. Since 2009, HECM for Purchase has been available to seniors across the country, yet it has consistently failed to gain the traction its design would seem to warrant.
This stagnation comes at a particularly notable moment. Earlier in 2026, proprietary reverse mortgage loan volume surpassed HECM volume for the first time — a significant milestone that signals shifting dynamics in the reverse mortgage market. While private-label products offer advantages such as lower upfront costs and the ability to accommodate higher-value properties, the declining market share of HECMs is at least partly attributable to the underperformance of the purchase program.
Why Has HECM for Purchase Struggled to Gain Traction?
Industry experts point to several overlapping reasons why HECM for Purchase has remained a niche product despite its clear benefits for seniors:
- Limited awareness among consumers. Many older Americans who could benefit from the program simply do not know it exists. Reverse mortgages in general carry a perception problem rooted in outdated information, and the purchase variant adds another layer of complexity that most consumers have never encountered.
- Insufficient education among real estate agents. Real estate professionals who work with senior buyers are often unfamiliar with how HECM for Purchase works, how to structure a transaction around it, or how to communicate its benefits to clients. Without agents actively presenting it as an option, many potential borrowers never hear about it at all.
- Disconnect with forward mortgage lenders. Traditional mortgage loan officers rarely think to refer senior clients to reverse mortgage specialists, even when a HECM for Purchase could serve the borrower far better than a conventional loan. Bridging this professional gap has proven difficult.
- Transaction complexity. The HECM for Purchase process involves more moving parts than a standard home purchase, including counseling requirements, HUD oversight, and coordination between multiple parties. This complexity can deter both borrowers and the professionals who might otherwise recommend the product.
The Industry Fights Back: Education as the Engine of Growth
At the recent Western Regional Meeting of the National Reverse Mortgage Lenders Association (NRMLA), a dedicated panel discussion put HECM for Purchase front and center. Five industry professionals shared their real-world experience successfully integrating the program into their businesses and offered insights into what it takes to make these transactions work.
The consensus was clear: education is the single most important lever available to grow HECM for Purchase adoption. That education needs to reach three distinct audiences — consumers, real estate agents, and forward lending professionals — simultaneously and consistently.
Panelists emphasized that reverse mortgage originators who have found success with the program share a common trait: they have invested serious time in building relationships with real estate professionals in their local markets. Hosting continuing education seminars, attending real estate networking events, and co-marketing with buyer's agents have all proven to be effective strategies for getting HECM for Purchase in front of the right audiences.
A Market Opportunity That's Too Big to Ignore
The demographic case for HECM for Purchase has never been stronger. Older Americans now represent the majority of today's active buyers and sellers in the U.S. housing market, and that share is only expected to grow as Baby Boomers continue aging into their retirement years. Millions of these individuals own their homes outright or carry minimal mortgage balances, making them ideal candidates for a program that converts equity into purchasing power without creating a monthly payment obligation.
If the reverse mortgage industry can successfully educate consumers and the professionals who serve them, HECM for Purchase has genuine potential to move well beyond its historically stubborn 5% ceiling. The product works. The market is there. What remains is the hard work of getting the right information to the right people at the right time.
The Bottom Line
HECM for Purchase has spent nearly 15 years operating far below its potential. As proprietary reverse mortgages claim a growing share of the overall market and the senior homebuying demographic continues to expand, the pressure on the industry to unlock this program's value is greater than ever. With renewed educational momentum coming out of NRMLA's regional meetings and growing attention from originators who have already seen success, there is reason for cautious optimism that HECM for Purchase may finally be approaching its long-overdue moment of wider adoption.