HECM for Purchase: A Powerful Program That Hasn't Reached Its Potential
For decades, the Home Equity Conversion Mortgage (HECM) has been the cornerstone of the reverse mortgage industry, giving older Americans a federally insured way to access their home equity without making monthly mortgage payments. But despite its long track record, one of the HECM program's most compelling features — the HECM for Purchase option — has barely scratched the surface of its true potential.
According to data from the U.S. Department of Housing and Urban Development (HUD) for fiscal year 2025, purchase transactions accounted for just roughly 5% of all HECM endorsements. Even more striking, that share has never crossed into double digits since the HECM for Purchase program was first introduced in 2009. For an industry that serves one of the fastest-growing demographic segments in the country, that number represents a massive missed opportunity — and reverse mortgage professionals are finally making a coordinated push to do something about it.
What Is HECM for Purchase and Who Is It For?
The HECM for Purchase program is a specialized lending product that allows senior homeowners aged 62 and older to sell their existing home, use the equity they've built up, and purchase a new primary residence — all without taking on a monthly mortgage payment. The buyer makes a down payment using proceeds from the sale of their previous home or other assets, and the HECM loan covers the remaining balance. The borrower simply maintains the home, pays property taxes and homeowners insurance, and the loan isn't due until they move out, sell the home, or pass away.
On paper, this is an extraordinary tool for older Americans who want to downsize, relocate closer to family, or move into a more accessible home as they age. Given that baby boomers now represent the majority of today's homebuyers and sellers, the HECM for Purchase program would seem tailor-made for the current market. Yet awareness and adoption remain stubbornly low.
Why Is HECM for Purchase So Underutilized?
The persistent underuse of HECM for Purchase comes down to a combination of factors that industry professionals are working hard to address.
- Limited consumer awareness: Many seniors and their families have never heard of the program, or they carry outdated misconceptions about reverse mortgages in general. The idea that a reverse mortgage is a "last resort" financial product still lingers in the public consciousness, even though the modern HECM is a carefully regulated, FHA-insured lending tool.
- Low engagement from real estate agents: Because HECM for Purchase transactions are more complex than a standard home purchase, many real estate agents are unfamiliar with how the program works, how to explain it to clients, or how to structure a transaction around it. Without a knowledgeable agent in the room, the conversation often never happens.
- Hesitancy among forward mortgage professionals: Traditional mortgage lenders and loan officers who don't specialize in reverse mortgages often have little incentive to refer clients to a HECM for Purchase product. Unless there's an established partnership with a reverse mortgage specialist, these leads simply fall through the cracks.
- Complexity of the transaction: Compared to a conventional home purchase, HECM for Purchase transactions involve more documentation, additional counseling requirements, and a longer timeline. Buyers, agents, and lenders who aren't familiar with the process can find it daunting.
The Industry Responds: Education and Collaboration Take Center Stage
At the National Reverse Mortgage Lenders Association's (NRMLA) recent Western Regional Meeting, industry professionals gathered for a panel discussion specifically focused on how to breathe new life into the HECM for Purchase program. The session brought together five experienced practitioners who have successfully integrated HECM for Purchase into their business models, and they shared a clear message: education is the key.
The panel emphasized the need to build stronger relationships with real estate agents and forward lending professionals who regularly work with older buyers and sellers. When a 68-year-old client tells their real estate agent they'd love to buy a smaller home but can't afford to take on a new mortgage, most agents don't yet know to suggest HECM for Purchase as a solution. Closing that knowledge gap at the agent level could unlock thousands of transactions that currently never materialize.
Consumer education is equally critical. Seniors who understand how HECM for Purchase works — that they can buy a home they genuinely love, preserve their liquid savings, and eliminate monthly mortgage obligations — are often enthusiastic about the program. The challenge is reaching them with accurate, jargon-free information before they've already committed to a different path.
The Broader Market Context: HECMs Under Pressure
The urgency around HECM for Purchase has also been amplified by a notable shift in the overall reverse mortgage landscape. In the first quarter of 2026, proprietary reverse mortgage loan volume actually exceeded HECM volume for the first time — a significant milestone that underscored the growing competitive threat from private-label products. Private-label reverse mortgages can offer advantages like lower upfront costs and access to larger loan amounts, particularly for high-value properties that exceed FHA lending limits.
For the HECM product line to remain relevant and competitive, maximizing every available feature — including HECM for Purchase — is essential. A program that has hovered below 5% penetration for over 15 years represents both a challenge and a genuine growth opportunity.
What Needs to Happen Next
Reverse mortgage professionals who want to grow their HECM for Purchase business have a clear roadmap ahead. Building relationships with real estate agents through local outreach, lunch-and-learn events, and co-marketing efforts can dramatically increase referrals from the front lines of the housing market. Partnering with forward mortgage lenders and financial advisors who work with clients in or near retirement is equally valuable.
At the consumer level, clear and transparent content — including videos, guides, and case studies that illustrate real-world HECM for Purchase scenarios — can help seniors and their families understand how the program can serve their housing goals. Regulatory and counseling requirements, while sometimes seen as barriers, also serve as important safeguards that can build trust when explained properly.
The HECM for Purchase program has been available for over 15 years. With older Americans driving more home purchase transactions than ever before, the timing to finally unlock its potential has never been better. The tools are already in place. Now it's up to the industry to make sure the right people know they exist.