HECM for Purchase calculator: down payment from age and price

HECM for Purchase (H4P) is the FHA-insured HECM used to buy rather than refinance a home, governed by HUD Handbook 4000.1 §II.B; the buyer brings a substantial down payment, the HECM covers the rest, and no monthly mortgage payment is required while the home is the primary residence (24 CFR §206.27). Enter age, purchase price, and expected rate. The output is the HECM-for-Purchase principal limit and the cash-to-close the buyer brings to closing. No email, no phone, no SSN.

What does the H4P calculation do?

HECM for Purchase is one transaction with two pieces of financing on the buyer's side. The principal limit is calculated from the buyer's age and the purchase price the same way the standard HECM principal limit is calculated against home value: the HUD Principal Limit Factor table is indexed by age and expected interest rate, the maximum claim amount is the lesser of the purchase price and the FHA HECM lending limit ($1,249,125 for 2026 case numbers under HUD Mortgagee Letter 2025-22), and the PLF times the maximum claim amount produces the principal limit. The principal limit covers part of the purchase price; the buyer brings the rest in cash. That cash piece is the cash-to-close, and it is what the H4P calculator surfaces above.

H4P eligibility in one paragraph

The eligibility rules are the same as standard HECM with two purchase-specific additions. The youngest borrower must be at least 62 (FHA Single Family Housing Policy Handbook 4000.1 §II.B.5). The property being purchased must become the borrower's primary residence within 60 days of closing (§II.B.9), and the borrower must occupy the property as the principal residence for the majority of each calendar year thereafter. HUD-approved counseling is required before the FHA case number is assigned. The financial assessment confirms the borrower can meet ongoing property charges (taxes, insurance, maintenance). The cash brought to closing must come from documented borrower funds: sale of an existing home, savings, retirement-account distributions, or a gift from a family member with the appropriate gift letter. The cash-to-close cannot be financed (no second mortgage, no bridge loan, no seller second), and the buyer cannot receive cash back at closing.

Where the cash-to-close number comes from

The formula is straightforward. Purchase price plus standard closing costs (origination, third-party, recording, prepaid items) equals the total transaction cost. The HECM principal limit covers part of that total. The remainder is the cash-to-close. A 70-year-old buying a $500,000 home at a 6.0% expected rate looks up a PLF of roughly 0.45, multiplies by the $500,000 maximum claim amount, and gets a principal limit near $225,000. Add roughly $15,000–$20,000 in closing costs to the $500,000 purchase price, subtract the $225,000 principal limit, and the cash-to-close lands in the $290,000–$295,000 range. The exact figure depends on the lender's margin, the upfront mortgage insurance (2.0% of the maximum claim amount, financed into the principal limit), and state-specific closing items. The calculator above runs the lookup with the inputs entered.

Frequently asked questions

Next step: HECM for Purchase guide for the full eligibility and process walkthrough, or closing-cost detail for what makes up the cash-to-close figure.

Last reviewed 2026-05-20