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Home Downsizing

A Home Downsizing Tip

One of the key considerations when planning for retirement is the possibility of downsizing to a more practical and newer home.  When you think about spending the next twenty plus years in retirement, a home with modern amenities and lower maintenance may be desirable. Beginning in 2009, The Home Equity Conversion Mortgage for Purchase loan program or H4P Program for short, has helped retirees to achieve this dream.


The H4P Program increases a home buyer’s purchasing power and significantly reduces out-of-pocket expenses as compared to paying cash or securing traditional financing. At the same time this program frees up savings that can be used to enhance the buyer’s retirement years.


Some details about the H4P Program:


  • To qualify one spouse must be at least age 62
  • The home must be the buyer’s personal residence
  • Monthly mortgage payments are deferred
  • When the home is sold, the purchaser receives 100% of the proceeds after the loan is repaid
  • As the loan is insured by the FHA, neither the buyer nor heirs have any personal liability for the repayment of the debt
  • The buyer remains responsible for maintenance, property taxes, homeowner’s insurance and any HOA fees


The primary benefit of this program is that during the homeowner’s retirement years savings are not tied up as compared to paying cash for a home.  Monthly cash flow is increased by not having to make monthly mortgage payments.  If the heirs wish to retain the property after the parent's passing they may do so by paying the lesser of the reverse mortgage balance or 95% of the appraised value of the home. This plan offers a great way to create income needed to maintain a satisfactory standard of living during retirement.