FHA Makes Changes to HECM for Purchase Program

FHA recently published a notice in the Federal Register indicating that it is making certain changes to the HECM for Purchase program, including (i) expanding the list of acceptable funding sources used to satisfy the borrower’s monetary investment requirement, and (ii) permitting additional interested party contributions.  The comment period on these proposed changes ends on November 24, 2023.  These changes were included in the recently updated Single Family Housing Policy Handbook (Handbook), which now incorporates FHA’s HECM origination and servicing requirements.  The changes to the updated Handbook may be implemented immediately but must be implemented by April 29, 2024. 

Specifically, the proposed changes would allow HECM borrowers to satisfy their required monetary investment through additional funding sources, such as premium pricing, gifts, employer assistance, and disaster relief grants.  Additionally, FHA will permit interested party contributions, up to six percent of the sales price, to be used toward the borrower’s origination fees and other closing costs. These changes would bring the HECM for Purchase program more in line with FHA’s forward mortgage programs.