Beyond Cash and a Traditional Mortgage: How Seniors Are Financing Their Next Move
I get this question almost every time I sit down with a client thinking about downsizing: “Do I have to sell my house first, or pay cash, to make this work?”
The answer depends on your situation. There’s more than one way to finance a move into a 55+ home, and the options that may be available can depend on your equity, income, assets, credit, and how much of your savings you want to use for the new home.
Here’s a rundown of some of the options I talk through most often, including one that surprises almost everyone.
Older couple reviewing home financing documents together
Selling First and Using Your Equity
This is a common path, and for good reason. If you’ve owned your home for a while, the equity you’ve built may cover much or all of a smaller, single-level home, or leave you with a manageable mortgage.
The trade-off is timing: you’re either selling before you’ve found the next place, or coordinating two closings close together.
Bridge Financing (HELOC or Bridge Loan)
If you don’t want to sell before you buy, a home equity line of credit or a short-term bridge loan may allow you to access equity in your current home to help purchase the new one, then pay it off once your current home sells.
This can give you more flexibility with your timing, but it can also mean carrying two properties and two sets of costs for a period of time.
Terms, availability, and qualification requirements vary by lender.
A Traditional Mortgage
Some homeowners simply get a conventional mortgage on their next home, particularly when they aren't selling their current home right away.
Whether you qualify depends on factors such as income, credit, assets, debts, and the lender's underwriting requirements.
Asset Depletion Loans
This is an option worth asking a lender about if you're retired with substantial investments but don't have a lot of traditional employment income.
Some lenders may allow certain investment and retirement assets to be considered when evaluating a borrower's ability to repay a mortgage. The specific calculation and qualifying requirements vary by lender and loan program.
If this sounds like your situation, a qualified lender can explain whether this type of underwriting may be available to you.
Reverse Mortgage for Purchase (HECM for Purchase)
This is the option that surprises many people.
For buyers 62 and older, a HECM for Purchase is a reverse mortgage specifically designed to help purchase a new home. Instead of using a traditional monthly-payment mortgage, the buyer contributes a portion of the purchase price and finances the remaining eligible amount through the reverse mortgage.
A few important things to know:
You generally need to provide a significant amount of your own funds toward the purchase price and closing costs.
There is no required monthly mortgage payment, although you remain responsible for property taxes, homeowners insurance, maintenance, and other property-related expenses.
The amount you can finance depends on factors including the age of the youngest borrower, interest rates, and the FHA lending limit.
For 2026, the FHA HECM maximum claim amount is $1,249,125.
HUD requires HECM borrowers to complete counseling with an approved counseling agency before obtaining the loan.
Is it the right option for everyone? No. It depends on your goals, equity, finances, and what you want for the future. It's worth discussing the numbers with a trusted, HUD-approved lender rather than making a decision based on a blog post, mine included.
Some lenders may also offer bridge financing that can be used alongside a HECM for Purchase. Ask your lender whether that type of arrangement is available and appropriate for your particular timeline.
Own the Home, Lease the Land
Here’s a newer option that doesn’t get talked about much: land-lease programs, including Estately Land Lease, which is currently available in Colorado.
Instead of purchasing the land with the home, you lease the land while owning the home itself. Depending on the community and financing arrangement, this can reduce the upfront cost and monthly payment compared with purchasing both the home and land.
Estately says its land-lease model can result in up to 20% lower monthly payments, but actual savings depend on the property and individual circumstances.
You may still build equity in the home, and the specific terms around purchasing the land, refinancing, or selling can vary. It's worth exploring if a lower monthly payment is important to you and you're comfortable with a land-lease arrangement.
What I’d Tell You Over Coffee
Most people default to whichever option they've heard of, not necessarily the one that fits their situation.
I’m not going to be the one running your numbers, but I can connect you with a trusted local lender so you can get real numbers for your situation instead of guessing.
— Trina Oyloe, SRES® | Your South Metro Denver Realtor
303-378-9333 | Trina@RealtorTrina.com
This post is for general informational purposes only and isn't financial, mortgage, or lending advice. Loan terms, rates, costs, and qualification requirements vary by individual circumstances and lender. Always confirm current information with a licensed mortgage professional or qualified financial advisor before making a financial decision.