Right-Sizing at 72: How a Bowie Homeowner Can Sell the Big House and Buy a Rambler With No Monthly Mortgage Payment
If you are 62 or older and thinking about buying a home in this market, there is an option I want you to look at before you decide anything: a reverse mortgage used to purchase, called a HECM for Purchase.
I know what some of you are thinking. You have heard the stories. A neighbor who lost a house. A TV ad that felt too good to be true. I am not going to pretend the industry never had bad actors. It did. But the program you are hearing about today is not the program from twenty years ago, and I would rather show you the real math than ask you to take my word for it.
So let me walk through one example, start to finish, for a homeowner in Bowie.
Forget What You Heard. Here Is What Changed.
The reverse mortgage I am talking about is the Home Equity Conversion Mortgage, or HECM. It is insured by the FHA and governed by HUD rules. Since the Dodd-Frank Act created the Consumer Financial Protection Bureau, reverse mortgage lending also sits under federal consumer protection oversight. Add the HUD changes made over the last decade, and today’s HECM is one of the most closely regulated loans in the mortgage business.
Here is what that means for you in practical terms:
- Counseling comes first. Before you can apply, you must meet with an independent, HUD-approved housing counselor. Not me. Not the lender. Someone whose only job is to make sure you understand the loan and your alternatives.
- Your family can be part of it. I encourage adult children or other trusted family members to join the counseling session and our conversations. Good decisions are made in the open.
- There is a financial assessment. The lender reviews your income, credit, and ability to keep paying property taxes and insurance. That rule exists to protect you from a loan that does not fit.
- It is non-recourse. Neither you nor your heirs will ever owe more than the home is worth when the loan is repaid. Any remaining equity belongs to you or your estate.
- You keep title. The home is yours. The loan is repaid when the last borrower sells, moves out permanently, or passes away.
My goal is simple: provide a great mortgage to the right person. Sometimes that is a HECM for Purchase. Sometimes it is not, and I will tell you so.
The Situation: A Big Colonial in Bowie, and Too Many Stairs
Let’s call her Margaret. She is 72 and has lived in Bowie for 25 years. She raised her family in a three-story, 5,500 square foot colonial. The kids are grown. The stairs are getting harder. The house costs more to heat, cool, clean, and maintain than she wants to manage.
She wants a one-level rambler, about 3,000 square feet, still close to family, her church, and her doctors in Prince George’s County. She has found one listed at $650,000.
Her big home is worth about $985,000, and she has 80 percent equity in it. That means she still owes roughly $197,000 on her current mortgage.
Margaret has three choices:
- Pay cash for the rambler and put almost all of her sale proceeds into the new house.
- Take out a traditional mortgage and carry a monthly payment on a retirement income.
- Use a HECM for Purchase, bring part of the price to closing, and have no required monthly principal and interest payment.
Step One: What She Walks Away With From the Sale
| Sale of the Bowie colonial | Amount |
|---|---|
| Sale price | $985,000 |
| Pay off current mortgage (20% of value) | -$197,000 |
| Estimated selling costs (commission, transfer taxes, fees, about 7%) | -$68,950 |
| Estimated net proceeds | $719,050 |
That $719,050 is her working capital. The question is how much of it she should lock inside the walls of the next house.
Step Two: How the Principal Limit Factor Sets the Loan Amount
With a HECM, the lender does not decide how much you can borrow. HUD does, using a table of Principal Limit Factors, or PLFs. The PLF is a percentage based on three things:
- The age of the youngest borrower (or eligible non-borrowing spouse). Older borrowers get a higher percentage.
- The expected interest rate. Lower rates mean a higher percentage.
- The maximum claim amount, which on a purchase is the lesser of the purchase price, the appraised value, or the 2026 HECM limit of $1,249,125.
In this example, Margaret is 72. Using HUD’s PLF table at an expected rate of 6.0 percent, her factor is 0.416, meaning she can borrow 41.6 percent of the maximum claim amount. The rambler is $650,000, well under the HUD limit, so the math looks like this:
From that principal limit, the upfront costs of the loan can be financed. Here is a reasonable estimate:
| HECM for Purchase on the $650,000 rambler | Amount |
|---|---|
| Principal limit ($650,000 x 0.416) | $270,400 |
| FHA upfront mortgage insurance (2% of $650,000) | -$13,000 |
| Origination fee (HUD maximum is $6,000) | -$6,000 |
| Estimated third-party closing costs (title, appraisal, recording, counseling) | -$10,000 |
| HECM funds applied to the purchase price | $241,400 |
Step Three: What She Brings to Closing, and What She Keeps
| Closing on the rambler | Amount |
|---|---|
| Purchase price | $650,000 |
| HECM funds toward the price | -$241,400 |
| Cash Margaret brings to closing (all costs included) | $408,600 |
| Net proceeds from the Bowie sale | $719,050 |
| Proceeds Margaret keeps in reserve | $310,450 |
Margaret moves into a one-level home she likes. She has no required monthly mortgage payment. And she still has about $310,000 in the bank for healthcare, travel, helping grandchildren, emergencies, or simply peace of mind.
How the Three Paths Compare
| Path | Monthly mortgage payment | Left in reserve |
|---|---|---|
| Pay all cash (price plus about $10,000 in closing costs) | None | About $59,000 |
| Traditional 30-year mortgage on about $400,000 | About $2,500 principal and interest at 6.5%, plus taxes and insurance, and she must qualify on retirement income | About $300,000, less closing costs |
| HECM for Purchase | None required | About $310,000 |
Paying cash feels safe, but it leaves Margaret house rich and cash poor at 72. A traditional mortgage keeps her savings intact but puts a required payment on a fixed income for decades. The HECM for Purchase sits between the two. She keeps a real cushion and has no required monthly principal and interest payment.
She can still make payments if she wants to. Any voluntary payment reduces the loan balance and can preserve more equity for her heirs. The difference is that the payment is her choice, not an obligation.
What She Still Has to Do
A HECM is not free money, and I want to be clear about the responsibilities:
- Keep paying property taxes, homeowners insurance, and any HOA dues on time.
- Maintain the home.
- Live in the home as her primary residence. On a purchase, she generally needs to move in within 60 days of closing.
- Understand that interest and mortgage insurance are added to the loan balance over time. The balance grows, and the equity left for her estate shrinks accordingly.
If the financial assessment shows tight cash flow, the lender may set aside funds for future taxes and insurance. That is a protection, not a penalty.
A Common Question: Can She Buy Before She Sells?
The cleanest version of this plan is to sell the Bowie house first, then close on the rambler with the proceeds. But timing does not always cooperate. If Margaret finds the right rambler before her colonial sells, a buy before you sell program may help bridge the gap. Every situation is different, so this is a conversation to have early, not the week before closing.
Who This Is Not For
I would not recommend a HECM for Purchase if:
- You plan to move again within a few years. The upfront costs make more sense when you stay put.
- Leaving the home completely free and clear to your children is your top priority.
- You are not comfortable with a loan balance that grows over time.
- Paying property taxes and insurance would strain your budget.
The right answer depends on your goals, your health, your family, and your numbers. That is why I ask a lot of questions before I recommend anything.
Frequently Asked Questions About HECM for Purchase in Maryland
What is a HECM for Purchase?
A HECM for Purchase, also called H4P, is an FHA-insured reverse mortgage used to buy a new primary residence. Buyers 62 and older bring part of the price to closing, and the HECM covers the rest. No monthly principal and interest payment is required.
How much down payment do I need for a HECM for Purchase?
The down payment depends on the age of the youngest borrower, the expected interest rate, and the lesser of the purchase price or appraised value. It often falls around half the price or more once costs are included. In this example, a 72-year-old buying a $650,000 home brings about $408,600, including closing costs.
What is the principal limit factor (PLF)?
The principal limit factor is the percentage HUD allows you to borrow, based on your age and the expected interest rate. At age 72 with a 6.0 percent expected rate, the PLF is 0.416, or 41.6 percent of the maximum claim amount.
What is the 2026 HECM loan limit?
The 2026 HECM maximum claim amount is $1,249,125 nationwide, including Bowie and all of Prince George’s County. It caps the home value used in the calculation, not the loan amount itself.
Is counseling required for a reverse mortgage?
Yes. Every HECM borrower must complete counseling with an independent, HUD-approved counselor before applying. Family members are welcome to attend.
Can my heirs lose money on a reverse mortgage?
No. A HECM is non-recourse, so neither you nor your heirs will owe more than the home is worth when the loan is repaid. Any remaining equity goes to you or your estate.
Do I still pay property taxes and insurance?
Yes. You must keep paying property taxes, homeowners insurance, HOA dues if any, and maintenance, and you must live in the home as your principal residence.
The Bottom Line
If you are 62 or older and living in a home that no longer fits, a HECM for Purchase lets you right-size without emptying your savings or taking on a monthly mortgage payment. It is regulated, it requires independent counseling, and your family is welcome at the table.
Margaret’s numbers will not be your numbers. Your age, the home you buy, and the expected rate on the day you apply all change the result. But the framework is the same, and I can run it for your situation in one conversation.
To learn more, read how the HECM for Purchase works, what happens to the home and your heirs, and answers to common reverse mortgage myths and FAQs. If you live in Bowie or anywhere in Prince George’s County, I am local and happy to meet with you and your family.
See Your Own Numbers, Side by Side
Tell me your age, what your current home might sell for, and where you want to land. I will show you a HECM for Purchase next to paying cash and next to a traditional mortgage, so you and your family can decide with clear information.
Request a Private Reverse Review Book a Call With KenCall or text (240) 237-7855 | ken.powell@fairwaymc.com
About Ken Powell: Ken is a 20-year Navy veteran, former real estate professional, and mortgage loan officer with Fairway Home Mortgage. He helps homeowners 62 and older, veterans, self-employed borrowers, and investors across Southern Maryland and Prince George’s County, including Bowie, Upper Marlboro, Clinton, and Waldorf.
Ken Powell
Mortgage Loan Officer, NMLS #2656628
Fairway Home Mortgage
8307 Old Leonardtown Rd, Hughesville, MD 20637
Example is hypothetical and for illustration only. Figures assume a youngest borrower age of 72, an expected rate of 6.0 percent, a principal limit factor of 0.416 from HUD’s current PLF table, the 2026 HECM maximum claim amount of $1,249,125, and estimated closing and selling costs. Your actual principal limit, costs, and required down payment will depend on the youngest borrower’s age (or eligible non-borrowing spouse’s age), current interest rates, and the lesser of the appraised value or purchase price. Borrowers must continue to pay property taxes, homeowners insurance, HOA dues if applicable, and maintenance, and must occupy the home as their principal residence. HECM loans are FHA insured and require HUD-approved counseling. This material is not from HUD or FHA and was not approved by HUD, FHA, or any government agency. This is educational and not a commitment to lend.
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