By Ken Powell · NMLS #2656628 · August 2026
You are 62 or older, you have real equity in your current home, and you are trying to decide between paying all cash for your next house or taking on a mortgage payment in retirement. There is a third option most homeowners never hear about from a call center. Here is how it actually works, using two real examples from Southern Maryland.
By Ken Powell, Reverse Mortgage Planner and Mortgage Loan Officer, NMLS #2656628 | Serving Calvert, Charles, St. Mary’s, and Prince George’s counties
The short answer: An H4P loan, also called a HECM for Purchase, lets a homeowner age 62 or older buy a new primary residence using a combination of home sale proceeds and reverse mortgage financing, with no required monthly principal and interest payment. It works whether you are upsizing into a larger home or downsizing into something easier to manage, and it is available throughout Calvert County, St. Mary’s County, Charles County, and Prince George’s County.
What Is an H4P Loan, in Plain Terms
A traditional mortgage requires a down payment plus a monthly principal and interest payment for the life of the loan. An H4P loan flips that structure. A homeowner 62 or older puts down a larger percentage of the purchase price, typically using proceeds from the sale of their current home, and a reverse mortgage covers the rest. As long as the homeowner lives in the property as their primary residence and stays current on property taxes, homeowners insurance, and basic maintenance, there is no required monthly mortgage payment.
That single fact, no mandatory P&I payment, is why so many retirees in Southern Maryland use it to protect their retirement savings while still moving into the right home.
Who This Is For
- Homeowners age 62 or older
- Selling a current home with meaningful equity
- Moving to a new primary residence, whether larger, smaller, or simply better suited to retirement
- Interested in preserving retirement accounts rather than tying them up in a large all cash purchase
- Uninterested in carrying a required monthly mortgage payment into retirement
Example 1: Upsizing in Lusby, MD
Carol, 70, recently retired and decided to sell her paid off home near Solomons. The sale nets her $475,000. She also has $320,000 in a retirement account and draws $3,200 a month from Social Security and a small pension.
Carol has her eye on a new construction home in Lusby with water access and a first floor primary suite, priced at $625,000. She weighs three paths to get there.
| Option | What happens to her savings | Monthly mortgage payment |
|---|---|---|
| Pay cash | Nearly all $475,000 in sale proceeds gets tied up in one illiquid asset | None, but no liquidity left |
| Traditional mortgage | Smaller down payment, savings stay more liquid | Required monthly P&I for the life of the loan |
| H4P loan | About $210,000 down, roughly $265,000 of proceeds stay in hand | None required |
Carol chooses the H4P loan. She uses roughly $210,000 of her home sale proceeds as her down payment plus closing costs, and an H4P loan covers the remaining $415,000 needed to complete the $625,000 purchase.
The result: Carol moves into her new Lusby home with roughly $265,000 of her original sale proceeds still in hand, her retirement account untouched, and no required monthly P&I payment. She is still responsible for property taxes, homeowners insurance, and upkeep, but the mandatory mortgage payment that would have stretched her fixed income is gone.
Example 2: Downsizing in Charlotte Hall, MD
Robert and Linda, 68 and 66, have lived in their five bedroom Charlotte Hall home for over twenty years. With their children grown and the yard work becoming a burden, they decide to sell and net $540,000 from the sale.
They find a new single level home in a 55 and older community closer to Charlotte Hall’s shopping and medical offices, priced at $430,000.
| Amount | |
|---|---|
| New home purchase price | $430,000 |
| Down payment plus closing costs from sale proceeds | − $150,000 |
| H4P loan amount | $280,000 |
| Sale proceeds remaining, liquid | $390,000 |
They considered paying all cash, which would get them into the home immediately but would mean putting nearly all $540,000 of their sale proceeds into the property, something they were not eager to do given how much they value having liquid savings available for healthcare and travel in retirement.
Instead, they use roughly $150,000 of their proceeds as the down payment plus closing costs, and an H4P loan covers the remaining $280,000. They move into their new Charlotte Hall home, keep close to $390,000 liquid and available, and avoid a required monthly mortgage payment during retirement. They still cover taxes, insurance, and maintenance, but the flexibility of having that much cash on hand, instead of locked into the house, is what made the decision easy.
These scenarios are for illustration purposes only. Every borrower’s numbers, loan amount, and qualification will differ based on age, home value, interest rates, and program guidelines at the time of application.
Frequently Asked Questions
Do I have to make a monthly mortgage payment with an H4P loan?
No required monthly principal and interest payment is due as long as you live in the home as your primary residence and stay current on property taxes, homeowners insurance, and basic home maintenance.
What is the minimum age to qualify for an H4P loan?
At least one borrower on the loan must be 62 or older.
How much do I need to put down on an H4P purchase?
The required down payment is generally larger than a conventional loan, often somewhere between 45 and 60 percent of the purchase price, depending on the youngest borrower’s age and current interest rates. Many buyers cover this using proceeds from the sale of a previous home.
Is an H4P loan the same as a traditional reverse mortgage?
They are related but not identical. A standard reverse mortgage (HECM) lets an existing homeowner convert equity in a home they already own into cash or a line of credit. An H4P loan (HECM for Purchase) is used specifically to buy a new home, combining a large down payment with reverse mortgage financing in a single transaction.
Can I use an H4P loan anywhere in Southern Maryland?
Yes. This includes Calvert County towns like Lusby, Prince Frederick, and Solomons, St. Mary’s County towns like Charlotte Hall, Leonardtown, and California, as well as Charles County and Prince George’s County.
Does the new home have to be smaller than my current home?
No. As shown above, H4P loans work for upsizing into a larger or more expensive home just as well as downsizing into something smaller.
What happens to the loan if I sell the home later or pass away?
The loan becomes due when the home is no longer the borrower’s primary residence, typically through sale, moving out permanently, or passing away. At that point the home is generally sold, the loan balance is paid off from the proceeds, and any remaining equity belongs to the borrower or their heirs.
Why Work With a Local Loan Officer for This Decision
An H4P loan is not a product you should choose from a national ad or a call center. It is a strategic decision about how to structure your retirement, and it deserves a loan officer who will sit down, ask the right questions, and walk through the actual numbers for your specific home and goals, not just hand you a rate sheet.
I am Ken Powell, a Navy veteran and mortgage adviser based in La Plata, serving homeowners throughout Calvert, Charles, St. Mary’s, and Prince George’s counties. I specialize in the loans that require more thought: reverse mortgages and H4P purchases, DSCR and investor loans, and self employed borrower programs using bank statements, P&L, or asset based qualification. My job is to make sure you understand exactly what you are signing up for, not just to get you to the closing table.
If you are in Lusby, Charlotte Hall, Prince Frederick, Leonardtown, or anywhere in between and you are weighing whether an H4P loan makes sense for your next move, let’s run your actual numbers together.
Book a call with Ken · Call or text (240) 237-7855 · Request a scenario review
Sources
- U.S. Department of Housing and Urban Development, HECM for Purchase program requirements at 24 CFR Part 206
- Consumer Financial Protection Bureau, guidance on reverse mortgage loan structures and borrower obligations
Ken Powell | Mortgage Loan Officer | NMLS #2656628 | Fairway Independent Mortgage Corporation d/b/a Fairway Home Mortgage | NMLS #2289 | NMLS Consumer Access | Equal Housing Lender.
Reverse mortgage borrowers are required to obtain an eligibility certificate by receiving counseling sessions with a HUD approved agency. The youngest borrower must be at least 62 years old. Borrowers remain responsible for payment of property taxes, homeowners insurance, and property maintenance. Failure to meet these obligations may result in the loan becoming due and payable. Monthly reverse mortgage advances may affect eligibility for some other programs. This material has not been reviewed, approved, or issued by HUD, FHA, or any government agency. The company is not affiliated with or acting on behalf of or at the direction of HUD, FHA, or any other government agency.
The examples in this article are illustrations only. They use assumed values, balances, and rounded figures, and do not reflect any actual transaction, quote, or offer of credit. Actual costs, terms, and outcomes vary. This article is provided for educational purposes and is not legal, tax, or financial advice. Consult your own attorney, tax professional, and a HUD approved housing counselor regarding your specific situation.
About the Author
Ken Powell · Mortgage Loan Officer, Fairway Home Mortgage · NMLS #2656628 · La Plata, MD
Ken is a retired U.S. Navy veteran, a former Realtor with more than 10 years and $22M+ in closed sales, and a real estate investor since 2014. He specializes in reverse mortgage, VA, DSCR, and self employed financing across Maryland and Virginia. Learn more →
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About the Author
Ken Powell · Mortgage Loan Officer, Fairway Home Mortgage · NMLS #2656628 · Hughesville, MD
Ken is a retired U.S. Navy veteran, a former Realtor with more than 10 years and $22M+ in closed sales, and a real estate investor since 2014. He specializes in VA, DSCR, and self-employed financing across Maryland and Virginia. Learn more →
Equal Housing Lender