A reverse mortgage for purchase follows the same application steps as a traditional mortgage, starting with a HUD-1009 form and pre-approval after a background check. Instead of monthly payments, lenders verify you can cover property taxes and insurance through an FHA financial assessment rather than a standard debt-to-income ratio.
So the reverse mortgage for purchase transaction, very much like any other traditional mortgage, the application consists of a 1009 application. Time frames from start to close are very much the same. There's a purchase contract that takes place. So just like any other purchase transaction, the lender receives the purchase contract, we do our background check on the borrower. Of course, we have to issue a pre-approval. There is an income requirement for a reverse mortgage, even though you're not making a payment, we as a lender have a responsibility to make sure that you can stay in that home and maintain the future property taxes and the homeowner's insurance. So there is no debt-to-income ratio— that is what's required on a conventional mortgage. With FHA, on the reverse mortgage for purchase, we're required to do what's called a financial assessment just to make sure that you've got enough income coming in that would foresee any problems with you maintaining the taxes and the insurance.
