The Long Island Agent’s Guide to H4P Financing

Why should a Long Island agent care about H4P?

Because it turns a dead conversation into a transaction. You have had this client. They own a Levittown or Hicksville ranch free and clear, the stairs are getting hard, and they want a newer place in a 55+ community in Plainview or Melville.

Then they price one at $750,000, look at their equity, and conclude that moving means either draining their retirement savings to pay cash or taking on a mortgage payment on a fixed income. So they stay. You lose two sides of a transaction, and they stay in a house that no longer works for them.

HECM for Purchase sits between those two options. The buyer brings a large down payment, an FHA-insured Home Equity Conversion Mortgage covers the balance, and they take title at closing with no required monthly principal and interest payment. They keep more of their cash and they get the house.

For your business the effect is straightforward. A buyer who was priced out at $750,000 all-cash may be able to transact at $750,000 with roughly $444,000 down at age 70, keeping the rest. That is a listing sold and a buyer served who would otherwise have stayed put.

Illustrative example only, September 2026. Down payment percentages depend on the youngest borrower's age, the expected rate at lock and the FHA lending limit, and they move whenever rates move. The consumer guide linked below carries the full table and its assumptions.

How does an H4P deal differ from the purchase I am used to?

Less than you would expect. It is one closing, one title transfer, and your client's name goes on the deed exactly as with any other financed purchase. What changes is the underwriting, the property rules and the front end of the calendar.

💡 On a phone? Swipe the table left and right to see every column.

After closing, your client remains responsible for property taxes, homeowners insurance, HOA or common charges and maintenance, and falling behind on those can make the loan due and payable. Worth saying to buyers plainly, because it is the obligation they most often underestimate.

What can my seller contribute, and what can they not?

Up to 6% of the sales price or appraised value, whichever is lower, toward the buyer's closing costs. Nothing at all toward the down payment. That second half is where deals go wrong, because it is the opposite of what many agents assume from FHA forward loans.

💡 On a phone? Swipe the table left and right to see every column.

Acceptable down payment sources are the buyer's own: proceeds from selling their current home, verified savings and investment accounts, documented gifts from family, employer relocation assistance and certain disaster-relief grants. A gift is fine. A loan dressed as a gift is not, and underwriting is good at telling the difference.

Which Long Island listings will kill an H4P deal?

Four categories, and on this island the first two account for most of the failures. Screen for them before your buyer falls in love with a unit.

💡 On a phone? Swipe the table left and right to see every column.

The condo approval problem, in the order you should work it

Many Long Island condo and townhome communities have never sought FHA approval, because their sales have historically been cash or conventional. This is the single most common reason an H4P purchase collapses, and almost nobody hears about it until they are already in contract.

1. Get the exact legal project name and address from the listing agent, not the marketing name on the sign.
2. Have the lender check it against HUD's condominium approval list before your buyer makes an offer. This costs nothing.
3. If it is not approved, ask whether Single-Unit Approval is realistic. That depends on the association's reserves, owner-occupancy ratio, delinquency rate and any planned special assessment, and the association will have to produce documents.
4. If neither path works, steer to a different community now, weeks before a deposit is at risk.

What belongs in the contract?

Nothing exotic, but a few things that a standard Long Island contract will not contain unless someone adds them.

• Name the financing accurately. The contract and the attorneys should reflect that this is an FHA-insured reverse mortgage, not a conventional loan. Attorneys who assume otherwise write timelines and contingencies that do not fit.
• Build in the counseling step. HUD-approved counseling has to be complete before the file can proceed, and scheduling it is the most common source of delay. It belongs in the calendar at contract, not at commitment.
• Address required repairs. If the FHA appraisal flags repairs, they generally have to be completed before closing. On a purchase that is a seller negotiation, so decide early who is doing the work.
• Handle new construction timing. If your buyer is purchasing from a builder in one of the still-building 55+ communities, the certificate of occupancy has to exist before funding. Put that dependency in writing.
• Coordinate the departing sale. Where the down payment comes from a concurrent sale, both closings need to be sequenced deliberately.

What can a lender legally do for me, and what can't they?

This section matters more than any other one on this page, because agents get pitched constantly by lenders offering things that federal law prohibits, and RESPA penalties reach the person who accepts as well as the person who pays.

Section 8 of the Real Estate Settlement Procedures Act, implemented at 12 CFR 1024.14, says that no person shall give and no person shall accept any fee, kickback or other thing of value for referring settlement service business. A referral is not a compensable service. "Thing of value" is defined broadly and covers money, discounts, commissions, services at free or special rates, and unusual banking terms.

Where co-marketing and services agreements actually sit

Marketing services agreements are not illegal in themselves. The CFPB has said that entering into, performing services under and making payments under an MSA are not by themselves prohibited acts. What makes one unlawful is the structure or the execution: payment that is really for referrals, compensation above reasonable market value, or services that are nominal or never actually performed.

The same logic governs co-marketing. If you and a lender split the cost of a mailer or a listing portal placement, each side has to pay fair market value for its own share of what it received. A lender paying 80% of a piece that is 50% yours is defraying an expense you would otherwise have carried, and that is a thing of value.

Our position is simple and we will put it in writing. We will not pay you for a referral, and we would be wary of any lender who offers to. What we will do is answer your questions, screen properties, run real numbers for your client, and tell you honestly when H4P is the wrong tool for the buyer in front of you.

This is a general summary of a complex federal rule, not legal advice. Marketing arrangements, co-marketing splits and services agreements should be reviewed by your brokerage's counsel and your own compliance officer before you enter into them.

What does an H4P deal look like from my side?

An illustration, and a common shape on Long Island. Your clients are a married couple, both 70, who own a Levittown ranch free and clear. They want a condo in a Plainview 55+ community listed at $650,000, and they have told you twice that they cannot afford to move.

💡 On a phone? Swipe the table left and right to see every column.

Illustrative example only, September 2026. Assumes both borrowers age 70, no mortgage on the departing home, an FHA-approved condominium project, and the rate environment at the time of drafting. Actual figures will differ. Not an offer or a commitment to lend.

What you transacted: a listing and a sale. What your clients got: a newer home with no stairs, no required monthly principal and interest payment, and roughly $456,000 in liquid savings they would not have had if they paid cash.

What they still owe every month is worth saying out loud to them at the kitchen table, because it is the part buyers underestimate: Nassau property taxes, homeowners insurance and the community's common charges. And the honest trade-off is that the loan balance grows rather than shrinks, so the equity their children eventually inherit is smaller unless the condo appreciates faster than the balance climbs.

Some families hear that and proceed. Some hear it and decide to pay cash after all. Either way you did your job, and the conversation happened before the offer rather than after the deposit.

How do I spot an H4P buyer?

They rarely arrive asking for a reverse mortgage. They arrive as a listing appointment or an open house conversation that ends in resignation. Listen for these.

• "We love it, but we can't afford to move." Said by someone 62 or older who owns their current house outright. This is the single strongest signal.
• "We'd have to pay cash and then we'd have nothing left." The buyer has the purchase price in equity but not the appetite to spend all of it.
• "We're not taking on a mortgage at our age." A fair position, and one H4P is designed around.
• A seller listing a family home with no clear next step. They may be stuck on the buy side rather than uninterested in selling.
• Adult children doing the searching. Often the family is helping a parent move closer, and the numbers are the obstacle.

What to say next is not a pitch. It is a question: "Would it help to know the actual number you would need to put down on that one?" If they say yes, the arithmetic does the rest, and it costs the buyer nothing to find out.

What does the timeline look like?

Plan on 45 to 60 days from contract to closing, comparable to a conventional purchase and sometimes faster than an FHA forward loan. The front of the schedule is what differs.

1. Counseling first. Every HECM borrower in New York must complete counseling with a HUD-approved counselor, and for a HECM it cannot be waived. Start scheduling immediately.
2. Application and disclosures, including the list of housing counselors approved by the Department of Financial Services.
3. FHA appraisal. Repairs flagged here become a seller negotiation, so surface them early.
4. Condo approval check, running in parallel and ideally already done before the offer.
5. Underwriting, including a financial assessment of the buyer's credit history and ability to sustain taxes, insurance and charges. This can result in a set-aside from the loan for those bills.
6. Closing, at which your buyer takes title.