HECM for Purchase, Re-Priced: the Favorable Band Was a 4% Expected-Rate Artifact, and at 7.25% the Advantage Is Erased Below ~$492k and Shrinks by Two-Thirds Above It

PRIVACY: this note stays in the local vault. It concerns living people's finances. Do not publish, sync to a public surface, send to an external research service, or quote the figures outside this file. The parents are referred to only as "the parents."

NOT ADVICE. This is decision-support arithmetic for a conversation with a HUD-approved HECM counselor and a licensed lender. HUD requires reverse-mortgage counseling before an H4P application closes (Mortgagee Letter 2008-33, "Enhanced Counseling"), and that counselor -- not this brief -- produces the binding numbers.

The question

Verbatim: *"At the parents' actual likely purchase price ($450k-$600k) and ages, does HECM for Purchase's cash cost -- using HUD's 2026 age-based down-payment bands and current expected rate -- actually undercut the $150k-gift conventional-mortgage path, or does re-pricing at their real numbers erase the generic-band advantage flagged in the 2026-08-19 brief?"

Context: [[2026-08-19-asset-depletion-mortgage-qualification]] called HECM for Purchase (H4P) "the option the vault has never considered" and quoted generic down-payment bands of 55-60% at age 62 and 47-52% at age 70, concluding H4P beat the cash-gift conventional path at $600k by $130-190k. It named no expected rate. The whole band moves with the expected rate, so the claim was untestable as written. This brief re-derives it from HUD's own principal limit factor (PLF) tables at a current expected rate.

Headline answer, up front

The advantage is largely erased, and it reverses at the bottom of the range. The parent brief's bands back-solve to an expected rate of about 4.00% -- a 2020-21 rate world. Today's expected rate is roughly 7.25%. At 7.25% and a youngest-borrower age of 70:

Against the conventional path sized so the parents actually qualify, H4P is $26k more expensive at $450k, $21k cheaper at $525k, and $68k cheaper at $600k (45% DTI). Break-even is ~$492,000. On a 50% DTI it is ~$545,000, and H4P loses at both $450k and $525k. And even where H4P wins on cash, it costs $500-750k of the parents' terminal equity at year 20 -- 7 to 11 times the cash it saves.

What we already know (from the vault)

• The $150k gift and the $600k price are the project's stated plan, and the gift was never derived from the parents' finances. [[readme]] Project B: "$600k house in parents' name / Founder gifts ~$150k for down payment / Parents carry ~$450k mortgage on retirement income." [[milestones]] records the 2026-04-18 rationale as "typical FL retiree mortgage qualification ceiling" -- an unsourced heuristic.
• The project README's own range is $500-700k, not $450-600k. [[readme]] Project B says "$500-700k house/townhome." The $450k low end in this question comes from [[2026-08-19-asset-depletion-mortgage-qualification]], not from the project. Worth reconciling: $450k is below the project's stated floor and $700k is above the ceiling anyone has modeled.
• Parents' mortgage qualification is still the single blocking input. [[readme]] Critical Open Question #1, marked partially answered 2026-08-19, "Getting their real asset picture is now the single blocking input." [[index]] has carried "Parents' mortgage qualification clear -- Unknown" since a 2026-06-30 due date.
• The conventional path's real cash number is not $150k. [[2026-08-19-asset-depletion-mortgage-qualification]] Step 4: on Social Security alone the cash-only gift is ~$242-276k at $450k and ~$436-470k at $600k. The $150k gift only works if the parents hold $295k-$1.57M investable, depending on program -- and a household with $1M in an IRA does not need a $150k gift.
• The parents are currently housed with the founder's sister and brother-in-law in Rhode Island. [[living-family-branch-2026-07-22]] and the extended-family map. That matters here in two ways: there is no departure-residence sale proceeds to fund a down payment, and the H4P principal-residence/60-day-occupancy test becomes a live question rather than a formality.
• Co-signing is the most expensive option on the board -- ~$597k of the founder's own borrowing capacity at a $600k purchase, against a build envelope that already closes with no margin. [[2026-08-14-construction-to-permanent-loans-florida]] [[2026-08-25-jumbo-portfolio-overlays-contingent-liability]]

Inputs: what the vault supplies, and what is a labeled guess

Verified primary, not guessed: HUD's PLF tables (pulled live from HUD's own factor-table service at entp.hud.gov on 2026-10-01, case numbers assigned on/after 10/02/2017, report version V2.5); upfront MIP 2.00% of the maximum claim amount; annual MIP 0.50% of loan balance; the 2026 HECM maximum claim amount $1,249,125; the origination-fee cap formula; the H4P occupancy, property-type and funding-source rules in Mortgagee Letter 2008-33; the youngest-mortgagor-or-non-borrowing-spouse PLF rule in Mortgagee Letter 2014-07; the LESA requirement levels in HUD's HECM Financial Assessment guide (updated 01/2026).

What the web says

• HUD's PLF table, pulled directly today, is the thing the parent brief was missing. The principal limit is maximum claim amount x PLF, where PLF is read off HUD's grid by the youngest borrower's age and the expected rate. Selected verified values (HUD factor-table service, 2026-10-01):

Note the flat spot: ages 70 and 71 carry the identical PLF, so a year of waiting buys nothing there, while 62 -> 67 buys ~3.7 points and 72 -> 75 buys ~2.7 points.

• The parent brief's bands are a 4.00%-expected-rate artifact. Reconstructing its "55-60% at 62 / 47-52% at 70" from the HUD grid: at ER 4.000%, age 62 requires 57.2% down and age 70 requires 52.0% -- both land inside the quoted bands. At ER 5.500% the same ages need 66.0% and 60.3%; at 7.250%, 74.1% and 68.2%. The bands were not wrong arithmetic; they were right arithmetic at a 10-year CMT of roughly 2.0-2.3%, which is ~300bp below today's 5.29%.
• The widely-cited industry table carries a fresh date but a stale rate. reverse.mortgage's H4P page (page-updated 2026-09-26) publishes 64.9% down at 62 and 59.2% at 70, explicitly stamped "5.75% rate / 5.5% expected rate as of 09/30/2026." Those percentages reconcile almost exactly with HUD's ER 5.500% column -- the table is internally honest. But a 5.5% expected rate implies a ~3.5-3.75% 10-year index, and Treasury's own 09/30/2026 curve puts the 10-year CMT at 5.29%. Either their expected rate is a carried-forward assumption, or they are quoting an unusually thin margin. Any H4P number sourced from that page today should be treated as roughly 8 percentage points of down payment too generous. Flagged as a contradiction below rather than resolved -- a lender's actual rate sheet settles it.
• MIP and fees, verified. Upfront MIP 2.00% of MCA for all loans; annual MIP 0.50% of loan balance for all loans (HUD factor-table footer and HUD's published PLF table). Annual MIP is accrued onto the balance, not paid in cash -- it is a terminal-equity cost, not a monthly cost. Origination fee is capped at 2% of the first $200,000 of MCA plus 1% above, floor $2,500, ceiling $6,000 -- so $6,000 at all three price points.
• H4P eligibility has hard non-financial gates (ML 2008-33, primary). Borrowers "must occupy the property within 60 days from the date of closing" as a principal residence. Ineligible property types include cooperative units and newly constructed homes where a Certificate of Occupancy has not been issued; existing manufactured homes before 6/15/1976, or after it without conforming certification labels and a permanent foundation. Only completed construction qualifies. Separately, non-FHA-approved condominiums are not eligible collateral -- material, because [[readme]] explicitly contemplates a "house/townhome."
• The funding-source rule is the unresolved risk to the founder's entire mechanism. ML 2008-33 states: "HECM mortgagors must use cash on hand or cash from the sale or liquidation of the mortgagor's assets for the required monetary investment," and bars gap financing from credit cards, seller financing, and unsatisfied lending commitments. That originating text does not list a third-party gift. Current industry guidance (reverse.mortgage, 2026-09-26) says "Family gifts, employer assistance, or disaster-relief grants" are acceptable while "borrowed funds, unsecured loans, and credit-card advances are not permitted," which reflects later Handbook 4000.1 policy. I could not retrieve 4000.1's HECM section (II.B) to primary -- the published 4000.1 PDF at hud.gov covers Sections I and II.A only and explicitly excludes HECM, and five candidate URLs for the HECM section returned 404. See the explicit non-verification list.
• The non-borrowing-spouse trap is a real repricing risk, verified primary. ML 2014-07: "the mortgagee must base the Principal Limit on the age of the youngest mortgagor or Non-Borrowing Spouse." If one parent is under 62 at closing, the younger spouse can be an Eligible Non-Borrowing Spouse -- but the PLF is then read at that age, not the older borrower's, and HUD's factor tables extend well below 62. A spouse ten years younger does not shave the down payment; it raises it.
• LESA is the unpriced tail risk. HUD's HECM Financial Assessment (updated 01/2026) sets four levels: Not Required, Voluntary-Fully Funded, Required-Fully Funded, and Required-Partially Funded, driven by credit history, property-charge payment history, and a regional residual-income standard with a shortfall test. A required LESA carves the life-expectancy cost of taxes and insurance out of the principal limit before anything reaches the purchase, which raises the required cash dollar-for-dollar. See the arithmetic -- at a 7.25% expected rate this is close to fatal.

Convergences and contradictions

• Convergence: HUD's primary PLF grid and the leading industry table agree completely once you hold the expected rate fixed. reverse.mortgage's 59.2%-at-70 reconciles to within a tenth of a point of HUD's ER 5.500% column plus 2% UFMIP plus ~1% of other costs. There is no dispute about the formula. The entire gap between the parent brief's answer and this one is the expected rate, and the parent brief never named one. That is the methodological lesson: an H4P band without a stated expected rate and as-of date is not a number, it is a vibe.
• Contradiction, unresolved: reverse.mortgage asserts a 5.5% expected rate "as of 09/30/2026"; Treasury's own daily curve for 09/30/2026 puts the 10-year CMT at 5.29%, which with any plausible 1.50-2.75 margin yields 6.79-8.04%. Both cannot be right. I used 7.250% because the index is primary and the margin is the only soft term. If a lender actually quotes a 5.5% expected rate, every H4P figure in this brief improves by roughly $50k and the conclusion shifts back toward the parent brief's. That single question -- "what expected rate will you use, and what is your margin" -- is the first thing to ask, and it has a ~$50k answer.
• Contradiction with [[2026-08-19-asset-depletion-mortgage-qualification]]: that brief's claim that H4P "is cheaper in cash and removes the payment-default risk" survives only the second half. On cash it is wrong below ~$492k and right by about a third of the claimed margin above it. [[readme]] currently carries the stronger claim as a bolded bullet under Critical Open Question #1 -- "HECM for Purchase is cheaper in cash than the conventional gift path at both price points." That line needs to be corrected.
• Contradiction nobody has flagged: the parent brief compared H4P against the cash-only conventional path ($436-470k at $600k) while [[readme]]'s plan is the $150k-gift path. Against the $150k-gift path, H4P is never cheaper at any price or any rate in the modeled range -- $406k versus $168k all-in at $600k. The two paths answer different questions, and conflating them is how the favorable framing survived.

The arithmetic

Mechanics

Maximum Claim Amount (MCA) = lesser of appraised value, sale price, $1,249,125
Principal Limit (PL)       = MCA x PLF(youngest borrower or NBS age, expected rate)
Upfront MIP                = 2.00% x MCA
Origination fee            = min($6,000, 2% of first $200k + 1% above, floor $2,500)
Cash from borrower         = Price + UFMIP + origination + third-party costs - (PL - LESA)

At every price point here MCA = the price, so the $1,249,125 ceiling is not binding.

Step 1 -- H4P required cash, re-priced (ER 7.250%, third-party costs $4,000, no LESA)

Worked, at $600k / age 70: PL = $600,000 x 0.360 = $216,000. UFMIP = 2% x $600,000 = $12,000. Origination = $6,000. Third-party = $4,000. Total needed = $600,000 + $22,000 = $622,000. Cash = $622,000 - $216,000 = $406,000.

Rate sensitivity at age 70, as a reminder of how fast this moves:

Every 25bp of expected rate costs about $4,500-6,000 of additional down payment. From the parent brief's implied 4.00% to today's 7.25% is roughly $73k-$97k.

Step 2 -- the two conventional paths, same prices, 7.00% / 30-yr fixed

Path A1 -- the plan as written ($150k gift). Requires the parents to qualify, which per [[2026-08-19-asset-depletion-mortgage-qualification]] needs $295k-$1.57M of investable assets depending on program.

Path A2 -- the gift sized so the parents qualify on Social Security alone (no assets counted). This is the path the parent brief compared H4P against.

The perverse result from the parent brief reproduces: because taxes and insurance scale with price and eat a fixed Social Security DTI budget from both ends, the supportable loan shrinks as the house gets more expensive ($181k at $450k down to $144k at $600k).

Step 3 -- side by side, same rows

At $450,000:

At $525,000:

At $600,000:

Step 4 -- break-even

Solving H4P cash = Path A2 cash at ER 7.250%, age 70, with taxes/insurance scaling as modeled:

• 45% DTI: break-even price ~$492,000. Below it, the conventional sized-gift path is cheaper in cash. Above it, H4P is.
• 50% DTI: break-even price ~$545,000. H4P loses at $450k (by $60,015) and at $525k (by $12,727), and wins at $600k by $34,562.

So on the vault's own planned price of $600k, H4P still wins on cash -- by $35-68k, not the $130-190k the parent brief claimed. On a $450k purchase it loses. The project README's actual range ($500-700k) straddles the break-even.

Step 5 -- what H4P costs in terminal equity (the inheritance line)

H4P's opening balance equals the principal limit drawn. Accruing at 7.00% (6.50% note + 0.50% MIP, labeled assumption I11), with the home appreciating 3%/yr:

At $600k, H4P saves $68,088 of cash today and destroys $753,390 of year-20 family equity. That is a 1:11 trade. H4P is non-recourse, so the downside is capped at the house -- but the base case is not the downside, it is this.

Step 6 -- the LESA bound, and why it may be decisive

A Required-Fully-Funded LESA sets aside the life-expectancy cost of property charges out of the principal limit before anything reaches the purchase. I do not have HUD's LESA discounting formula verified, so here is a clearly-labeled undiscounted upper bound at a 17-year life expectancy for a 70-year-old:

The undiscounted set-aside is essentially equal to the entire principal limit at every price point. HUD discounts, so the real LESA is smaller -- but the structural point holds: at a 7.25% expected rate the principal limit has shrunk to the point where a required fully-funded LESA could consume most or all of it, turning H4P into a ~90-100% cash purchase. This risk did not exist in the parent brief's 4%-expected-rate world, where the principal limit was 45% larger. The parent brief's reading that "a LESA can be imposed instead of a denial" is true and reads as reassuring; at these rates it is closer to a denial with extra steps. Whether a LESA will be required is a financial-assessment output, and it is the single largest unquantified number in this brief.

Step 7 -- non-financial disqualifiers (a cheaper path they are ineligible for is not a path)

1. Both borrowers must be 62+ at closing, and the PLF reads the youngest (ML 2014-07). The father is ~70 (labeled guess from a tilde-flagged vault figure). The mother's age is not in the vault at all. If she is under 62, she is at best an Eligible Non-Borrowing Spouse and the PLF is read at her age -- strictly worse than the table above, potentially by 10+ points of down payment. If she is 62-67, the base case overstates H4P by $10-28k. Getting her birth year is a one-question fix with a five-figure answer.
2. Principal residence, occupied within 60 days of closing (ML 2008-33). The parents currently live with the founder's sister and brother-in-law in Rhode Island [[living-family-branch-2026-07-22]]. If the plan is a part-year or near-family house rather than their actual year-round home, H4P is out. Occupancy is also an ongoing condition -- a move to assisted living triggers due-and-payable (subject to the non-borrowing-spouse deferral regime in ML 2014-07 / ML 2015-15).
3. Property type. Cooperatives are ineligible outright. Non-FHA-approved condominiums are ineligible collateral. [[readme]] contemplates a "house/townhome" -- a condo-form townhome in a project without FHA approval kills H4P before any arithmetic. New construction needs a Certificate of Occupancy already issued; only completed construction qualifies. Manufactured homes must post-date 6/15/1976 with conforming labels and a permanent foundation.
4. Funding source for the down payment -- the open one. ML 2008-33's originating text restricts the required monetary investment to "cash on hand or cash from the sale or liquidation of the mortgagor's assets," and bars gap financing. Current industry guidance says family gifts are acceptable. I could not verify the current Handbook 4000.1 rule to primary. The founder's entire mechanism is a gift. If gift funds are not an acceptable monetary-investment source, the whole H4P column is void. Verify this first; everything else is downstream.
5. HECM counseling is mandatory, with enhanced H4P-specific content (ML 2008-33, "Enhanced Counseling"). Certificate must be in file before closing. Budget calendar time for it.
6. Financial assessment reviews credit, property-charge payment history, and a regional residual-income standard against family size, with a documented shortfall test and compensating factors (HUD HECM Financial Assessment, 01/2026). No minimum income or FICO, but the LESA outcome in Step 6 rides on it.
7. No co-signer exists on a HECM. Every borrower must be 62+ and occupy. This is genuinely good news for the founder's own 2027 build envelope -- H4P removes the co-sign/DTI question entirely, which [[2026-08-25-jumbo-portfolio-overlays-contingent-liability]] shows is worth ~$597k of his borrowing capacity. It is also why the gift is unrecoverable: he cannot hold paper the way [[2026-08-25-florida-intra-family-purchase-money-note]] contemplates and also use H4P.

Synthesis for RDCO

Re-pricing erases the advantage below ~$492k and cuts it by roughly two-thirds above it, and the reason is entirely the expected rate. The parent brief's "47-52% down at age 70" was not sloppy arithmetic -- it was correct arithmetic at a 4.00% expected rate, which is to say a 10-year CMT around 2.0-2.3%. Treasury's 09/30/2026 curve prints the 10-year at 5.29%. Push that through any plausible lender margin and the expected rate lands near 7.25%, where the age-70 principal limit factor is 0.360 instead of 0.522 -- a 31% reduction in loan proceeds, which lands dollar-for-dollar on the down payment. At $600k the required cash moves from $308,800 to $406,000. The finding generalizes past this decision: H4P is a long-duration-rate product dressed as a product for old people. Its cash cost is driven far more by the 10-year index than by the borrowers' ages -- 325bp of expected rate moved the $600k number by $97k, while eight years of age (62 to 70) moved it by $35k. Any future vault note that quotes an H4P band without a stated expected rate and as-of date should be treated as unusable, and the correction belongs in [[readme]] now, because the strong claim ("cheaper in cash than the conventional gift path at both price points") is currently sitting in the project's Critical Open Question #1 as though it were settled.

But the comparison the parent brief ran was never the comparison the project faces, and that is the bigger error. It priced H4P against the cash-only conventional path -- the one where the founder writes a $474k check so the parents clear DTI on Social Security alone. Against the plan as actually written in [[readme]] -- a $150k gift with the parents carrying a $450k mortgage -- H4P is never cheaper, at any price point, at any expected rate in the modeled range: $406,000 versus $168,000 all-in at $600k. The $150k-gift path's problem was never its cash cost; it was that nobody has confirmed the parents can qualify for it, which requires $295k-$1.57M of investable assets they may not have. So the honest decision tree has three branches, not two: (a) the parents hold real investable assets, in which case the $150k-gift path wins on cash by $240k and H4P is irrelevant; (b) they hold little, the price lands under ~$492k, and the sized cash gift beats H4P by $26-60k; (c) they hold little, the price lands over ~$545k, and H4P wins on cash by $35-68k. Branch (a) versus (b)/(c) turns on one unanswered question that has been open since 2026-06-30. The research cannot close it. A thirty-minute conversation can.

Where H4P still earns its place, it is not on cash -- it is on risk transfer, and the price of that transfer is the inheritance. Even in branch (c), the $68,088 of cash H4P saves at $600k comes against $753,390 of destroyed year-20 family equity: the balance compounds at the note rate plus 0.5% MIP from day one with no amortization, reaching $835,852 against a $1,083,667 house. That is an 11-to-1 trade in dollars. What the founder buys for it is real and is not denominated in dollars: the required monthly obligation drops from $4,044 to $1,050 (property charges only, with upkeep unbudgeted in every column), the loan is non-recourse, there is no co-signer and therefore no DTI contamination of his own 2027 construction envelope, and the failure mode that [[2026-08-19-asset-depletion-mortgage-qualification]] correctly identified -- "the founder ends up funding it anyway, later, without having planned for it" -- shrinks from a $3,000/mo exposure to an $800-1,050/mo one. If the actual worry is "what happens when they can't make the payment in 2032," H4P addresses it directly and the equity is the premium. If the actual worry is "how much cash leaves my balance sheet in 2027," H4P is the wrong tool at $450-525k and a marginal one at $600k.

Three things should move before the Q1 2027 gate, in this order. First, verify that gift funds are an acceptable monetary-investment source under current Handbook 4000.1 -- ML 2008-33's originating text restricts the down payment to the mortgagor's own cash and liquidated assets, I could not retrieve 4000.1's HECM section to primary, and the founder's entire mechanism is a gift. If the answer is no, the H4P column is void and three of this brief's seven tables are moot. Second, get the mother's birth year and the father's actual birth date. The PLF reads the youngest mortgagor or non-borrowing spouse, so a younger spouse raises the down payment rather than lowering it, and the band between age 62 and 72 is worth $35k at $600k. The vault has only "dad b.~1956" from [[living-family-branch-2026-07-22]] and nothing at all for the mother. Third, ask one lender for an expected rate and a margin in writing. The leading industry table asserts 5.5% "as of 09/30/2026" against a 5.29% 10-year CMT, and the gap between those two worlds is ~$50k per price point -- the largest single swing factor in this analysis and the cheapest to resolve. All three are questions, not projects. Nothing else in the H4P lane is worth another hour of research until they are answered.

Why this is in the vault

This corrects a specific load-bearing line in [[readme]]'s Critical Open Question #1 -- "HECM for Purchase is cheaper in cash than the conventional gift path at both price points" -- which is false against the project's actual $150k-gift plan at every price point, and true against the cash-only path only above a ~$492k break-even and by a third of the stated margin. It replaces the undated 47-52% band in [[2026-08-19-asset-depletion-mortgage-qualification]] with HUD-primary principal limit factors at a named expected rate and as-of date, so the Q1 2027 decision gate in [[milestones]] can price the H4P branch instead of gesturing at it, and it narrows the still-open blocking input from "the parents' whole financial picture" to three specific questions (gift-funds eligibility, the mother's birth year, one lender's expected rate and margin).

Open follow-ups

• Does current FHA Handbook 4000.1 Section II.B permit a Family Member gift as the borrower's required monetary investment on a HECM for Purchase, and does it bar gifts from a party with an interest in the sale? Mortgagee Letter 2008-33's originating text restricts the investment to the mortgagor's own cash and liquidated assets; the published 4000.1 PDF on hud.gov covers Sections I and II.A only and explicitly excludes HECM, and five candidate URLs for the HECM section returned 404. This gates the entire H4P option and could not be verified to primary.
• What is HUD's actual LESA calculation formula (discount basis, life-expectancy table, cushion), and what dollar set-aside would it produce at $450k-$600k of Florida property charges for a 70-year-old? The undiscounted 17-year bound in Step 6 is roughly equal to the entire principal limit at a 7.25% expected rate, which means a Required-Fully-Funded LESA may make H4P functionally unavailable rather than merely expensive. This is the largest unquantified number in the brief.
• What expected rate and lender margin will an actual HECM lender quote this month, and does any lender price off the 10-year SOFR swap rate rather than the 10-year CMT? The leading industry table asserts a 5.5% expected rate "as of 09/30/2026" against Treasury's 5.29% 10-year CMT for the same date. The two worlds differ by ~$50k of required cash per price point, and the discrepancy could not be reconciled from secondary sources.
• Are HECM for Purchase interested-party contributions now permitted, and to what limit? HUD's own HECM calculator exposes a "Cash from Lender/Interested Party Contributions" input field, which implies some allowance, while ML 2008-33's era prohibited seller concessions. If permitted, it reduces the required cash in the H4P column by whatever the cap is and was not modeled here.
• Does the project's actual price range remain $500-700k, and if so what are the H4P and conventional numbers at $650k and $700k? [[readme]] Project B states $500-700k while every model in the vault -- including this one -- runs $450-600k. $700k is above anything anyone has priced, and it is the region where H4P's advantage is largest.
• If the parents' retirement home is in Rhode Island rather than Florida, how do the numbers move? [[living-family-branch-2026-07-22]] has them currently housed with the founder's sister in RI, while every PITI assumption in the vault uses a 1.2% Florida property-tax basis. Higher property charges hurt the conventional column more (they sit inside DTI) and raise any required LESA in the H4P column -- the direction of the break-even shift is not obvious without running it.

Related

• [[2026-08-19-asset-depletion-mortgage-qualification]] - the parent brief; source of the generic 47-52% / 55-60% bands this brief re-prices, and of the $150k-gift and cash-only conventional figures used as the comparison baseline
• [[readme]] - Home Rebuild 2027 + Parents' Retirement Home; Critical Open Question #1 and the "H4P is cheaper in cash at both price points" line that needs correcting
• [[milestones]] - the Q1 2027 decision gate and the 2026-04-18 $150k gift-sizing decision
• [[living-family-branch-2026-07-22]] - the only vault source for the father's approximate birth year, and the record that the parents are currently housed with the founder's sister in Rhode Island
• [[2026-08-14-construction-to-permanent-loans-florida]] - the founder's own jumbo build envelope, the capacity H4P protects by having no co-signer
• [[2026-08-25-jumbo-portfolio-overlays-contingent-liability]] - what a co-signed PITI costs the founder's borrowing capacity under portfolio overlays
• [[2026-08-25-florida-intra-family-purchase-money-note]] - the third structure; mutually exclusive with H4P, since a HECM must be the only lien
• [[2026-06-04-home-affordability-build-vs-buy]] - the "don't fund the gift and the full-stretch build in the same window" constraint
• [[index]] - Finance Pulse longitudinal index, where "Parents' mortgage qualification clear" has been Unknown since 2026-06-30

Sources

Vault

• ~/rdco-vault/06-reference/research/2026-08-19-asset-depletion-mortgage-qualification.md
• ~/rdco-vault/01-projects/home-rebuild-2027/README.md
• ~/rdco-vault/01-projects/home-rebuild-2027/milestones.md
• ~/rdco-vault/01-projects/life/family-history/living-family-branch-2026-07-22.md
• ~/rdco-vault/06-reference/research/2026-08-25-jumbo-portfolio-overlays-contingent-liability.md
• ~/rdco-vault/06-reference/research/2026-08-25-florida-intra-family-purchase-money-note.md

Primary (HUD / Treasury), retrieved 2026-10-01

• HUD FHA, "Factors for Determining Borrower's Principal Limit," HECM Program report V2.5, case numbers assigned on/after 10/02/2017 - https://entp.hud.gov/idapp/html/f17hecm-calc-factor.cfm?RptCaseAssign=3 (PLF grid by age and expected rate; UFMIP 2.00% of MCA, annual MIP 0.50% of loan balance stated in the same table)
• HUD Mortgagee Letter 2008-33, "HECM for Purchase" - https://www.hud.gov/sites/documents/08-33ml.pdf (60-day occupancy; eligible/ineligible property types incl. cooperatives and newly constructed without a Certificate of Occupancy; monetary investment; funding sources "cash on hand or cash from the sale or liquidation of the mortgagor's assets"; gap-financing prohibition; enhanced counseling requirement)
• HUD Mortgagee Letter 2014-07, Non-Borrowing Spouse - https://www.hud.gov/sites/documents/14-07ml.pdf ("the mortgagee must base the Principal Limit on the age of the youngest mortgagor or Non-Borrowing Spouse")
• HUD Mortgagee Letter 2015-15, Non-Borrowing Spouse deferral and assignment paths - https://www.hud.gov/sites/documents/15-15ml.pdf
• HUD, HECM Financial Assessment (FHA Connection guide, updated 01/2026) - https://entp.hud.gov/pdf/mp_sfo12_hcm_fin_assessmnt.pdf (residual-income standard and shortfall test; LESA levels Not Required / Voluntary-Fully Funded / Required-Fully Funded / Required-Partially Funded)
• US Treasury, Daily Treasury Par Yield Curve Rates, 2026 - https://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treasury_yield_curve (10-yr CMT 5.29%, 1-yr 4.54% on 09/30/2026)
• HUD, FHA 2026 loan limits announcement (HECM maximum claim amount $1,249,125) - https://www.hud.gov/news/hud-no-25-145 (via [[2026-08-19-asset-depletion-mortgage-qualification]])

Secondary

• reverse.mortgage, "HECM for Purchase" (page updated 2026-09-26) - https://reverse.mortgage/purchase (down-payment-by-age table stamped "5.75% rate / 5.5% expected rate as of 09/30/2026"; eligibility summary; the family-gift funding-source claim that conflicts with ML 2008-33's originating text)
• Land Home Financial Services, "Principal Limit Factor Table" (6/28/2021 reproduction of the HUD table) - https://cdn.lhfs.com/lhfscdn/wholesale/download/Principal_Limit_Table_Reverse.pdf (corroborates the HUD PLF values at ages 62/72 and the 2.00% / 0.50% MIP structure)

Explicit non-verifications

• FHA Handbook 4000.1 Section II.B (HECM) could not be retrieved. The published handbook PDF at hud.gov/sites/dfiles/OCHCO/documents/4000.1hsgh.pdf covers Sections I and II.A and states it applies "except for Home Equity Conversion Mortgages"; five candidate URLs for the HECM section returned 404, and hud.gov's HECM program page exposes no handbook link. All H4P mechanics here rest on Mortgagee Letters, which 4000.1 may have amended -- most importantly on whether gift funds are an acceptable monetary investment.
• The lender margin (1.96% assumed) is not sourced to a rate sheet. The expected rate is therefore a construction, not a quote.
• The 30-year conventional rate (7.00%) is not sourced to a rate sheet.
• HUD's LESA calculation formula was not located; Step 6 is an undiscounted upper bound, explicitly not HUD's method.
• Third-party H4P closing costs ($4,000) are an estimate; reverse.mortgage states no figure and no primary cap exists beyond the origination-fee formula.
• Whether interested-party contributions are permitted on H4P is unresolved (HUD's calculator exposes the field; ML 2008-33's era prohibited seller concessions).
• The 2026 annual gift-tax exclusion was not verified, so the lifetime-exemption consequence of a $307k-$474k gift versus $150k is not quantified here.
• Rhode Island property-tax and insurance figures were not researched; all property-charge figures use the Florida basis inherited from [[2026-08-19-asset-depletion-mortgage-qualification]].
• Every figure attributed to the parents (ages, Social Security, debts, assets) is a labeled guess per the Inputs table. None is a vault fact.