Reverse mortgage vs. downsizing
Stay, sell, or do both?
JP Dauber · Licensed HECM Specialist
NMLS# 386298 · Published March 31, 2026
What are the real costs of downsizing?
Downsizing sounds simple — sell the big house, buy something smaller, pocket the difference. But the costs add up fast:
Selling costs: 5–6%
On a $500,000 home, that's $25,000–$30,000 in agent commissions alone. Add closing costs and repairs, and you're at $35,000+.
Buying costs
The new home has its own closing costs, inspections, and potentially a new mortgage payment. Plus higher property taxes if you're in a Prop 13 state.
Moving expenses
Movers, storage, temporary housing. Budget $5,000–$15,000 depending on distance and complexity.
The hidden cost: your life
Your neighborhood, your neighbors, your doctor, your routines. The financial math never captures what it costs to leave 20 years of community behind.
What does staying with a HECM look like?
A reverse mortgage on the same $500,000 home gives you access to roughly $210,000–$300,000 (depending on your age and rates) — with no monthly mortgage payment, no moving costs, and no disruption to your life.
The trade-off: you access less total equity than selling, and the balance grows over time. But your housing is settled, your costs are predictable, and you keep everything that makes your home home.
The third option: sell and HECM for Purchase
If you are ready to move — downsizing, relocating closer to family, or going somewhere warmer — there's a path that gives you the best of both:
Sell your $500,000 home → net ~$465,000
After commissions and costs.
Buy a $350,000 home with HECM for Purchase → ~$175,000 down
The HECM covers the rest. No monthly mortgage payment on the new home.
Keep ~$290,000 in cash
Liquid money in the bank. No mortgage payment. New home. That's a powerful retirement position.
This is the option most people don't know about. For retirees who are ready to downsize, it's often the strongest financial move available. Learn more in our HECM for Purchase guide.
Explore reverse mortgage options in your state
Whether you stay or move, we can help. We serve homeowners in Arizona, California, Colorado, Florida, Idaho, and Texas.
Run both sets of numbers
If you want to stay, a reverse mortgage lets you access equity without moving. If you're ready to go, selling works — but consider HECM for Purchase to keep the cash and eliminate the payment on your next home. The right answer depends on your life, not just the math.
Not sure which path fits? Schedule a conversation and I'll run the numbers for all three scenarios.
Keep reading
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