Home Equity Options to Pay for Senior Care Compared

Home equity options to pay for senior care come down to four tools: a HELOC, a home equity loan, a cash-out refinance, and a reverse mortgage. Three of them require a monthly payment. One doesn't. That single difference usually decides which fits your family.1

This guide compares all four, then helps you match the right one to your situation, whether care happens at home or in a facility, and whether a spouse stays in the house.

Why Families Tap the House

Care is expensive, and few people have the cash for it sitting in a bank account. Many older homeowners have it in their house instead.

Home equity is the difference between what the house is worth and what you still owe on it. The four tools below all turn some of that equity into cash for care. They differ in how you get the money, whether you make payments, and what happens when your loved one moves out.1

All four also share a risk worth saying up front: the house is the collateral. Fall behind, and you can lose it.1

Option #1: HELOC

A home equity line of credit (HELOC) is a revolving line secured by your home. According to the Consumer Financial Protection Bureau (CFPB), it works like a credit card backed by your house.1

You draw money as you need it, up to a set limit, during a draw period. Then comes the repayment period, when the draw stops and you pay back what you borrowed.1

Two things make a HELOC tricky on a fixed income.

First, the rate is usually variable. Your payment can rise if rates rise.1

Second, payments often jump sharply when the repayment period starts.1 A bill that felt manageable during the draw years can become a strain later.

A HELOC fits paying care bills month to month, because you draw only what you use. But it demands monthly payments the whole time, and missing them can mean losing the home.1

Option #2: Home Equity Loan

A home equity loan hands you a lump sum up front. You repay it in fixed monthly installments, usually at a fixed rate.1

CFPB describes it as a second mortgage: a single loan against your equity, separate from your first mortgage.1

The fixed rate is the appeal. Your payment doesn't move, so it's easier to budget than a HELOC. The trade-off is the lump sum. You take the full amount, and interest, on day one, even if care costs unfold slowly over years.

This tool fits a large, known cost, such as paying for a stretch of care you can estimate, or covering home modifications. Like every loan here, it requires monthly payments that continue even after a facility move.1

Option #3: Cash-Out Refinance

A cash-out refinance replaces your existing mortgage with a larger one, and you pocket the difference in cash.1

So instead of adding a second loan, you reset your first one at a higher balance. You walk away with cash for care and a new mortgage payment going forward.

This can make sense if today's rates beat your current mortgage rate, or if you want one payment instead of two. It makes less sense if refinancing means trading a low existing rate for a higher one across your whole balance.

A cash-out refinance is still borrowing with a monthly payment, and it keeps demanding that payment after a facility move.1

Option #4: Reverse Mortgage

A reverse mortgage is the odd one out, because it requires no monthly payments.2

The most common version is the Home Equity Conversion Mortgage (HECM), the only reverse mortgage insured by the federal government, available to homeowners age 62 or older on their principal residence.2 You keep the title to your home.2

Age is only the first gate, and this is where families get a surprise. The CFPB requirements also include:

• The home is your principal residence, meaning where you live for a majority of the year.
• You own it outright or carry a low mortgage balance, and you can pay any remaining balance off when the reverse mortgage closes. You can use your own funds or money from the reverse mortgage itself to clear it.
• You owe no federal debt, such as federal income taxes or federal student loans. Money from the reverse mortgage may be used to pay that debt off.
• You have enough of your own money, or agree to a set-aside out of the loan at closing, to cover ongoing property charges plus maintenance and repair costs.
• The home is in good shape and meets the required property standards.
• You complete counseling with a HUD-approved reverse mortgage counseling agency before the loan.2

So age alone doesn't qualify anyone. A remaining mortgage or federal debt has to be paid off, with your own money or with money from the reverse mortgage, and the house has to meet the property standards.2

Instead of you paying the lender, interest and fees get added to the loan balance each month, so the balance grows over time.2 The loan gets repaid later, usually from selling the home.

The CFPB describes three main ways to take the money: a line of credit, a monthly payout, or a lump sum.2 The monthly payout comes as either term payments, fixed for a set number of years, or tenure payments, fixed for as long as you keep up the reverse mortgage, and the line of credit and the monthly payout can be combined with each other. For ongoing care at home, the line of credit or tenure payments usually fit best, because they release cash as bills arrive instead of all at once, and because a lump sum charges interest and fees on the whole amount from closing.

How much a borrower can actually draw is called the principal limit, and CFPB says it is calculated from the age of the youngest borrower or eligible non-borrowing spouse, the interest rate on the loan, and the maximum claim amount, which is the lesser of the home's appraised value, its sale price, or the ceiling FHA will insure.2 For FHA case numbers assigned on or after January 1, 2026, that ceiling is $1,249,125, up from $1,209,750 in calendar year 2025, and it applies in all areas of the country.2 Read it as a cap on the home value FHA will insure, not as cash your family will receive. HUD describes a HECM as letting a borrower withdraw a portion of the home's equity.2

Here's the rule that defines a reverse mortgage. It becomes due and payable when the last borrower (or an eligible non-borrowing spouse) dies, sells the home, or stops living there as a principal residence.2 That includes being away more than 12 consecutive months in a healthcare facility like a hospital, nursing home, or assisted living.2

A HECM also has a floor under it. If the loan balance is more than the value of the home, the CFPB says you or your heirs “may not have to pay the difference”: heirs settling a loan larger than the home is worth won't have to pay more than 95 percent of the appraised value, and mortgage insurance covers the remaining balance.2

And the loan does not end your obligations on the house. You are required to pay property taxes and homeowners insurance, use the property as your principal residence, and keep it in good condition. Property charges are broader than most people assume: where they apply they also include flood insurance premiums, ground rents, condominium fees, planned unit development fees, homeowners' association fees, and other special assessments.1 The CFPB warns that failing to meet these obligations would cause the loan to fall into default and may lead to foreclosure.2

For a deeper walk-through of how this works, see our full guide to using a reverse mortgage to pay for senior care.

How Home Equity Options to Pay for Care Stack Up

The differences matter most along four lines: do you owe a monthly payment, is the rate fixed or variable, who can qualify, and what happens when your loved one moves to a facility.

The pattern is clear. The first three keep billing you no matter where your loved one lives. The reverse mortgage flips that, no payments while they stay home, but a reckoning once they leave it for good.1,2

Which Home Equity Option to Pay for Care Fits Your Situation

Match the tool to the care, not the other way around.

Care will happen at home. A reverse mortgage often fits best. It funds care year after year with no monthly payment, and the 12-month clock never starts while your loved one lives in the house.2 A HELOC also works if you'd rather draw smaller amounts and can carry the payments.

One spouse needs care; the other stays home. A reverse mortgage suits this well. As long as a borrower or an eligible non-borrowing spouse keeps the house as a principal residence, the loan stays in place.2 That can keep the remaining spouse in the home instead of facing a forced sale.

A single person is moving permanently into a facility. A reverse mortgage usually backfires here. After 12 months away, the loan comes due and the house typically has to be sold, often at the worst possible moment.2 Selling the home outright, or qualifying for Medicaid, generally fits better.

You need a fixed, predictable payment. A home equity loan gives you a lump sum at a fixed rate.1 Just be sure the household income can carry that payment for years, including after a facility move.

You'd benefit from resetting your mortgage. A cash-out refinance can fold cash for care into a single new loan, which helps if the new rate beats your old one.1

For how these tools sit alongside Medicaid, long-term care insurance, and other funding, see our guide to paying for senior care.

Home Equity and Medicaid Eligibility

If long-term-care Medicaid is anywhere in the plan, the equity in the house is already part of that calculation, so tapping it is not a neutral move.

For 2026, Medicaid's home equity limit for long-term care runs from a federal minimum of $752,000 to a state-set maximum of $1,130,000, and the figure rises each year with the Consumer Price Index. An applicant whose equity interest in the home is above the figure their state uses is not eligible for nursing facility services or other long-term care assistance.3

The limit is switched off entirely, not merely raised, when a protected relative lives in the house. Federal law says it does not apply if the applicant's spouse, a child under 21, or a blind or permanently and totally disabled child is lawfully residing in the home.3 That is why the case where one spouse stays in the house looks so different from the single applicant's.

Federal law also says, in so many words, that nothing in the equity rule “shall be construed as preventing an individual from using a reverse mortgage or home equity loan to reduce the individual's total equity interest in the home.”3 So equity above the limit is not a permanent bar to Medicaid. Whether making that trade is wise is a separate question, and one for an elder-law attorney in your state: converting equity into cash changes what your loved one holds, not whether they hold it. Our guide to what counts as an asset for Medicaid sorts the home, cash, and other holdings into countable and exempt.

Cautions Before You Sign

Every option here carries the same core risks. Know them going in.

• The house is collateral. All four put your home up as security. With the three loans, missing payments can lead to foreclosure.1
• Closing costs apply. Each of these carries closing costs that come off what your family eventually keeps.1
• You still owe the carrying costs. With any of them, you must keep paying property taxes, homeowners insurance, and upkeep. With a reverse mortgage that is not a nicety: paying the property charges on time, living in the home as your principal residence, and keeping it in good repair are the loan's requirements, and failing them would cause it to fall into default and may lead to foreclosure.1,2
• Equity shrinks for heirs. Every option reduces the equity left to family. A reverse mortgage in particular spends it down as the balance grows.1
• Fixed income, fixed risk. A monthly-payment loan keeps demanding payment even after a facility move, when household finances are often tightest.1

Because the stakes run into the hundreds of thousands of dollars, talk through your specific situation with a financial advisor or elder-law attorney before you sign. For a reverse mortgage, the HUD-approved counseling is required anyway, so use it.

Learn More

Find personalized help comparing home equity options to pay for your family's care at brevy.com.

The information on Brevy.com is for educational purposes only and is not a substitute for professional legal, financial, or medical advice. Rules vary by state and program and change frequently. Always verify with the relevant agency or a qualified professional. Brevy is not a law firm, financial advisor, or healthcare provider.