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.
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.
All four also share a risk worth saying up front: the house is the collateral. Fall behind, and you can lose it.
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.
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.
Two things make a HELOC tricky on a fixed income.
First, the rate is usually variable. Your payment can rise if rates rise.
Second, payments often jump sharply when the repayment period starts. 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.
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.
CFPB describes it as a second mortgage: a single loan against your equity, separate from your first mortgage.
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.
Option #3: Cash-Out Refinance
A cash-out refinance replaces your existing mortgage with a larger one, and you pocket the difference in cash.
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.
Option #4: Reverse Mortgage
A reverse mortgage is the odd one out, because it requires no monthly payments.
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. You keep the title to your home.
Instead of you paying the lender, interest and fees get added to the loan balance each month, so the balance grows over time. The loan gets repaid later, usually from selling the home.
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. That includes being away more than 12 consecutive months in a healthcare facility like a hospital, nursing home, or assisted living.
A HECM is also non-recourse. Neither you nor your heirs will ever owe more than the home is worth. And before you can get one, you must complete counseling with a HUD-approved counseling agency.
For a deeper walk-through of how this works, see our full guide to using a reverse mortgage to pay for senior care.
How the Four Compare
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.
| Option | Monthly payment required? | Rate | Who qualifies | If the owner moves to a facility |
|---|---|---|---|---|
| HELOC | Yes, during draw and repayment | Usually variable | Income and credit qualification | Payments continue; the home stays at risk |
| Home equity loan | Yes, fixed installments | Usually fixed | Income and credit qualification | Payments continue; the home stays at risk |
| Cash-out refinance | Yes, on the new mortgage | Fixed or variable | Income and credit qualification | Payments continue; the home stays at risk |
| Reverse mortgage (HECM) | No | Variable balance growth | Owner age 62+, principal residence | Comes due after 12+ months away |
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.
Which 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. 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. 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. 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. 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.
For how these tools sit alongside Medicaid, long-term care insurance, and other funding, see our guide to paying for senior care.
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.
- Closing costs apply. Each of these carries closing costs that come off what your family eventually keeps.
- You still owe the carrying costs. With any of them, you must keep paying property taxes, homeowners insurance, and upkeep. Fall behind, and even a reverse mortgage can be called due.
- Equity shrinks for heirs. Every option reduces the equity left to family. A reverse mortgage in particular spends it down as the balance grows.
- Fixed income, fixed risk. A monthly-payment loan keeps demanding payment even after a facility move, when household finances are often tightest.
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.
Frequently Asked Questions
A HELOC is a revolving line of credit you repay monthly, usually at a variable rate. A reverse mortgage requires no monthly payment, but the balance grows and the loan comes due when the owner leaves the home. A HELOC keeps billing you even after a facility move; a reverse mortgage fits care at home better than a permanent facility stay.
Usually none of the borrowing options, and usually not a reverse mortgage either if your parent lives alone. A reverse mortgage comes due after 12 months away in a facility, forcing a sale. Selling the home or qualifying for Medicaid often fits a permanent facility move better than tapping equity.
For a HELOC, a home equity loan, and a cash-out refinance, yes. All three require income and credit qualification, which is harder on a fixed retirement income. A reverse mortgage instead keys on the owner being 62 or older with the home as a principal residence.
Yes. All four put the home up as collateral. With the three loans, missing monthly payments can lead to foreclosure. Even a reverse mortgage can be called due if you stop paying property taxes, insurance, or upkeep.
Less than before, in every case. Each option reduces home equity, and a reverse mortgage spends it down as the balance grows. A HECM is non-recourse, though, so heirs never owe more than the home is worth.
Learn More
- How to Pay for Senior Care
- Using a Reverse Mortgage to Pay for Senior Care
- How Long-Term Care Insurance Works
- Using Life Insurance to Pay for Senior Care
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.