Paying for In-Home Care: Is a Reverse Mortgage an Option?

For seniors who have significant equity in their homes but may be a little short on cash, reverse mortgages can offer a greater sense of stability. A reverse mortgage lets you borrow against your home equity without having to make monthly loan payments, so it gives you the financial freedom to cover unexpected costs.

Many seniors who take out reverse mortgages use the funds to pay down high-interest debt, pay for home repairs, or supplement daily living costs. Others create emergency funds. But is a reverse mortgage a viable way to pay for in-home care?

Why In-Home Care Costs Are Rising

The cost of in-home care has gone up every year.

According to recent studies, the average cost of a home health aide is now over $30 per hour in many states. That can add up to more than $60,000 per year if you need daily care.

For many retirees, Social Security or pensions don’t cover that much.

That’s why more homeowners are looking for ways to use their home equity to pay for care — without taking on new debt or selling their homes.

Can You Use a Reverse Mortgage to Pay for In-Home Care?

The short answer is yes — you can use reverse mortgage proceeds to pay for in-home care. However, before you decide this is the route you want to take, it’s important to consider reverse mortgage requirements and to look closely at all available options for funding in-home care.

How a Reverse Mortgage Can Help With Care Costs

A reverse mortgage can turn part of your home value into cash you can use right away.
You can use those funds to:

• Pay caregivers or home health aides
• Make your home safer and easier to live in (like adding ramps or walk-in showers)
• Cover medical bills or prescriptions
• Build an emergency savings cushion

Because you don’t make monthly payments, the money you get can go directly toward the care and comfort you need — not back into another loan.

Qualifying for a Reverse Mortgage

Before you start digging into the logistics of paying for in-home care in the future, take a moment to see if you’re a candidate for a reverse mortgage. These are some of the most important qualifications:

• You must be at least 62
• You must either own your home or have substantial home equity
• The home must be your primary residence
• You must continue to pay property taxes and homeowners’ insurance
• You must not have delinquent taxes or other federal debt
• You must complete loan counseling from an approved agency

Before you can be approved for a reverse mortgage, your home will have to pass an inspection. In some cases, you may need to complete repairs before receiving funds. Use our easy reverse mortgage calculator to see how much equity you can unlock.

In-Home Care and Reverse Mortgages: Key Considerations

Just like taking out a traditional forward mortgage, taking out a reverse mortgage is a major decision, and it’s not one you should rush into. Here are some of the most important factors to consider:

Residency Requirements

Some people who would prefer in-home care ultimately need to move to a nursing home or assisted living facility. If you have a reverse mortgage, this may pose a problem.

A reverse mortgage requires you to maintain your home as your primary residence. If you move away for more than 12 months, the loan may immediately be due. If you can’t pay it, you run the risk of losing your home.

However, if you have a co-borrower (like a spouse) who still lives in the home, you’ll still be compliant with the loan terms.

What Happens If You Need to Move into a Care Facility

If you have to move into a nursing home or assisted living for more than 12 months, your reverse mortgage could come due.

That means the loan balance would need to be paid off — usually by selling the home.

If you have a spouse or co-borrower who still lives in the home, the loan stays active and nothing changes.

If not, your family will have the option to sell the house, pay the balance, or transfer ownership to the lender.

Talking through this possibility ahead of time helps make sure everyone understands what will happen if long-term care becomes necessary.

Lump Sum, Installments, or Line of Credit?

If you’re approved for a reverse mortgage, there are three primary ways you can access the proceeds:

• Lump Sum: Receive all proceeds at once
• Installments: Receive regular (usually monthly) payments
• Line of Credit: Only access funds when you need them

If you primarily want to make sure you can afford in-home care if you need it, getting your reverse mortgage as a line of credit may be the best choice. However, if you also anticipate using the funds for other purposes, installments (or even a lump sum) may be more appropriate.

Choosing the Right Payment Option

The best setup depends on your care plan:

• Lump sum: good if you need to pay for home upgrades or large medical bills all at once.
• Monthly payments: steady income for regular caregiver costs.
• Line of credit: flexibility to use funds only when needed — and the available credit grows over time.

For many people planning for possible future care, the line of credit option is ideal. It keeps funds available and growing until you need them.

Alternatives to a Reverse Mortgage

A reverse mortgage can help you pay for in-home care, but it’s not your only option. Depending on your income, you may qualify for government programs to help with in-home care. You also may choose to purchase long-term care insurance.

Long-term care insurance premiums can be more costly than many people realize. One option is to take out a reverse mortgage and then use some or all of the proceeds to pay for a long-term care insurance policy.

Example – Using a Reverse Mortgage for In-Home Care

Let’s say Linda, age 74, owns her home outright and qualifies for a reverse mortgage.
Her reverse mortgage line of credit gives her access to $180,000 in available funds.

Over the next few years, she uses:

• $40,000 to pay for part-time in-home care
• $15,000 for bathroom and ramp modifications
• $5,000 for unexpected medical costs

She still has more than $100,000 left in her credit line that continues to grow each year — and she never makes a monthly mortgage payment.

This approach lets her stay in her home comfortably while keeping her finances predictable.

Plan for the Future

It’s worth considering how your heirs will handle your reverse mortgage after your death. Generally, they can choose one of three options:

• Sell the home and use the proceeds to pay off the loan
• Keep the home and pay the loan themselves
• Deed in lieu of foreclosure (signing the home over to the lender)

After your death, your heirs will usually have some time to decide how to handle the loan and the home. If you do take out a reverse mortgage, it’s worth explaining the situation to your loved ones so they understand their options after you pass away.

Planning Ahead for Family and Finances

Before you take out a reverse mortgage, it’s smart to include your family in the conversation.
Make sure they understand:

• How the loan works and when it’s repaid
• What happens if you move or pass away
• The options your heirs will have with the home

You may also want to talk with a financial advisor to see how a reverse mortgage fits with your other retirement plans.

When everyone’s on the same page, it’s much easier to use this tool with confidence and peace of mind.

Considering a Reverse Mortgage?

A reverse mortgage can grant you freedom and peace of mind during retirement. However, this option isn’t right for everyone. At South River Mortgage, we want to help you find the solutions that work best for you. Get in touch today to learn more. Take a minute to see how much equity you can unlock with our reverse mortgage calculator.

FAQ – Paying for In-Home Care With a Reverse Mortgage

Can I use a reverse mortgage to hire a family member as a caregiver?

Yes, as long as they’re being paid for real caregiving services, not as a gift. Keep good records for tax and benefit purposes.

What if I need to move out for rehab or a short hospital stay?

Short-term absences don’t affect your reverse mortgage. The 12-month rule only applies to long-term moves.

Will getting a reverse mortgage affect my Medicare or Social Security?

No. Reverse mortgage proceeds aren’t counted as income and won’t affect these benefits.

Can I still qualify if I already have a small mortgage?

Yes. The reverse mortgage will first pay off that balance, and you’ll receive the remaining funds.

How fast can I get approved?

Once counseling and paperwork are done, most reverse mortgages close in about 30 to 45 days.