Turning Home Equity Into Long-Term Care: A Guide for Family Caregivers

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Over 63 million Americans are currently serving as caregivers—and the financial and emotional toll is staggering.

Recent findings from AARP and the National Alliance for Caregiving paint a sobering picture: caregiving isn’t merely an emotional journey—it’s a significant financial burden that affects millions of families.

The 2025 Caregiving in the U.S. study shows that nearly 1 in 4 American adults provides care for someone with a medical condition or disability. Remarkably, 40% of these caregivers handle complex medical responsibilities, including giving injections and operating medical equipment.

These largely unpaid family members form the foundation of our nation’s long-term care infrastructure—supporting elderly parents, spouses, and adult children with chronic conditions, frequently sacrificing their own financial security, careers, and wellbeing in the process. As healthcare expenses climb and public assistance programs face increasing pressure, families need viable solutions to finance care. One frequently overlooked resource? The equity in their homes.

Table of Contents

The True Cost of Family Caregiving

The AARP/NAC study exposes the extent of caregiver sacrifice:

$7,200 annually typical out-of-pocket expenses
Nearly half experience significant financial hardship
1 in 5 describe their personal health as fair or poor
Just 11% receive proper training for medical responsibilities
40+ hours weekly is the time investment for a quarter of all caregivers

These expenses compound existing retirement challenges—including inflation pressures, healthcare bills, unexpected home repairs, and dwindling retirement accounts.

Understanding the Long-Term Care Challenge

Requiring long-term care isn’t an exception, it’s the norm for most seniors.

Data from the 2025 Genworth/CareScout Cost of Care Survey reveals:

70% of Americans over 65 will need long-term care services
20% will need care lasting more than five years
$80,080 annually – median expense for home health aide services
$74,400 per year – typical assisted living facility cost

Many people mistakenly believe Medicare covers long-term care expenses. It doesn’t. Medicaid provides limited coverage, but only for individuals with minimal income and assets.

The Long-Term Care Insurance Question

Long-term care insurance can provide protection, but it’s frequently inaccessible.

Premiums are costly, applications are often rejected based on health status, and rates increase substantially with age. Very few seniors have this coverage. This leaves most families searching for alternatives when they need help most.

Home Equity: An Underutilized Resource for Care Funding

For homeowners 62 and above, home equity typically represents their most valuable asset. American seniors collectively hold more than $13 trillion in housing wealth.

However, unless this equity is tapped, it remains unavailable for funding care needs.

Here’s how three popular equity access methods compare:

Financing Option	Monthly Mortgage Payment Required	Age Requirement	When Repayment Begins
HELOC (Home Equity Line of Credit)	Yes	None	Interest-only during draw period (typically 10 years), then principal & interest (typically 20 years)
Home Equity Loan	Yes	None	Fixed repayment term (often 30 years)
HECM Reverse Mortgage	No (Borrower must maintain property taxes and insurance)	62+	When last borrower leaves home permanently

Now let’s examine the retirement-focused solution designed specifically for older homeowners.

HECM Reverse Mortgage: A Versatile Retirement Tool

The Home Equity Conversion Mortgage (HECM) is the sole reverse mortgage backed by the Federal Housing Administration (FHA). It’s specifically created for homeowners aged 62 and older and offers flexible equity access.

Proceeds can be distributed as:

A lump sum payment
Monthly installments (for a set period or lifetime)
A credit line
Or any combination of these options

With a HECM, the borrower has no obligation to make monthly mortgage payments. Instead, they’re responsible for the property charges they already had to pay, such as taxes, insurance, and home upkeep. Interest and loan fees accumulate over time, causing the loan balance to increase. Borrowers may make voluntary payments of any amount, whenever they choose, to control the balance growth or for tax purposes. Repayment isn’t required until the property is sold, the borrower relocates permanently, or passes away. The FHA’s non-recourse protection ensures that neither borrowers nor their heirs will owe more than the home’s value when sold.*

Using a HECM to Cover Long-Term Care Expenses

HECM proceeds can help manage long-term medical care costs without depleting retirement savings or creating burdens for adult children.

These funds can:

Cover long-term care insurance premium payments upfront
Pay entrance fees for assisted living or memory care facilities (allowing one spouse to receive care while the other remains home)
Finance part-time or full-time home care services
Fund home modifications for aging in place
Provide financial compensation for family caregivers who reduce their work hours

While home equity has value, it provides no practical benefit unless the home is sold or the equity is accessed.

HECM Line of Credit: Strategic Planning for Future Care

One of the HECM’s most valuable features is the expanding line of credit.

Unlike traditional HELOCs, the HECM credit line:

Increases over time (unused funds grow, expanding available credit)
Cannot be frozen or reduced regardless of market conditions
Has no expiration date for accessing funds
Features more accessible qualification for senior homeowners
Eliminates mandatory monthly mortgage payments (borrower must pay essential property charges like taxes and insurance)

Consider this example based on a 6.75% annual interest rate with no withdrawals:

After 20 years: $848,911
Starting HECM Line of Credit: $200,000
After 5 years: $287,070
After 10 years: $412,056

When Relocation Is the Answer: H4P Loans Support Better Living Situations

Sometimes optimal care doesn’t mean staying put—it means moving. Whether downsizing to a more manageable property, relocating near family, or choosing a single-story home that accommodates mobility challenges, the right move can make caregiving more feasible.

For homebuyers 62 and older, a HECM for Purchase (H4P) loan enables them to purchase a new primary residence with improved cash flow management.

Unlike conventional mortgages, an H4P eliminates monthly mortgage payments as long as borrowers fulfill loan requirements such as maintaining property taxes and insurance. The loan becomes due when the last borrower moves out permanently, sells the property, or passes away. And unlike an all-cash purchase that locks up substantial assets, an H4P typically requires only 50 to 70% of the purchase price as a down payment, with the balance financed through the loan. The precise percentage depends on the youngest borrower’s age and additional factors.

Without required monthly mortgage payments, an H4P provides the benefits of a cash purchase while preserving more savings for other needs. This creates greater financial flexibility.

This approach can facilitate “right-sizing” into a safer, more caregiver-friendly home without exhausting savings or relying on adult children. When used strategically, H4P can reduce both financial pressure and caregiving burden—leading to better outcomes for the entire family.

Let’s Discuss Your Options

Caregiving ranks among life’s most meaningful responsibilities, but it shouldn’t compromise your financial security.

With long-term care expenses climbing and family caregivers facing unprecedented pressure, it’s essential to reconsider how we finance care. For many senior homeowners, a HECM reverse mortgage provides:

Greater flexibility in where and how to age
Reduced financial burden on family members
A reliable, adaptable funding source for future needs

If you or a loved one is preparing for long-term care needs, I encourage you to consult with our team. The sooner you explore your options, the more empowered your decisions will be.

*There are some circumstances that will cause the loan to mature and the balance to become due and payable. Borrower is still responsible for paying property taxes and insurance and maintaining the home. Credit subject to age, property and some limited debt qualifications. Program rates, fees, terms and conditions are not available in all states and subject to change.

**This advertisement is not tax or financial advice. Please consult a tax advisor or financial advisor for your specific situation.

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