Paying for In-Home Care: How Your Parents’ Home Equity Can Help
The cost of senior care in the United States continues to rise, and many families are caught off guard. In-home care alone can run $60,000–$96,000 per year — and most families haven’t planned for it. If your parents own their home, the equity built up over decades of mortgage payments may be the key to funding the care they need.
The Real Cost of Senior Care
According to the Genworth Cost of Care Survey, the national median costs for senior care in 2024 are:
| Type of Care | Monthly Cost | Annual Cost |
|---|---|---|
| In-Home Care (Non-Medical) | $5,000–$8,000/month | $60,000–$96,000 |
| Home Health Aide (Medical) | $6,000–$12,000/month | $72,000–$144,000 |
| Assisted Living Facility | $4,000–$8,000/month | $48,000–$96,000 |
| Memory Care | $6,000–$10,000/month | $72,000–$120,000 |
| Nursing Home (Skilled Nursing) | $8,000–$15,000/month | $96,000–$180,000 |
How a Reverse Mortgage Can Fund Care
For many families, the largest untapped asset is the equity in their parents’ home. A reverse mortgage allows seniors to access this equity without selling the home or making monthly payments. Here’s how the math works in practice:
- 1 Home equity is converted to cash through a reverse mortgage line of credit or monthly payments.
- 2 No monthly mortgage payments means more income available for care expenses.
- 3 The line of credit grows over time, providing increasing access to funds as care needs increase.
- 4 The non-recourse feature protects the family from owing more than the home is worth.
The Line of Credit Growth Advantage
One of the most powerful — and least known — features of a reverse mortgage is the growing line of credit. If your parents set up a reverse mortgage line of credit but don’t use it immediately, the available balance grows at the same rate as the loan’s interest rate plus the mortgage insurance premium. This means the credit line increases every year, even if the home’s value doesn’t change.
This is ideal for care planning because care needs often escalate gradually. Your parents can establish the line of credit now while they’re healthy, and draw from it as needed over time — with the balance growing each year to match increasing care costs.
Important Considerations
Medicaid Implications
If your parent receives or may need Medicaid, reverse mortgage proceeds must be carefully managed. Loan proceeds received in a month and not spent on allowed expenses may count as assets, potentially affecting Medicaid eligibility. Consult with an elder law attorney before proceeding.
Tax Planning
Reverse mortgage proceeds are generally not considered taxable income. However, how the funds are used (for care services) may have tax implications. A qualified tax professional can help you understand the potential benefits.
Long-Term Planning
A reverse mortgage is most effective when it’s part of a comprehensive care plan. Work with a financial advisor, elder law attorney, and your loan officer to ensure the reverse mortgage fits into the bigger picture of your parent’s care strategy.
“I had a daughter call me last year. Her mother was in declining health, and they were looking at $7,000 a month for in-home care. They had no idea the equity in her mom’s home could cover it. Two months later, her mom was receiving care at home, no monthly mortgage payment, and the family had peace of mind.”
— Adam Heaney
Planning for Your Parents’ Care?
Adam can help you understand how much equity is available and whether a reverse mortgage can fund the level of care your parents need.
Schedule a Free Consultation