Reverse Mortgage and Long-Term Care
Using Home Equity to Fund Your Care Options
JP Dauber
NMLS# 386298 · Published April 28, 2026
The long-term care gap most people face
About 70% of people turning 65 today will need some form of long-term care during their lifetime. The average cost of a home health aide is over $60,000 a year. A private room in a nursing home tops $100,000.
Medicare covers very limited skilled nursing care — usually only short-term rehab after a hospital stay. It doesn't cover custodial care, which is what most people actually need: help with bathing, dressing, meals, and daily tasks. Long-term care insurance can help, but many people don't have it, can't afford it, or can't qualify for it.
That's where home equity comes in. For most retirees, the house is their largest asset — and a reverse mortgage is one way to tap into it without selling or moving.
Three ways a HECM supports long-term care
Fund in-home care now
Use a lump sum or monthly payments to hire home health aides, cover adult day programs, or pay for skilled nursing visits.
Modify your home
Accessibility upgrades — walk-in showers, grab bars, ramps, stairlifts — can keep you safe at home for years longer than an unmodified house.
Build a standby fund
Open a HECM line of credit today, let it grow, and leave it untouched until you need it. The unused portion increases every year.
The standby line of credit strategy
This is the approach financial planners are most excited about. Here's how it works:
Open the line of credit early
You don't need to draw any funds right away. The cost to establish the line is relatively low, and you only pay interest on what you actually borrow.
The unused portion grows
Your available credit line increases every year at the same rate as your loan's interest rate plus the annual mortgage insurance premium. Over 10 years, the available balance can grow substantially.
Draw when you need it
If care needs arise at 80 or 85, you have a larger pool of funds ready to go — no new application, no underwriting, no waiting period.
This approach essentially turns your home equity into a self-growing emergency fund for care. And unlike long-term care insurance, there's no "use it or lose it" — if you never need the funds, your heirs inherit the remaining equity.
Important rules to keep in mind
If you're using a HECM to fund long-term care, there are a couple of things to watch:
The 12-month rule
If you move out of your home for 12 consecutive months — including to an assisted living facility — the loan becomes due. Short-term rehab doesn't count. A spouse who remains in the home resets this clock.
Medicaid planning
HECM proceeds aren't income, but unspent funds sitting in a bank account can count as assets for Medicaid purposes. Spend reverse mortgage draws within the same calendar month to protect eligibility.
A healthcare reserve you control
Long-term care is expensive, and most people don't have a clear plan for paying for it. A reverse mortgage won't solve every care scenario, but it gives you options — especially if you set it up before you actually need the funds. Using home equity to age in place, fund in-home care, or build a standby credit line is one of the most practical uses of a HECM.
Thinking about how this fits into your plan? Let's have a conversation about your specific situation, or explore how the line of credit growth feature works.
Keep reading
What Happens in a Nursing Home? →
The 12-month rule and spousal protections
HECM Line of Credit Growth Rate →
How your unused credit grows over time
Reverse Mortgage and Medicaid →
How HECM funds interact with Medicaid eligibility
Payment Options Explained →
Lump sum, credit line, monthly income, or a combination