Reverse Mortgages & Long-Term Care: HECM Guide

A reverse mortgage lets homeowners 62 and older turn part of their home equity into cash without selling the house and without a monthly mortgage payment. The most common kind is the Home Equity Conversion Mortgage, or HECM, which is insured by the Federal Housing Administration. You can take the money as a lump sum, monthly payments, a line of credit or a mix. Because it is a loan, the money is generally not taxable income. You keep the title, and you still pay property taxes, homeowners insurance and upkeep. The loan is repaid when the last borrower dies, sells or moves out, including a move to a care facility for more than 12 months in a row. It can help pay for care at home. It is not built to pay for a nursing home. Model your numbers with the Reverse Mortgage calculator, then see how it fits into your financial plan.

Key Takeaways

A HECM is a federally insured reverse mortgage for homeowners 62 and older. No monthly mortgage payment is required while you live in the home.
How much you can get depends on three things: the age of the youngest borrower or eligible spouse, interest rates, and your home's value up to the 2026 FHA limit of $1,249,125. At recent rates, that is often around 35% to 45% of the home's value in your 60s, and more as you get older.
Upfront costs are real: 2% FHA mortgage insurance, an origination fee capped at $6,000 and closing costs. Interest and a 0.5% yearly insurance charge are added to the balance over time.
The loan comes due if every borrower is out of the home for more than 12 consecutive months, including in assisted living or a nursing home, unless an eligible non-borrowing spouse still lives there.
The money is a loan, not income. But cash you keep past the month you receive it can count as an asset for Medicaid and SSI.
It is non-recourse. You and your heirs will never owe more than the home is worth.
HUD-approved counseling is required before you apply. Before that, model it with the Reverse Mortgage calculator.

The Asset Most Families Forget They Have

Most families plan for care with three numbers. Income. Savings. Insurance.

They leave out the biggest one. The house.

For a lot of people over 62, the home is worth more than everything else they own combined. It is also the one asset nobody wants to touch. It is where the kids grew up. It is the inheritance. It is the place Mom says she will never leave.

Here is the uncomfortable truth. Wanting to stay home is only a care plan if someone can pay for the help. Medicare does not pay for custodial care at home. Nationally, home care runs about $6,673 a month.

So families drain savings first and look at the house last, when the options are fewer. Or they sell it in a crisis, after care has already started.

I have watched families make this decision in a hurry. It is a decision that deserves time.

A reverse mortgage is one way to use the house without selling it. It is not right for everyone. It has real costs. And it has one rule about leaving home that every family needs to understand before anyone signs.

What Is a Reverse Mortgage (HECM)?

A reverse mortgage is a loan against your home that you do not have to pay back while you live there.

A regular mortgage works one way. You pay the bank every month, and your equity grows. A reverse mortgage works the other way. The lender pays you, the loan balance grows, and your equity shrinks.

The Home Equity Conversion Mortgage, or HECM (people say "heck-um"), is the reverse mortgage most people get. It is insured by the Federal Housing Administration (FHA), which is part of the U.S. Department of Housing and Urban Development (HUD). That federal insurance is what makes the program's key protections possible. One of them is the promise that you will never owe more than the home is worth.

There are also private reverse mortgages, sometimes called proprietary or jumbo reverse mortgages. They are mostly for higher-value homes, and they follow different rules. This guide is about the HECM.

A few things a reverse mortgage does not do:

It does not give the bank your house. You keep the title.
It does not end your housing bills. Property taxes, insurance, HOA dues and repairs are still yours.
It is not free money. It is a loan, with interest, and it is repaid from the home.

Who Qualifies for a HECM

To get a HECM, generally:

At least one borrower must be 62 or older.
The home must be your primary residence. You live there most of the year.
You need significant equity. Any existing mortgage has to be paid off at closing, usually with the reverse mortgage money.
The home must be an eligible type. That means a single-family home, a 2-to-4 unit home you live in, an FHA-approved condo or a manufactured home that meets FHA rules.
The home must meet FHA property standards. Needed repairs may have to be made first, or the money for them set aside from the loan.
You cannot be behind on federal debt, like federal taxes or federal student loans.
You must meet with a HUD-approved counselor before you apply.
You must pass a financial assessment. The lender looks at your credit and income to see whether you can keep paying property taxes and insurance. If that is a concern, the lender can require a Life Expectancy Set-Aside (LESA). That is money held back from the loan to pay those bills for you.

If you are married and your spouse is under 62, you can still get a HECM. Your spouse can be listed as an eligible non-borrowing spouse. But the amount you can borrow is based on the younger spouse's age, so you will get less. What that status protects is covered below.

How Much Can You Get?

Three things decide it:

The age of the youngest borrower or eligible non-borrowing spouse. Older means more.
The expected interest rate. Lower rates mean more.
Your home's value, up to the FHA limit. In 2026, HUD will not count any value above $1,249,125. That limit is the same in every county.

HUD turns those three things into a percentage called the principal limit factor. Multiply it by your home's value, up to the limit, and you get your principal limit. That is the total you can borrow before costs.

At recent rates, that percentage is often in the high 30s at age 62 and climbs into the 50s by the mid-80s. When rates move, the number moves.

Take the calculator's default example: a 66-year-old with a $600,000 home. The estimated total proceeds come to about $252,000, roughly 42% of the home's value.

That is not the check you get. From it come:

2% upfront FHA mortgage insurance. That is $12,000 on a $600,000 home.
The origination fee. Up to $6,000.
Other closing costs, like the appraisal, title and recording fees. These vary.
Any existing mortgage, which must be paid off first.

There is also a first-year limit. In the first 12 months, you can generally take up to 60% of your principal limit. You can take more if you need it to pay off an existing mortgage. The rest opens up after the first year.

The question is not "How much is my house worth?" The question is "How much can we actually use, and when?"

How You Can Take the Money

Option	How it works	Often used for
Lump sum	One payment at closing. Fixed-rate HECMs pay out this way.	Paying off a mortgage or a large one-time cost
Line of credit	Draw what you need, when you need it. The unused part grows over time.	A standby fund for future care
Tenure payments	Monthly payments for as long as you live in the home	Closing a monthly income gap
Term payments	Larger monthly payments for a set number of years	Covering a known stretch of time
Combination	For example, a line of credit plus monthly payments	Flexibility

Lines of credit, tenure and term payments come with an adjustable-rate HECM. A fixed rate locks you into one lump sum.

The line of credit is the option most families overlook

With an adjustable-rate HECM, the unused part of your line of credit grows every month. It grows at the same rate as the loan: the interest rate plus the 0.5% insurance charge.

That is not interest you earn. It is more room to borrow later. And you pay no interest on money you have not drawn. You do pay interest on any upfront costs you rolled into the loan, starting on day one.

For care, this matters. A line of credit opened at 65 and left alone can be much larger at 80, when care is more likely. A bank can freeze a home equity line of credit. As long as you keep up with the loan terms, a HECM lender cannot freeze or cancel this one.

6 Ways a Reverse Mortgage Can Help Pay for Care

1. Pay for help at home

Monthly payments or line of credit draws can pay for a home care aide, adult day care or a paid family caregiver agreement. For a lot of families, that is the difference between staying home and moving.

2. Get rid of the monthly mortgage payment

If a parent still has a mortgage, paying it off with a HECM frees that payment every month. That money can go to care. For many families, this is the biggest win.

3. Make the home safe enough to stay in

Grab bars. A walk-in shower. A ramp. A first-floor bedroom. Better lighting. Small changes can keep someone home longer, and safer.

4. Keep a standby fund for the day care starts

Open a line of credit now. Leave it alone. Use it after the fall, the diagnosis or the hospital stay. The money is there without a new application at the worst possible time.

5. Bridge a waiting period

A long-term care insurance policy may have a 90-day elimination period before benefits start. A VA benefits application can take months. A line of credit can cover the gap.

6. Move to a home that fits how your body works now

A HECM for Purchase lets you buy a new primary home, like a single-floor home closer to family. You make a large down payment, and there is no monthly mortgage payment after the move. The same rules, costs and protections apply.

Model a reverse mortgage with your numbers

Try the Reverse Mortgage Calculator

The 12-Month Rule: What Happens If You Move to Assisted Living or a Nursing Home

This is the section I most want families to read.

A HECM requires the home to be your principal residence. If every borrower is out of the home for more than 12 consecutive months for health reasons, the loan becomes due. That includes time in a hospital, rehab, assisted living, memory care or a nursing home.

That changes what a reverse mortgage can do for long-term care.

A short rehab stay after a fall or surgery: You come home, and the loan continues.
A permanent move to assisted living or a nursing home: After 12 months away, the loan generally has to be repaid. Usually that means selling the house.
Two borrowers, and one moves to care: If the other borrower still lives in the home, the loan continues.
A spouse who is not on the loan: An eligible non-borrowing spouse may be able to stay in the home after the borrower dies or moves to a care facility for more than 12 months. They have to meet HUD's rules. And they cannot draw any more money from the loan.

Your loan servicer will send an occupancy certification every year. Answer it. If a borrower will be away from home for a long stretch, tell the servicer.

Here is the uncomfortable truth. A reverse mortgage does not pay for a nursing home. It can help someone stay out of one longer.

If the plan is to age in place as long as possible, a HECM can be a strong tool. Some care needs move quickly toward a facility, as they do on many dementia journeys. If that is likely, model the whole timeline before you sign. Upfront costs buy a lot less if the loan comes due in two or three years. The Health Trajectory tool can help you see what level of care may be ahead.

What a Reverse Mortgage Costs

Upfront

Initial FHA mortgage insurance premium: 2% of the home's value, up to the 2026 limit of $1,249,125.
Origination fee: The lender can charge $2,500, or 2% of the first $200,000 of value plus 1% of the rest, whichever is greater. The fee is capped at $6,000.
Third-party closing costs: The appraisal, title insurance, credit report, recording and similar fees.
Counseling fee: Often around $125 to $200. Some agencies lower or waive it if you cannot afford it.

Most of these can be paid from the loan. That means they start adding interest right away.

Ongoing

Interest on the balance, fixed or adjustable.
Annual FHA mortgage insurance: 0.5% of the balance each year, added to the loan.
A monthly servicing fee, on some loans.
Property taxes, homeowners insurance, HOA dues and upkeep. You pay these every year, for as long as you have the loan.

Nothing is paid back each month, so the balance grows. Interest is charged on interest. That is the trade. You get cash now. There is less equity later.

Care Costs vs. a Reverse Mortgage

A reverse mortgage can feel like a lot of money. Care costs put it in perspective. Here are national medians compared with $200,000 in reverse mortgage proceeds.

Type of care	Monthly	Yearly	About how long $200,000 lasts
Home care (non-medical)	$6,673	$80,080	30 months
Assisted living	$6,200	$74,400	32 months
Nursing home, semi-private room	$9,581	$114,975	21 months

Source: the 2025 CareScout Cost of Care Survey, as shown on LTCareNav Care Costs by State. Last updated March 2026. The $200,000 is an illustration, not a quote. It does not include interest or loan costs.

Now compare that with how long care can last. According to the U.S. Administration for Community Living, someone turning 65 has almost a 70% chance of needing long-term care. Women need it for 3.7 years on average and men for 2.2 years.

A reverse mortgage can buy real time at home. On its own, it rarely pays for years of round-the-clock care. And remember the 12-month rule. Assisted living and nursing home costs are mostly paid after the move, when the loan may already be coming due.

These are national medians. Costs in your state could be much higher or lower. See the numbers where you live on Care Costs by State, then see how it fits into your financial plan.

How long will your money last if care starts tomorrow?

See How It Fits Into Your Financial Plan

Taxes, Medicaid and SSI

Taxes. Reverse mortgage money is loan money, so it is generally not taxable income. Interest is generally not deductible until it is actually paid, which is usually when the loan is paid off. Ask a tax professional.
Social Security and Medicare. A reverse mortgage does not change either one.
Medicaid and SSI. The money is not counted as income. But cash you still have on the first day of the next month can count as an asset. The SSI asset limit is $2,000 for an individual and $3,000 for a couple. Medicaid limits vary by state and are often just as low. An unused line of credit is generally not counted until you draw it.
Giving the money away can backfire. Handing reverse mortgage cash to family can be treated as a transfer of assets under Medicaid rules. That can lead to a penalty.

If a parent is on Medicaid or SSI, or may need Medicaid soon, take only what will be spent that month. Talk with an elder law attorney first. Find one in the LTCareNav Marketplace, and see your state's rules in the Medicaid Long-Term Care Guide.

What Happens to the House When You Die

The loan comes due when the last borrower dies. If there is an eligible non-borrowing spouse, it comes due when their deferral ends.

Your heirs then have a few choices:

Sell the home. The loan is paid off from the sale. Anything left goes to the heirs.
Keep the home. They pay off the loan, with cash or a new mortgage. If the balance is more than the home is worth, they can keep it by paying 95% of the current appraised value.
Walk away. If the home is worth less than the loan, they can sign it over to the lender. They owe nothing more.

This is what non-recourse means. Neither you nor your heirs will ever owe more than the home is worth. FHA insurance covers the shortfall.

The timeline is tight. Heirs may have just 30 days to tell the servicer what they plan to do. They generally have up to six months to sell or refinance, sometimes longer with extensions. Tell your family now who the loan servicer is and where the paperwork lives. That conversation is a gift.

Can You Lose Your Home With a Reverse Mortgage?

Yes, if the loan terms are not met. The most common reason is falling behind on property taxes or homeowners insurance. Others are letting the home fall into serious disrepair or no longer living there.

If you are struggling, call your servicer early. A HUD-approved housing counselor can help too, at (800) 569-4287.

And watch for pressure. Be careful if anyone:

Calls a reverse mortgage "free money" or a "government benefit"
Pushes you to use the money to buy an annuity, an investment or an insurance policy
Shows up offering home repairs paid for with a reverse mortgage
Is a relative or new "friend" who is in a hurry for you to sign

You are allowed to slow down. You are allowed to say no.

Reverse Mortgage vs. Other Ways to Use Home Equity

Feature	HECM reverse mortgage	Home equity loan or HELOC	Selling and downsizing
Monthly payment required	No. You still pay taxes, insurance and upkeep.	Yes	No mortgage payment. You have new housing costs.
Stay in your home	Yes	Yes	No
How you get the money	Lump sum, monthly payments, line of credit or a mix	Lump sum or line of credit	Cash at sale, minus selling costs
How you qualify	Age 62+, equity, counseling and a financial assessment	Income and credit	None
If you move to a care facility	Due after 12 months away, unless a co-borrower or eligible spouse still lives there	Payments continue as long as you keep making them	You have already moved
What heirs get	The home's value minus the balance. Never less than zero.	The home, with the debt still owed	Whatever is left of the cash
Medicaid and SSI	Proceeds are not income. Cash kept past the month can count as an asset.	Borrowed cash kept past the month can count as an asset	Sale cash generally counts as an asset

Compare every option side by side in Financial Tools. Read more in our guides to protecting your home from long-term care costs, annuities and long-term care and how to pay for long-term care.

Pros and Cons of a Reverse Mortgage for Long-Term Care

Advantages

No monthly mortgage payment required while you live in the home.
Tax-free money, because it is a loan.
You stay home and keep the title.
Non-recourse. You will never owe more than the home is worth.
It can pay for home modifications that help you age in place.
A line of credit that grows and cannot be frozen or canceled as long as you meet the loan terms.
FHA-insured. Your payments continue even if your lender goes out of business.

Considerations

It reduces what is left for heirs.
Upfront costs are high, and they are added to the balance.
The balance grows every month. Interest compounds.
You must keep paying property taxes, insurance and upkeep, or risk losing the home.
The loan comes due if you move to a care facility for more than 12 consecutive months.
Cash held past the month can affect Medicaid and SSI.
A spouse under 62 lowers the amount, and a spouse who is not on the loan cannot draw more money.

Who a Reverse Mortgage Fits

A reverse mortgage may be worth a closer look if:

You want to age in place, in a home that works for you now or can be modified.
Most of your wealth is in the house, and your monthly income is tight.
You are still paying a mortgage, and that payment is squeezing what you can spend on care.
You plan to stay in the home for years, not months.
You can keep paying property taxes, insurance and upkeep.
You want a standby fund for care down the road.

It may not be the right fit if:

A move to assisted living, memory care or a nursing home is likely soon.
You plan to sell or move in the next few years.
Leaving the house to your children free and clear is your top priority. Talk with them first.
You cannot keep up with property taxes and insurance, even without a mortgage payment.
You are on Medicaid or SSI and would be holding onto the cash.
Someone else is pushing you to do it.

The question is not "Can I get a reverse mortgage?" The question is "Will we still be living in this house when we need the money most?"

How to See If a Reverse Mortgage Fits Your Care Plan in 5 Steps

Project the care. Use the Health Trajectory tool and the Care Assessment to see what level of care may be ahead, where it is likely to happen and for how long.
Check your care runway. Look up costs on Care Costs by State, then see how it fits into your financial plan. You will see how far income and savings go and how big the monthly gap is.
Model the reverse mortgage. Open the Reverse Mortgage calculator and choose the situation closest to yours: monthly income, liquid assets, home value and age range. Adjust the home value to match your home. Create a free account to enter your real numbers.
Talk with your family. Include whoever expects to inherit the house. A reverse mortgage changes their plans too. It is better to have that conversation at the kitchen table than after the funeral.
Do your counseling and compare lenders. Find a HUD-approved HECM counselor at hud.gov/findacounselor or call (800) 569-4287. Then get written quotes from more than one lender and compare the fees, the rate and the total cost. Find vetted professionals in the LTCareNav Marketplace.

The calculator gives general estimates to show how a reverse mortgage could fit your plan. Actual amounts depend on your age, interest rates, your home's appraised value, loan costs and HUD's rules at the time you apply. It is a starting point for the conversation, not a quote.

Questions to Ask Before You Sign

What is my principal limit, and how much is left after every cost?
How much can I take in the first year?
Fixed or adjustable rate? Which payout options does that allow?
What are the origination fee, closing costs and any servicing fee? Can I see them itemized?
What interest rate and margin are you offering? How does that compare with other lenders?
Will I need a Life Expectancy Set-Aside for taxes and insurance?
If my spouse is not on the loan, do they qualify as an eligible non-borrowing spouse? What does that protect, and what does it not?
What happens if I am in a care facility for more than 12 months?
What will my heirs need to do when the loan comes due, and how long will they have?
Is anyone being paid if I use this money to buy another product?

Write down the answers. Get them in writing if you can.

Frequently Asked Questions

What is a HECM?

A HECM, or Home Equity Conversion Mortgage, is a reverse mortgage insured by the Federal Housing Administration. It lets homeowners 62 and older turn part of their home equity into cash with no monthly mortgage payment required. The loan is repaid when the last borrower dies, sells or moves out.

How much can I get from a reverse mortgage in 2026?

It depends on the age of the youngest borrower or eligible spouse, interest rates and your home's value, up to the 2026 FHA limit of $1,249,125. At recent rates, borrowers in their 60s can often access around 35% to 45% of their home's value before costs, and more at older ages. In the first year, you can generally take up to 60% of that amount.

Is reverse mortgage money taxable?

Generally, no. Reverse mortgage proceeds are loan money, not income, so they are generally not taxable. Interest is generally not deductible until it is actually paid. Talk with a tax professional about your situation.

Can a reverse mortgage pay for home care?

Yes. You can use reverse mortgage money for anything, including a home care aide, adult day care, home modifications or a paid family caregiver. Many families use a line of credit or monthly payments to help pay for care at home.

What happens to a reverse mortgage if I move into assisted living or a nursing home?

If every borrower is out of the home for more than 12 consecutive months for health reasons, the loan becomes due. That includes assisted living, memory care and nursing homes. The home is usually sold to repay it. If a co-borrower or an eligible non-borrowing spouse still lives in the home, repayment can be delayed.

Does a reverse mortgage affect Medicaid or Social Security?

A reverse mortgage does not affect Social Security or Medicare. For Medicaid and SSI, the money is not counted as income, but cash you keep past the month you receive it can count as an asset. An unused line of credit is generally not counted.

What happens to my house when I die?

The loan comes due. Your heirs can sell the home and keep what is left after the loan is paid. They can pay off the loan and keep the home, or sign the home over to the lender. If the loan is more than the home is worth, they can keep it by paying 95% of the appraised value. They will never owe more than the home is worth.

Can I lose my home with a reverse mortgage?

Yes, if you do not meet the loan terms. The most common reason is not paying property taxes or homeowners insurance. Not living in the home or letting it fall into serious disrepair can also cause the loan to come due.

What does a reverse mortgage cost?

Upfront costs include 2% FHA mortgage insurance on the home's value, an origination fee of up to $6,000 and third-party closing costs. Over time, interest and a 0.5% yearly mortgage insurance charge are added to the balance. Most costs can be paid from the loan.

Do both spouses need to be 62?

No. Only one borrower needs to be 62. A younger spouse can be listed as an eligible non-borrowing spouse, which can let them stay in the home after the borrower dies or moves to a care facility. Because the amount is based on the younger spouse's age, you will be able to borrow less.

Does Medicare pay for long-term care?

No. According to Medicare.gov, Medicare does not pay for long-term custodial care at home or in a nursing home. That is why families look at savings, home equity, insurance, VA benefits and Medicaid to pay for care.

Your House Can Be Part of the Plan

For many families, the house is the biggest asset in the care plan. It is also the most emotional one.

A reverse mortgage can turn that house into help at home, a safer place to live and a fund for the day care starts. It can also cost a lot, shrink the inheritance and come due right when a parent moves to a facility.

The difference is planning. Know what you are trading, how long you plan to stay and who else is counting on the house.

Model it with the Reverse Mortgage calculator, and compare it with every other option in Financial Tools.
See how it fits into your financial plan and how long your money will last.
See how much care may be ahead with the Health Trajectory tool.
Check care costs where you live with Care Costs by State.
Connect with a vetted professional in the Marketplace.

Not sure where to start? See how every piece fits together in one place to plan for long-term care.

It is free for families.

Plan before the crisis. Not during it.

Get Your Free Long-Term Care Plan

LTCareNav provides general educational information, not mortgage, legal, tax or financial advice. Reverse mortgage limits, costs and rules are set by HUD and can change. Lender fees and rates vary. Medicaid rules vary by state. Figures reflect 2026 amounts. Before you decide, talk with a HUD-approved counselor, a licensed reverse mortgage professional, a tax advisor and an elder law attorney, if Medicaid may be needed.

Reverse Mortgages and Long-Term Care: How a HECM Works, What It Costs and the 12-Month Rule