Financial stress from moving a loved one to assisted living can be overwhelming, especially when the need arises due to unexpected health changes. When unforeseen circumstances occur, your loved one may be able to leverage their home through a bridge loan or reverse mortgage, which can cover assisted living costs and future bills. These options ensure your loved one is in the living arrangement they need to stay healthy and comfortable.

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Assisted living is a popular option for older adults who need help with daily activities, but it’s increasingly expensive. The national median price tag for assisted living in 2021 was $54,000 per year, according to insurer Genworth’s annual survey. Most people move into assisted living on short notice after a change in mobility or health status, so the time to come up with funds is often short. If the combination of cost and time pressure has you in a bind, here’s how to leverage your house to pay for assisted living.

If you own your home outright or have a substantial amount of equity in it, you have two primary options. You keep the house and take out a reverse mortgage on it or you can sell your home and use the proceeds to pay for assisted living.

Using a bridge loan until you sell your home

In a hot real estate market, you may be able to sell your home quickly, without having to invest in major upgrades or repairs to get it market ready. When the market is slow and your home is unlikely to sell right away, a bridge loan can allow you to move into assisted living before your home is sold.

Bridge loans are offered by lenders who often specialize in working with senior homeowners. When you’re approved for a bridge loan, the lender typically pays your assisted living community directly. Once your home sells, the bridge loan is paid off from the proceeds, and the remaining money is yours to pay for your care.

Keeping your home and taking out a reverse mortgage

Reverse mortgages are a better solution when one person in the family is moving to assisted living while others remain in the home. These loans, also called home equity conversion mortgages (HECMs), must comply with extensive federal rules. Borrowers must be at least 62 years old and must meet with a qualified loan counselor before taking the loan.

The upsides to a reverse mortgage are:

There’s no monthly loan payment to make.
Reverse mortgage funds usually don’t affect your Social Security income or Medicare eligibility.
In most cases, you won’t have to pay taxes on the money you get from the loan.
At the end of the loan, your estate can’t owe more than the home’s appraised value at that time.
Your spouse may be able to continue to live in the home after your death.

The potential drawbacks are:

You must budget for and pay property taxes and insurance over the life of the loan.
You must keep the home in good repair or the lender can end the loan.
If the home is vacant for a year or more for any reason (spousal illness, an adult child relocated for work) the lender may end the loan and sell the home for repayment.
If your heirs can’t pay the appraised value of the home when the loan is due, the lender will sell it on the open market.

Despite the potential downsides, a reverse mortgage can make the most financial sense for couples or extended families who need assisted living and don’t have other savings or a long-term care policy to cover the costs. You can find more information about reverse mortgages at the Federal Trade Commission website.

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Meet the Author

Angelike Gaunt

Angelike Gaunt is a content strategist at OurParents. She’s developed health content for consumers and medical professionals at major health care organizations, including Mayo Clinic, the American Academy of Family Physicians, and the University of Kansas Health System. She’s passionate about developing accessible content to simplify complex health topics.

The information contained in this article is for informational purposes only and is not intended to constitute medical, legal or financial advice or create a professional relationship between OurParents (A Place for Mom, Inc.) and the reader. Always seek the advice of your health care provider, attorney or financial advisor with respect to any particular matter and do not act or refrain from acting on the basis of anything you have read on this site. Links to third-party websites are only for the convenience of the reader; A Place for Mom does not recommend or endorse the contents of the third-party sites.

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In this article

Using a bridge loan until you sell your home

Keeping your home and taking out a reverse mortgage