Care is Expensive!
10 Ways to Pay for Care: Real Estate Lending
Beyond the Reverse Mortgage: More Options for Financing Senior Care
By Mark Maimon (NMLS #3550), with Luminate Bank and the founder and host of the “On the Mark” Podcast
The conversations we’re having today matter — because for many older adults, the home represents not just a place filled with memories, but also the most significant financial asset they own.
The Reality: House-Rich, Cash-Poor
Many of today’s seniors fall into a category often described as “house-rich and cash-poor.” They’ve built equity over decades of homeownership, but they’re often unprepared for the rising costs of care as they age. And because most are no longer working, qualifying for traditional loans becomes much more difficult.
To make matters more complicated, the idea of moving or selling the family home can feel overwhelming. There’s emotional attachment — maybe the desire to leave the home to children or grandchildren — and often years of deferred maintenance that make selling or even transferring ownership challenging. Add in uncertainty around capital gains taxes and the step-up in basis, and it’s easy to see why so many seniors delay making a plan.
The Reverse Mortgage: A Common but Limited Tool
For years, the reverse mortgage has been one of the most talked-about financial tools for seniors — and it can be an excellent option in the right situation. However, it’s not the only one.
Reverse mortgages allow homeowners aged 62 and older to access equity without making monthly payments, but they come with a few important considerations:
- Equity limits: You can only tap a certain percentage of your home’s value.
- Occupancy requirement: You must continue living in the home. If you move — even for care needs — the loan must be repaid within a set timeframe (often 6–12 months).
- Heirs and inheritance: Your heirs can’t simply assume the reverse mortgage. They must refinance or pay off the loan.
- Compounding interest: While monthly payments aren’t required, interest accrues on top of interest, which can quickly erode equity.
- Higher closing costs: FHA reverse mortgages, in particular, can be expensive to set up.
For many families, these details create uncertainty — especially when care needs may require moving or accessing funds in more flexible ways.
Exploring the Alternatives:
- Asset-Based Loans
These loans use your assets — not your income — as the basis for approval. For example, if you have investment or retirement accounts, lenders may calculate how long those funds could last or simply require a minimum asset threshold (such as 100% of the loan amount) to qualify.
- Home Equity Lines of Credit (HELOCs)
Some HELOC products are specifically designed with seniors in mind. By converting retirement assets into qualifying income, you can access a line of credit that’s available when you need it — and you only pay interest on what you use.
- No-Income-Verification Loans
Originally designed for entrepreneurs, these loans don’t require proof of employment or income, making them ideal for retirees. They often allow borrowing up to 75–80% of a home’s value.
- Short-Term Bridge Loans
If you’re moving into a senior living community that requires an entry fee or upfront rent — or if your long-term care insurance has an elimination period — short-term loans can help bridge the gap.
- Co-Signed Loans
In some cases, a family member can co-sign a loan, helping the senior qualify for more favorable terms through traditional financing.
- DSCR or Cash-Flow Loans
If you plan to rent your home rather than sell it, these loans qualify based on the property’s rental income rather than your personal income.
- Non-Recourse Loans to Trusts
When a senior is unable to sign due to cognitive decline or other issues, a loan can sometimes be made directly to a trust, secured by the home itself, without requiring personal financial qualifications.
Case Studies: Real Life Examples
Here are two real-world situations where creative financing made a difference:
- Case 1: The HELOC Solution
An 85-year-old woman wanted access to her home’s equity but didn’t need funds immediately. She had been denied by three lenders for a standard HELOC because of her limited income. By converting $350,000 in retirement assets into $10,000 of qualifying income, we helped her get approved — giving her flexibility without high costs.
- Case 2: The Tax-Smart Strategy
A 97-year-old woman owned a $4.5 million home purchased 50 years ago. Selling would have triggered roughly $1 million in capital gains taxes. Instead, by financing the property, she was able to cover her care costs and keep the property in the family — preserving wealth instead of sending it to the IRS.
The Takeaway: Plan Early, Plan Smart
The earlier families explore their options, the more flexibility they have. Whether it’s a reverse mortgage, HELOC, or another creative financing solution, the key is to understand how each fits into your overall care and estate plan.
For seniors and their families, knowledge is power — and planning is peace of mind.
If you want to continue this conversation or need guidance, I’m here.
Mark Maimon (NMLS #3550)
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Our country is entering a new chapter, one we have never seen before… over 100 million people are 50 years of age or older, and the need for care is going to be more and more prevalent. We are dreaming of a nation where aging and care are understood and become part of our normal conversations with family.
To make this a reality, we need your help!