Homeownership can give you more retirement choices because years of principal reduction and home-value growth may create equity. That equity may support a move, lower monthly housing costs, home modifications, in-home care, or another retirement need. A reverse mortgage, including an FHA-insured HECM for Purchase, is one possible tool for eligible homeowners age 62 or older. It is a loan with costs, a growing balance, occupancy rules, and continuing obligations for taxes, insurance, and property maintenance.
Your house should not be the entire retirement plan. It should be part of the plan.
Why does housing belong in a retirement plan?
Housing affects nearly every part of retirement. It affects your monthly budget, where you live, how close you are to family, whether the home works as you age, and how much money may be available for other needs.
A paid-off house can reduce one major monthly bill. A house with a mortgage can still hold meaningful equity. A move can exchange one property for another that fits your life better.
That is why the question is bigger than whether you should pay the house off. The better question is what you need the home to do for you over the next 10, 20, or 30 years.
How much home equity do older homeowners hold?
Homeowners age 62 and older held a record $14.92 trillion in housing wealth during the first quarter of 2026, according to the NRMLA and RiskSpan Reverse Mortgage Market Index. That number does not mean every older homeowner is wealthy or has easy access to cash. It means a large share of retirement wealth sits inside homes.
Home equity is the difference between the home's current value and the debt secured by it. You do not spend equity like money in a checking account. To use it, you generally sell the home or borrow against it.
Each choice has costs and tradeoffs. A sale changes where you live. A new loan creates interest and fees. A line of credit can have a changing payment. A reverse mortgage balance can grow over time.
Are more homeowners carrying a mortgage into retirement?
Yes. More older homeowners are reaching retirement with mortgage debt than they did a generation ago.
An Urban Institute analysis found that 30.1% of homeowners age 75 and older had a mortgage in 2022, up from 10.9% in 1998. The median mortgage debt for that group was $106,800 in 2022.
The Harvard Joint Center for Housing Studies also found a sharp rise in mortgage debt among older households. The point is not that carrying a mortgage is automatically bad. The point is that the payment has to fit the retirement income plan.
If you are considering a move in Middle Tennessee, compare the payment, cash left after closing, taxes, insurance, maintenance, and accessibility before you make an offer. My guide to buying a home in Franklin, Tennessee explains the local housing questions that should be part of that conversation.
Why should long-term care be part of the housing conversation?
Long-term care can become one of the largest retirement expenses, and the home often affects where that care happens.
CareScout's 2025 national survey reported a median cost of $35 per hour for non-medical in-home care. At 44 hours per week, that equals $80,080 per year. The national median for assisted living was $74,400 per year. A private nursing-home room had a median cost of $129,575 per year.
Those are national medians, not a quote for your family. Actual costs depend on the care needed, the provider, and the local market. The full CareScout 2025 Cost of Care Survey collected more than 25,000 provider-reported rates.
The home matters here. A one-level layout, no-step entry, wider hallways, and space for a caregiver may make it easier to stay at home. A property with stairs, narrow doors, or heavy maintenance may create new costs.
Does Medicare pay for long-term care?
No. Medicare does not pay for long-term custodial care, including most help with daily activities at home, in assisted living, or in a nursing home.
Medicare Part A can cover qualifying skilled-nursing-facility care for a limited time when all coverage rules are met. For 2026, Original Medicare lists $0 daily coinsurance for days 1 through 20 after the applicable Part A deductible. Days 21 through 100 cost $217 per day. From day 101 forward, the patient pays all costs.
Coverage can end before day 100 if skilled care is no longer medically needed. Medicare Advantage plans can use different cost sharing and coverage rules. Check the plan instead of assuming the full 100 days will be covered.
Where does Medicaid fit into long-term-care planning?
Medicaid may cover long-term services and supports for people who meet the state's medical and financial eligibility rules. It is not a plan you should try to build during a crisis without legal guidance.
Federal policy generally requires states to review transfers for less than fair market value during the 60 months before an institutionalized applicant seeks Medicaid long-term-care coverage. A transfer can create a period of ineligibility.
Medicaid estate-recovery rules also matter. For enrollees age 55 or older, states must seek recovery for specified long-term-care services, subject to survivor protections and hardship procedures.
Do not give away a home, add someone to the deed, create a trust, or move assets based on a blog post. Talk with a qualified elder-law attorney who knows the rules in your state.
What choices can home equity create?
Home equity can create options, but the right option depends on what you are trying to accomplish.
- Sell and buy a smaller home. This can reduce maintenance or free cash, but the new home, closing costs, and taxes still matter.
- Move closer to family. The move may improve support and care options, but the local housing market can change the numbers.
- Modify the current home. A remodel may make aging in place easier, but major work can use a large share of savings or equity.
- Use a home-equity loan or HELOC. These can provide cash, but they normally create monthly payments and can use variable rates.
- Use a reverse mortgage. This may remove a required monthly principal-and-interest payment, but the balance grows and the borrower keeps paying taxes, insurance, maintenance, and other property charges.
No one option is automatically better. Compare the payment, cash left over, flexibility, taxes, insurance, interest, fees, and what the choice means for your heirs.
What is a HECM for Purchase?
A HECM for Purchase is an FHA-insured reverse mortgage that can help an eligible homeowner age 62 or older buy a primary residence.
The buyer brings the difference between the HECM proceeds, the sales price, and closing costs using permitted funds. The amount available depends on the age of the youngest borrower or eligible non-borrowing spouse, the expected interest rate, and the applicable property value or FHA limit.
You still need to qualify for the program and complete required counseling with a HUD-approved HECM counselor. You also need enough money to close the gap between the purchase price and the reverse-mortgage proceeds.
HUD explains the program on its HECM for Purchase page.
Do you still own the home with a reverse mortgage?
Yes. The Consumer Financial Protection Bureau says you keep title to the home.
You must still pay property taxes, maintain homeowners insurance, keep the property in good repair, and use it as your principal residence. If you do not meet those responsibilities, the loan can become due and payable.
The loan is generally repaid when the home is sold, the last borrower no longer lives there, or the last surviving borrower or eligible non-borrowing spouse dies. A move to a health-care facility for more than 12 consecutive months can also matter when no co-borrower remains in the home.
Example: using a HECM purchase to choose a home that fits better
Generalized client example. A homeowner planned to sell a longtime home and move closer to family. They originally looked only at lower-priced homes because they wanted to protect retirement income from a new monthly mortgage payment.
We compared a traditional mortgage with a HECM for Purchase. The reverse-mortgage structure required the buyer to bring more money to closing than a low-down-payment traditional loan, but it did not require a monthly principal-and-interest payment.
That opened a wider set of homes. The buyer could consider a one-level property in a location that worked better for family support and future needs.
This example does not promise approval, a specific down payment, or a result. HECM proceeds, rates, fees, property eligibility, and the amount needed at closing vary by borrower and transaction.
What are the costs and risks of a reverse mortgage?
A reverse mortgage can solve one problem and create other tradeoffs. Review all of them before you decide.
- The loan has interest and closing costs.
- The balance generally grows over time.
- Home equity available to heirs may be reduced.
- The borrower must pay taxes, insurance, maintenance, and other property charges.
- The home must remain the principal residence under the program rules.
- A spouse or other household member who is not properly protected under the loan may face different rights after the borrower dies or leaves the home.
- Using equity today can leave less flexibility later.
Required HECM counseling is an important step, but it does not replace advice from your tax professional, estate-planning attorney, financial adviser, or insurance professional.
What alternatives should you compare?
Compare at least three or four choices before using home equity.
Downsize with cash. This can remove a mortgage payment, but it may use most of the sale proceeds and leave less cash in reserve.
Use a traditional mortgage. This may require less cash at closing than a HECM purchase, but it creates a required monthly principal-and-interest payment.
Use a HELOC or home-equity loan. These may fit a renovation or short-term need. They normally require monthly payments, and a HELOC can have a variable rate.
Sell and rent. Renting can reduce repair responsibility and make a move easier. It also gives up future ownership and exposes the household to rent changes.
Stay in the current home. This may be the least disruptive choice. Price out maintenance, taxes, insurance, accessibility changes, and future care before you assume it is the cheapest option.
What should you ask before making a retirement housing move?
- How long do I expect to stay in the next home?
- Does the home work if mobility or care needs change?
- What will taxes, insurance, utilities, and maintenance cost?
- How much cash will I have left after closing?
- What required monthly payments will I have?
- How will this choice affect a spouse or other person living in the home?
- What happens if I move to assisted living or a nursing facility?
- How does this choice affect my estate and my heirs?
- What other retirement income and liquid savings do I have?
- Which professional should review the tax, legal, insurance, and investment questions?
What should your Realtor and mortgage team know?
Your Realtor needs to know the financing structure before writing an offer. A HECM purchase has program requirements, counseling, appraisal, title, closing, and property questions that should be addressed early.
Your mortgage team needs a clear picture of the sale, available funds, current debt, retirement income, property goals, and who will live in the new home. A Pre-Purchase Zoom gives us time to compare the choices before you are under contract.
If you still own a home and plan to buy another, review the sequence before listing or making an offer. My move-up buyer planning page explains why the timing between the sale and purchase matters.
If your next home will use a traditional mortgage, read You're Pre-Approved. Now What? before moving money, opening credit, or changing income.
How do you start the conversation?
Start before the current home is listed and before you make an offer on the next one.
Keith Goeringer is a mortgage loan officer with Barrett Financial Group, NMLS #488023. He works with homebuyers, homeowners, real estate agents, and families in Franklin, Nashville, Williamson County, and Middle Tennessee.
Complete the soft-check mortgage application. Bring your current mortgage statement, estimated home value, retirement-income information, cash-reserve plan, and the price range you are considering. We will compare the mortgage structures that may fit and identify the questions that need help from your financial, tax, legal, or insurance professionals.
Sources and important limitations
You can also review the site's verified identity and citation page for Keith Goeringer's licensing information, official profile, and source-led article index.
- HUD: FHA Home Equity Conversion Mortgage and HECM for Purchase.
- Consumer Financial Protection Bureau: Reverse Mortgages.
- NRMLA and RiskSpan: Q1 2026 Senior Home Equity.
- Urban Institute: Home Equity and Older Homeowners.
- Harvard Joint Center for Housing Studies: Housing and Care for Older Adults.
- CareScout 2025 Cost of Care Survey.
- Medicare: Long-Term Care Coverage and Skilled Nursing Facility Care.
- Medicaid: Estate Recovery.
This article is for education. It is not a loan approval, financial plan, tax advice, legal advice, insurance advice, or a promise of investment or home-value results. Program rules, loan terms, rates, costs, property eligibility, Medicare coverage, Medicaid rules, and state laws can change. Confirm the current facts for your own situation before making a decision.
