Caregiving in Crisis: Why Housing Wealth May Be the Key to Funding Long-Term Care in Retirement

63 million Americans are now providing care—and many are paying the price with their own health and finances.

A powerful new report from AARP and the National Alliance for Caregiving confirms what millions of families already know: caregiving isn’t just emotionally demanding—it’s financially draining.

According to the 2025 Caregiving in the U.S. report, nearly 1 in 4 adults is caring for an adult or child with a medical condition or disability. Among them, 40% are performing complex medical tasks, such as administering injections or managing medical equipment.

These mostly unpaid or underpaid family members are the unsung backbone of America’s long-term care system—helping aging parents, spouses, and adult children with chronic health issues, often at great personal cost to their careers, savings, and health.

With rising healthcare costs and strained public support systems, families are urgently seeking sustainable ways to fund care. One of the most overlooked? Home equity.

The Financial Toll of Family Caregiving

The AARP/NAC report reveals just how much caregivers are sacrificing:

$7,200/year – average out-of-pocket cost
Nearly 1 in 2 – report major financial strain
1 in 5 – rate their own health as poor or fair
Only 11% – receive training for medical tasks
40+ hours/week – time commitment for 25% of caregivers

These costs come on top of already mounting retirement risks—such as inflation, medical expenses, emergency home repairs, and shrinking nest eggs.

The Long-Term Care Dilemma

The need for long-term care isn’t rare—it’s likely.

According to the 2024 Genworth/CareScout Cost of Care Survey:

70% of people age 65+ will need some form of long-term care
20% will require care for 5+ years
$77,972/year – median cost of a home health aide
$70,800/year – average assisted living cost

Contrary to popular belief, Medicare does not cover most long-term care costs. Medicaid offers limited help—only for those with very low income and assets.

What About Long-Term Care Insurance?

LTC insurance can help—but it’s often out of reach.

It’s expensive, often denied due to health issues, and premiums rise dramatically with age. Very few older adults have it. That leaves most families scrambling for options—just when they need support the most.

Home Equity: A Hidden Lifeline for Care

For homeowners 62 and older, home equity is often their single largest financial asset. Seniors in the U.S. now hold over $13 trillion in housing wealth.

But unless that equity is accessed, it can’t be used to fund care.

Here’s a comparison of three common ways to tap into home equity:

Loan Type	Monthly Mortgage Payments Required	Age Limit	Repayment Timeline
HELOC (Home Equity Line of Credit)**	Yes	No	Interest-only repayment during draw period (e.g., 10 years) followed by interest & principal repayment period (e.g., 20 years)
Home Equity Loan**	Yes	No	Fixed term (e.g., 30 years)
HECM Reverse Mortgage	No (Must pay critical property charges like taxes and insurance)	62+	Deferred until loan matures (e.g., last remaining borrower permanently moves out of the home)

Let’s take a closer look at the retirement-friendly option built specifically for older homeowners.

HECM Reverse Mortgage: A Flexible Retirement Strategy

The Home Equity Conversion Mortgage (HECM) is the only reverse mortgage insured by the Federal Housing Administration (FHA). It’s designed for homeowners 62 and older and provides flexible access to home equity.

Loan proceeds can be received as:

A lump sum at closing
Monthly payouts (term or life)
A line of credit
Or a combination of the above

Unlike other loans, there are no required monthly mortgage payments—as long as the borrower:

Lives in the home as their primary residence
Maintains the home
Pays property taxes and insurance

Interest and fees get added to the loan balance, resulting in a rising balance over time. The borrower can make voluntary prepayments in any amount, at any time, to manage the loan balance.

Repayment is deferred until the home is sold, the borrower moves out, or passes away. Thanks to non-recourse FHA protection, neither the borrower nor their heirs will ever owe more than the value of the home at sale.*

How a HECM Can Help Fund Long-Term Care

HECM funds can be used to offset long-term care costs without draining savings or burdening adult children.

They can help:

Pay long-term care insurance premiums in advance
Cover deposits at assisted living or memory care communities (e.g., one spouse needs care, the other stays home)
Fund part-time or full-time in-home care
Make aging-in-place home modifications
Provide compensation for family caregivers who reduce work hours

While home equity is good, it’s of little functional value unless the home is sold or the equity is tapped.

HECM Line of Credit: A Smart Move for Future Care Needs

One of the most powerful features of a HECM is the growing line of credit.

Unlike a traditional HELOC, the HECM credit line:

Grows over time (growth applies to unused funds, increasing borrowing power)
Cannot be frozen or reduced due to market changes
Has no pre-set draw window—access funds when needed
Offers easier qualification for older-adult homeowners
Requires no mandatory monthly mortgage payments (must pay essential property charges like taxes and insurance)

To illustrate, consider the following example based on a monthly interest rate of 6.75% and no withdrawals made:

Initial HECM Line of Credit: $200,000

In 5 years: $287,070
In 10 years: $412,056
In 20 years: $848,911

When Moving Makes Sense: How An H4P Loan Supports Better Living Arrangements

Sometimes the best way to care for a loved one isn’t for them to stay—it’s to move. Whether rightsizing to a more manageable home, relocating closer to family, or choosing a one-level layout that accommodates mobility issues, the right move can make caregiving more sustainable.

For homebuyers aged 62+, a HECM for Purchase (H4P) loan allows them to buy a new primary residence in retirement cash-flow friendly way.

Unlike a traditional mortgage, an H4P requires no monthly mortgage payments as long as the borrower(s) meets loan obligations such as paying property taxes and insurance. The loan won’t be due until the last borrower moves out, sells the home, or passes away. And unlike paying all cash, which ties up a large portion of your assets, an H4P requires only about 50 to 70% of the home’s purchase price as a down payment with the remainder financed through the loan. The exact percentage depends on the youngest borrower’s age and other factors.

With no required monthly mortgage payments, an H4P feels like a cash purchase, except the borrower retains more of their savings for other priorities. That means more financial freedom.

This can make it easier to “right-size” into a safer, more caregiving-friendly environment without draining savings or depending on adult children. When thoughtfully used, H4P can reduce both financial strain and caregiving stress—opening the door to healthier outcomes for the whole family.

Let’s Start a Conversation!

Caregiving is one of the most important roles a person can take on—but it shouldn’t come at the expense of financial stability.

With long-term care costs rising and family caregivers stretched thin, it’s time to rethink how we fund care. For many senior homeowners, a HECM reverse mortgage can offer:

More choices for where and how to age
Less financial strain on loved ones
A sustainable, flexible source of funds for the future

If you or someone you care for is planning for long-term care, consider speaking with a retirement mortgage specialist like me. The earlier you understand your options, the more confident your decisions will be.

Get Ahead of Long-Term Care Today

*There are some circumstances that will cause the loan to mature and the balance to become due and payable. Borrower is still responsible for paying property taxes and insurance and maintaining the home. Credit subject to age, property and some limited debt qualifications. Program rates, fees, terms and conditions are not available in all states and subject to change.

**This is an educational example of one HEI and HEL. Requirements, payment, and other terms may vary between investors.