Can You Use a HELOC to Cover the Costs of Elder Care or Assisted Living?

Last updated: July 2025

As families face the rising costs of elder care and assisted living, finding a financing strategy that balances flexibility, affordability, and peace of mind is essential. 

A HELOC to cover the costs of elder care or assisted living lets you tap into your home equity—borrowing only what you need, when you need it—while potentially securing lower interest rates than credit cards or personal loans. 

Whether you’re planning for long-term care expenses or a sudden move to an assisted living community, a HELOC can help you preserve savings, maintain cash flow, and take advantage of any prepayment discounts. 

What is a HELOC?

A home equity line of credit (HELOC) is a revolving credit line secured by your home, enabling homeowners to borrow against the equity they’ve built, often with flexible repayment terms. 

Can I use a HELOC for elder care?

Yes, you can use a HELOC to pay for elder care or assisted living expenses. 

In fact, many families turn to home equity when faced with the high and often sudden costs of caregiving. This might include in-home support, memory care, nursing home services, or long-term assisted living facilities. 

Since a HELOC can offer lower interest rates compared to personal loans or credit cards. HELOCs can be a practical solution when liquid assets are limited.

Start an application with HomeEQ to see what you might qualify for in minutes.

What are the qualifications for a HELOC loan?

The general criteria to qualify for a HELOC are:

• Owning a minimum of 15% to 20% home equity (some lenders require more)
• Your credit score to be 620 or higher (though 700+ may get you better terms)
• Reliable income and low debt-to-income ratio
• Stable employment or retirement income proof

Lenders assess these factors to ensure that the borrower has the ability to repay the loan. 

Unlike some government-backed eldercare financial options, HELOCs are not limited to older homeowners. Anyone listed on the home title with sufficient equity and a good credit history may apply.

How does a HELOC work when used for assisted living or long-term care?

When using a HELOC for elder care, the homeowner (or their authorized caregiver) draws funds as needed during the draw period, which typically lasts 5 to 10 years. Monthly payments during this time often cover interest only, keeping payments manageable.

Here’s how a HELOC might be used in this context:

• Monthly facility payments: Cover recurring care home or in-home care costs
• Medical expenses: Pay for prescriptions, mobility aids, or medical equipment
• Home modifications: Make upgrades that support aging in place

The repayment phase begins once the draw period ends, or earlier if you choose. 

At that point, you pay back the principal and interest over a 10- to 20-year term, depending on your loan structure.

Explore how a HELOC works.

When does using home equity make sense for elder care?

Using home equity makes sense in several situations:

• Bridge financing: When you need to fund care immediately, but plan to sell the home within a year or two
• Avoiding high-interest debt: If you’re considering a personal loan or credit card, a HELOC may be more affordable
• Preserving liquid assets: You may want to delay tapping retirement funds that are invested
• Aging in place upgrades: Use equity to modify the home rather than move to a facility

Illustrative scenario:

When David’s mother was diagnosed with early-stage Alzheimer’s, he used a HELOC on her home to pay for a part-time in-home caregiver and install safety modifications. 

This helped her stay in her home for two more years before transitioning to assisted living. The flexible credit line allowed David to manage costs as needs changed.

What are the pros and cons of using a HELOC for assisted living costs?

Pros:

• Lower interest rates compared to unsecured loans
• Flexible access to funds over time
• Potentially interest-only payments during draw period
• No restrictions on how the funds are used

Cons:

• Home is used as collateral for any equity loan (risk of foreclosure if payments are missed)
• Variable interest rates can increase over time
• Adds to overall debt burden for family or estate
• Can impact Medicaid eligibility depending on how funds are used

It’s important to consider these trade-offs in the context of your long-term financial and care planning. 

Consulting a financial planner or attorney specializing in elder law can help you make informed decisions.

FAQ: HELOCs for elder care or assisted living

Can I use a HELOC if my parent is moving into a facility?

Yes, as long as they (or you, if co-applying) meet the lender’s qualifications and the home has sufficient equity. The home does not have to be sold immediately, but occupancy and insurance requirements still apply.

Does the borrower have to be the person receiving care?

No. The borrower is whoever owns the home. A child, spouse, or other caregiver can apply if they co-own the home or are added to the title.

What if the home is jointly owned?

All owners typically must agree to the loan and sign during the process. This can complicate things if family members disagree.

Are there any tax benefits?

HELOC interest is often tax-deductible when the funds are used to improve the home, but not typically for medical or care costs. Always consult a tax advisor.

Will this affect Medicaid eligibility?

It might. Medicaid rules vary by state and how home equity is counted. Using home equity to pay for care may impact qualification, especially if the home is no longer your primary residence.

Using a HELOC to pay for your elderly loved one’s care

For homeowners who qualify, a HELOC can offer timely and flexible funding during a challenging life stage. 

Whether you’re trying to keep a loved one comfortable at home or move them into a supportive living environment, tapping into home equity might be your best financial tool to help you move forward with confidence.

Want to learn more? Check your HELOC eligibility today and see what your home equity options are in just a few minutes.