Can I downsize my home while applying?

Can I downsize my home while applying?

Short answer: Yes. Selling one home and buying a less expensive one at fair value is allowed. The new home is exempt, but leftover proceeds count as an asset.

Figures change periodically. Double-check current amounts before relying on them.

Downsizing is not a transfer if both the sale and the purchase are at fair market value. Under the SSI-based rules most states use, proceeds from selling a home are excluded for a limited time if they are used to buy another home (generally within three months). The new home is then the exempt home.

Points to watch:

  • Leftover cash counts. Any proceeds not used for the new home (or used after the reinvestment window) become countable assets.
  • Titling. Buying the new home in a child’s name, or jointly with a child, can be a transfer.
  • Intent to return. If the applicant is in a nursing home, buying a new home they do not intend to live in may not keep it exempt.
  • Married couples. A spouse at home can buy a new home, and the home remains exempt while they live in it.
  • Estate recovery may apply to the new home later.

Report the sale and purchase to the caseworker, with settlement statements.

Getting help

Every situation is different, and small facts can change the answer. If this question affects a real decision, especially with a spouse at home, a home, gifts or a trust, a Certified Medicaid Planner can apply your state’s rules to your situation. As a rough guide, published fees for help with an application range from about $500 to $6,000, and hourly help from about $150 to $600.

Last updated for 2026. General information only, not legal or financial advice. Medicaid Answers is a free educational resource published by Medicaid Answers Foundation.

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