Does a reverse mortgage affect eligibility?

Does a reverse mortgage affect eligibility?

Short answer: Reverse mortgage loan advances are not income, but money kept past the month it is received generally becomes a countable asset. A reverse mortgage can also reduce home equity below the limit.

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

A reverse mortgage (often a federally insured Home Equity Conversion Mortgage) lets homeowners 62 and older borrow against their home’s equity without monthly payments.

For Medicaid:

  • Loan advances are not income. Under SSI-based rules, money borrowed is not income in the month received.
  • Leftover money counts. Any loan proceeds still held at the start of the next month generally become a countable asset. A large lump-sum draw can push the person over the limit. A line of credit that is not drawn is generally not counted.
  • Home equity. A reverse mortgage reduces equity, which can help an applicant whose equity is above the state’s home equity limit.
  • Nursing home moves. Many reverse mortgages become due when the borrower has not lived in the home for 12 consecutive months for medical reasons. A move to a nursing home can trigger repayment, often through a sale.
  • Estate recovery. The reverse mortgage lender is generally paid before other claims on the home.

Plan draws and spending carefully if Medicaid may be needed.

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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