Will Your Home Equity Pay For In-Home Care? What a New Study Found

I attended a presentation this week from the Joint Center for Housing Studies at Harvard, and the research they shared put language and data around something most families are already feeling in their own lives and homes.

The study looked at a group researchers call the “overlooked middle”: adults 50 and older who earn too much to qualify for Medicaid, but not enough to comfortably pay for in-home care or assisted living from their income alone.

After living in a multigenerational home for 11 years and talking with hundreds of families, many who are doing exactly this math on their own, here is what stood out to me. Your home is probably worth more to your future than you think. And tapping into it is a much bigger decision than most people realize.

Here is what the research actually found, and my thoughts on some of it.

What is the “overlooked middle”?

The “overlooked middle” is the researchers' name for older adults, age 50 and up, with household incomes between 139 percent and 500 percent of the federal poverty level. In plain terms: these folks have too much income to qualify for Medicaid, but not enough to pay for long-term care without real strain.

This group is easy to miss because nobody is checking in on them. They are not poor enough for public assistance and not wealthy enough for the conversation to feel secure with aging well financially. But most adults 65 and older will, at some point, need some form of long-term services and supports, such as help with daily living like bathing, dressing, or managing medication, for an average of just over three years. And most of that care gets paid for out of pocket.

How much home equity do older homeowners actually have?

More than most people assume, and it is sitting mostly untouched.

The study, conducted in California and grounded in national data, found that 65 percent of overlooked middle households 50 and older are homeowners. Among them, median home equity in California is $440,000 and nationally it is $255,000. For homeowners 75 and older, the age when care needs typically rise, it trends higher.

Lenders typically want you to retain 15 to 20 percent equity in a home, so a realistic accessible share of equity that can possibly be accessed is close to 80 percent of that total. To put that in perspective, one daily visit from a home health aide runs around $50,000 a year. Eight hours of care a day runs closer to $100,000. Home equity, for a lot of families, could potentially fund a few years of in-home care.

It is worth calling out what is probably obvious—this wealth is not distributed evenly. Home equity in the study was highest for white and Asian homeowners and lowest for Black and Hispanic homeowners, a gap that traces directly back to postwar housing policy. The GI Bill and FHA programs built the U.S. homeownership system after World War II, and Black families were excluded from it through mortgage systems and redlining. That history still shows up in families’ financial lives eighty years later.

Why won't people actually use their equity to support their needs?

Researchers ran focus groups with overlooked middle homeowners across California, and almost none of them wanted to tap their home equity for care, even when they agreed they might need it. Over and over, people described their home equity the same way: a last resort, a security blanket, a backup they hoped to never touch.

Underneath that reluctance is something more personal than money. Many people see their homes as comfort, memory, and identity. It is also, for most families, the single largest asset they will ever pass down to their families. Participants in the research talked openly about wanting to leave their home, or its value, to their children free and clear. But legacy and long-term care can’t always exist side by side, and most of the “overlooked middle” feel that tension.

There was also real fear that tapping equity now would close doors later. Several participants worried that pulling money out today would leave them with fewer options if they eventually needed to move to assisted living or a continuing care community. As one presenter at the event, Julia Gordon, former deputy assistant secretary at HUD, put it: home equity has become the “duct tape of financial planning.” It holds things together, but nobody wants to be the one who has to use it.

What are the actual options for tapping equity?

If a family does decide their home equity needs to work for them, there are several options. All of them should be considered thoughtfully.

Cash-out refinancing. This can make sense, but the math has shifted hard with interest rates. Refinancing out of a 2.5 percent mortgage into a 7 percent one erases most of the benefit for a lot of homeowners right now.

A HELOC (Home Equity Line of Credit) or second mortgage. These require decent credit and enough income to prove you can repay the loan, which can be a real barrier for someone living on Social Security and a modest pension.

A reverse mortgage, or HECM (Home Equity Conversion Mortgage). The HECM is the FHA-insured version of a reverse mortgage, and it is genuinely worth understanding rather than dismissing outright. It lets a homeowner stop making mortgage payments in exchange for a line of credit, lump sum, or monthly payments, while they keep the title to the home. Borrowers are still responsible for property taxes and insurance, and HUD requires housing counseling before you can get one, which is one of the valuable consumer protections of this product. It is not free money. There are real fees, and if there is no equity left when the home is sold, there is nothing left to pass on. But for the right family, in the right situation, it can be a legitimate and carefully regulated way to stay in the home longer.

Private reverse mortgages and newer, unregulated products. This is where I would slow down and ask a lot of questions. Private reverse mortgages can be a solution for properties with value that exceeds HECM limits (currently $1,249,125), but they can carry high interest rates in exchange. Shared appreciation contracts, where a company gives you cash now in exchange for a share of the home's future value, are complex and hard to evaluate. Sale-leaseback arrangements, where you sign over the title of your home and rent it back, can leave people with almost no protection against eviction. I have watched a client lose their home to one of these deals without fully understanding what they were signing away. These products are growing fast precisely because the mainstream, regulated options have not kept pace with what families need. That doesn’t mean they are all bad, but I would advise you to be very cautious and involve trusted family, friends, and/or professional advisors when considering them.

Where multigenerational living fits into this conversation

Here is my actual takeaway, and it is one of the reasons I wanted to write about this study.

Multigenerational living is not going to be the right fit for every family, and I would never tell you otherwise. It requires space, flexibility, and relationships that can hold up under a shared roof. Some families do not have those options.

But if you are worried about how you will ever afford in-home care as a parent ages, or as you age yourself, multigenerational living deserves real consideration along with other options. And it also solves for something financial products alone cannot provide: real presence. Someone there for the ordinary, everyday moments and a true hedge against the loneliness that so many of us face in our elder years. It can also meaningfully lower the actual cost of care, because a family member covering even a few hours of the day is a few hours a paid caregiver does not have to.

The researchers behind this study made the point that the “great wealth transfer” everyone talks about is largely a myth for this middle group. Most overlooked middle families are not going to leave a large inheritance. They are going to need their housing wealth to fund their own care.

A reverse mortgage can be a genuinely good option for the right household, as can downsizing, or combining households under one roof. None of these are one-size-fits-all solutions. The takeaway from this study is that there is not one perfect answer to this complex problem, but planning ahead and acknowledging that some trade-offs may need to be made to support our needs as we age are critical to remaining in control of our futures.

Quick answers

Can you use a reverse mortgage to pay for in-home care? Yes. A HECM, the FHA-insured reverse mortgage, lets homeowners 62 and older draw on their equity as a line of credit, lump sum, or as-need withdrawals while keeping the title to their home, and it can be used for in-home care costs. It requires HUD-approved housing counseling first, and it comes with real fees, so it is worth exploring with trusted advisors.

Is multigenerational living a realistic alternative to paying for assisted living? For some families, yes. It will not always replace the level of medical care an assisted living or memory care facility provides, but for families managing routine aging-in-place needs, sharing a home can meaningfully reduce paid care hours while adding daily support and connection that a facility cannot replicate.

How much does home equity typically cover for long-term care? Based on this research, a median California homeowner in the overlooked middle could access roughly $350,000 in equity, enough to fund several years of in-home care depending on the level of care needed and the financial product used to access it.

The bottom line

Your home is probably worth more to your future than you might think. Whether you access that value through selling and downsizing or a financial product like a reverse mortgage, the worst plan is no plan at all. Start the conversation before you need to.

Sources

Housing Wealth and In-Home Care: Opportunities and Obstacles to the Use of Home Equity for LTSS in California's Overlooked Middle, Molinsky, J.H., Scheckler, S. & Fang, J. (2026). Joint Center for Housing Studies of Harvard University, May 2026.

Genworth Cost of Care Survey, 2024.