Using a Reverse Mortgage to Pay for Long-Term Senior Care in Colorado
When you’re caring for an aging parent, every decision feels big. Especially when it comes to how to pay for senior care.
If you’re exploring ways to fund in-home care, assisted living, or a memory care community, you may have heard about reverse mortgages. But is it the right path for your family?
This guide will help you understand what a reverse mortgage is, how it works, and when it makes sense for long-term care. We’ll also walk through the potential risks—so you can make a confident, informed decision.
What Is a Reverse Mortgage?
A reverse mortgage lets homeowners aged 62 and older convert part of their home equity into tax-free cash—without selling the house or making monthly mortgage payments.
Many families use this money to help pay for long-term care needs, like:
- In-home caregivers
- Assisted living or memory care
- Medical equipment or home modifications
Important: The borrower must continue to live in the home, pay property taxes, insurance, and maintain the home. If not, the lender can foreclose.
Pros and Cons of Reverse Mortgages for Senior Care
✅ Benefits:
- No monthly mortgage payments: You can redirect those funds to care expenses.
- Still own your home: The title stays in your name.
- Tax-free funds: Doesn’t affect Social Security or Medicare benefits.
- Flexible use: Funds can cover care costs, home updates, or even help a spouse remain at home.
⚠️ Drawbacks:
- Loan costs: Origination fees, FHA insurance, closing costs, and interest add up.
- Reduced inheritance: Home equity shrinks as the loan grows.
- Repayment required: The loan becomes due when the borrower moves out or passes away.
- Not ideal for short stays: If you plan to move in under 5 years, the costs may outweigh the benefits.
Who Should Consider a Reverse Mortgage?
A reverse mortgage might make sense if:
- Your parent wants to age in place but needs help affording care.
- One spouse needs to move into assisted living while the other stays home.
- Your parent has substantial home equity and limited income.
It’s less ideal if:
- Your loved one may move soon.
- They’re already feeling isolated or unsafe at home.
- The home needs major repairs they can’t afford.
How Much Can You Get?
The amount depends on:
- Your parent’s age
- Home value and location
- Current interest rates
In high-cost areas of Colorado, the maximum loan amount (as of 2024) is $1,089,300. For lower-cost areas, it’s $472,030.
To estimate your family’s amount, use the Fairway Reverse Mortgage Calculator.
How Funds Can Be Used for Care
After repaying any existing mortgage, the remaining funds can be used for:
- Home care services (meal prep, bathing help, housekeeping)
- Modifications (ramps, grab bars, walk-in tubs)
- Medical needs (hearing aids, prescriptions, out-of-pocket costs)
- Senior living communities (especially if one spouse remains at home)
- Respite or adult day care
What Types of Reverse Mortgages Are There?
1. HECM (Home Equity Conversion Mortgage)
- Backed by FHA
- Most common option
- Comes with government protections
2. Single-Purpose Reverse Mortgage
- Offered by nonprofits or state/local agencies
- Must be used for a specific need (like home repairs)
3. Proprietary Reverse Mortgage
- Private loans for high-value homes
- Sometimes called “jumbo” reverse mortgages
Payment Options
You can choose how to receive the money:
- Lump sum
- Monthly payments
- Line of credit (only pays interest when you withdraw funds)
- Combination of the above
What Happens After the Borrower Moves Out or Passes Away?
The loan becomes due. Typically, the home is sold and the proceeds repay the reverse mortgage. Any leftover funds go to the heirs.
If the sale doesn’t cover the full loan, federally insured loans (HECMs) won’t require the heirs to pay more than the home’s value.
Actionable Checklist: What to Do Before You Decide
- Talk to a HUD-approved reverse mortgage counselor.
- Find a local counselor.
- Get a home appraisal.
- Needed to determine home value and loan amount.
- Review alternatives.
- Long-term care insurance
- VA benefits
- Medicaid or state aid programs
- Meet with a local senior care advisor.
- Harmony Senior Referrals can explain the care options available in your area.
3-Step Plan for Colorado Families
At Harmony Senior Referrals, we make it simple to find the right care and understand your options:
- Speak with a local senior care expert.
- Receive personalized guidance, including help evaluating financial options like reverse mortgages.
- Tour communities with support and clarity.
You don’t have to do this alone. Speak with a local expert today.
Frequently Asked Questions
How much does assisted living cost in Arvada, Colorado?
The average monthly cost for assisted living in Colorado Front Range is around $5,000, depending on the community and level of care.
Can I use a reverse mortgage to pay for assisted living?
Yes, especially if one spouse stays in the home. Funds can cover care costs while maintaining homeownership.
Do reverse mortgages affect Medicaid eligibility?
They can. Reverse mortgage payments may be counted as income, which could affect eligibility depending on your state. Speak to a Medicaid planner or elder law attorney.
What are alternatives to reverse mortgages?
Consider VA Aid & Attendance benefits, Medicaid, long-term care insurance, or bridge loans. A senior care advisor can help you explore all options.
Where can I find a trusted reverse mortgage counselor?
Visit HUD’s counselor search tool
Peace of Mind Starts Here
Choosing how to pay for senior care is one of the hardest decisions a family can make. But you’re not alone.
At Harmony Senior Referrals, we help families across Colorado—from Arvada to Longmont—navigate care and funding options with heart and clarity.
Let’s take the next step together.