Field Guide · Michigan Homeowners 62 and Up
The Michigan Senior Homeowner’s Guide
Reverse mortgages, property tax relief, downsizing, Medicaid, and protecting the home. A plain-language reference for Michigan homeowners later in life, and the families helping them.
Later in life, a home raises real questions. Should you borrow against it? Sell it? Pass it to your children? Could a nursing home take it? This guide answers those questions in plain language, and every figure is linked to its source. I am Alex, a licensed REALTOR in Southwest Michigan. I built it as a working reference I use with clients, and put it here for anyone who needs it.
Two things before you start. First, you are the one in charge here. Not your kids, not a salesperson, and not me. Second, none of this has to be solved today. If a topic feels heavy, that is normal, and it is a reason to slow down and ask more questions, not to rush. Bring someone you trust to any meeting, and never sign something you do not fully understand. There is no such thing as a question that is too small.
Reviewed May 2026 · Let’s Get Realty with Alex
Reverse mortgages
A reverse mortgage is a legitimate tool, and the one most surrounded by confusing ads. Here is the straight version: what it is, how much it can actually give you, what it costs, and when it makes sense.
What it is
A reverse mortgage lets a homeowner age 62 or older borrow against home equity and receive money, with no monthly mortgage payment. Interest and fees are added to the loan balance instead, so the balance grows and equity shrinks. It is repaid later, usually when you sell, move out, or pass away. You keep the title the whole time. The common version is the Home Equity Conversion Mortgage (HECM), the only reverse mortgage insured by the federal government, through the FHA.
Who can get one
- The youngest borrower is 62 or older, and the home is your main residence.1
- You own the home outright, or owe little enough that the loan can pay off the rest at closing.
- You can keep paying property taxes, insurance, and upkeep, or you set aside loan funds for them.
- You complete a required counseling session first.
You can take the money as a lump sum, fixed monthly payments, a line of credit, or a combination. A line of credit is often the most flexible.
Counseling comes first
Federal law requires every HECM borrower to meet with a HUD-approved housing counselor before closing. The counselor is independent and not paid by the lender. There is a fee, often around $125, and an agency cannot turn you away if you truly cannot afford it.6 Find one at HUD or call 800-569-4287.
HECM for Purchase
You can also use a reverse mortgage to buy a different home in one transaction. You bring a down payment, often from selling your old home, the loan covers the rest, and there is no monthly mortgage payment afterward. It is built for downsizing or moving closer to family. See HUD’s overview.
How much can you actually tap?
A reverse mortgage never gives you the full value of your home. It lends a fraction of it, and that fraction is set by your age and current interest rates, not by your equity. The older you are, the larger the fraction, because the loan is expected to run for fewer years. The table below is a quick reference: find the age down the left and the home value across the top, and the cell is roughly the most you could borrow, before costs, at recent rates.
| Age | $200,000 home | $300,000 home | $400,000 home | $500,000 home |
|---|---|---|---|---|
| 62 | $72,000 | $108,000 | $144,000 | $180,000 |
| 65 | $76,000 | $114,000 | $152,000 | $190,000 |
| 70 | $84,000 | $126,000 | $168,000 | $210,000 |
| 75 | $90,000 | $135,000 | $180,000 | $225,000 |
| 80 | $98,000 | $147,000 | $196,000 | $245,000 |
| 85 | $110,000 | $165,000 | $220,000 | $275,000 |
| 90 | $124,000 | $186,000 | $248,000 | $310,000 |
Rough HECM figures before costs, based on age factors of about 36 percent at 62 rising to about 62 percent at 90.18 For a value between the columns, read between the numbers. For a higher value, multiply it by that age’s factor. The exact amount depends on the interest rate at closing.
Two more limits apply. The home value used in the math is capped at $1,249,125 for 2026, up from $1,209,750 in 2025, so a home worth more than that does not count the excess.4 And in the first year you generally cannot draw more than 60 percent of the total, though a line of credit holds the rest for whenever you need it. The amounts above are before costs, and the costs below come out of that amount.
What it costs to get in
A reverse mortgage costs more to set up than a regular mortgage. Most of these costs are rolled into the loan rather than paid in cash, but they still reduce what you walk away with.5 Because the home is not being sold, there is no real estate commission.
- FHA mortgage insurance premium. Two percent of your home’s value, paid up front to the FHA.
- Lender origination fee. Two percent of the first $200,000 of home value, plus one percent of value above that, capped at $6,000.
- Third-party costs. The appraisal, title work, recording fees, and your HUD counseling session, usually a few thousand dollars combined.
All together, the upfront costs commonly run from about $7,000 to $20,000 or more, depending on the home’s value. After closing, the loan also adds interest, a small servicing fee, and a yearly insurance premium of half a percent of the balance, all added to what you owe.
When it makes sense
A reverse mortgage tends to make sense when your home is paid off or nearly paid off and you plan to stay in it for years to come. It tends not to make sense when you still owe a large mortgage, or when you expect to move within a few years, because the upfront costs are heavily front-loaded.
One homeowner, two situations
Carol is 74, and her home is worth $300,000. Because she is 74, a reverse mortgage can advance her about 44 percent of her home’s value, a principal limit of $132,000. That starting figure is the same no matter what she owes. What changes how much she actually walks away with is her current mortgage, because a reverse mortgage must pay off any mortgage she still has before she sees a dollar. Below is the same person, the same age, and the same home, with one difference: how much she still owes.
| Carol’s reverse mortgage, line by line | If her home is paid off | If she still owes $111,000 |
|---|---|---|
| Home appraised value | $300,000 | $300,000 |
| Principal limit (about 44 percent of value, at age 74) | $132,000 | $132,000 |
| FHA mortgage insurance premium (2 percent of home value) | minus $6,000 | minus $6,000 |
| Lender origination fee (2 percent of first $200,000, 1 percent above) | minus $5,000 | minus $5,000 |
| Title services and insurance | minus $1,800 | minus $1,800 |
| Appraisal | minus $650 | minus $650 |
| Recording and settlement fees | minus $250 | minus $250 |
| HUD counseling session | minus $150 | minus $150 |
| Paying off her current mortgage | nothing to pay off | minus $111,000 |
| What Carol can actually use | $118,150 | $7,150 |
Same age, same home, same $132,000 starting point. The only difference is the mortgage. With the home paid off, Carol has about $118,000 to use as cash, monthly income, or a line of credit. Still owing $111,000, she has only about $7,000 left to use, though in that case she also no longer makes a monthly mortgage payment. The rule of thumb: the more you still owe, the less a reverse mortgage puts in your pocket.
A reverse mortgage does not erase your tax and insurance bills
This is the biggest thing people miss. You still owe property taxes, homeowners insurance, and upkeep. If taxes or insurance go unpaid, the loan can default and the lender can foreclose, and you can lose the home. A reverse mortgage removes the monthly mortgage payment, not the tax and insurance bills. See the CFPB borrower responsibilities.
You can never owe more than the home is worth
A HECM is a non-recourse loan. You and your heirs will never owe more than the loan balance or the home’s value, whichever is less. Federal insurance covers any shortfall, and no other assets have to cover the difference. CFPB explains the non-recourse rule.
What happens at the end
The loan comes due when the last borrower dies, sells, or stops living in the home as a main residence, including a care-facility stay longer than 12 months. Heirs then generally have 30 days to buy it, sell it, or hand it to the lender, and they never pay more than 95 percent of the appraised value. An eligible non-borrowing spouse can often stay in the home if named correctly in the loan documents.
Other mortgage options
A reverse mortgage is one option. Sometimes a simpler tool fits better.
| Question | Reverse mortgage (HECM) | Home equity loan | HELOC |
|---|---|---|---|
| Monthly payment? | No | Yes | Yes |
| Balance over time | Grows | Shrinks as you pay | Varies with use |
| How you qualify | Age 62+, equity, ability to pay taxes and insurance | Income and credit | Income and credit |
| Best suited for | Older owners who want cash and no monthly payment | A one-time lump sum need | Ongoing or flexible borrowing |
With a home equity loan or HELOC the balance goes down as you pay and equity grows. With a reverse mortgage the balance goes up. Home equity loans and HELOCs cost less to set up but require monthly payments. The FTC compares the three here. Refinancing a regular mortgage is also an option, though the CFPB cautions against a fresh 30-year loan late in life when a shorter term fits better.
The law is on your side as an older borrower
Under the Equal Credit Opportunity Act, a lender generally cannot deny you a loan or charge you more because of your age, and cannot refuse to count income from Social Security, a pension, an annuity, or other retirement sources. Steady retirement income makes you a qualified borrower. CFPB explains your rights.
Michigan property tax relief
Property tax is the recurring bill that most often threatens an older owner’s ability to stay in their home. Michigan has several programs that lower it or postpone it, and several go unclaimed because people do not know they exist.
For how Michigan property taxes work in the first place, including assessments and uncapping, see my Michigan Property Taxes page. This section is the relief programs.
| Program | What it does for you | Who qualifies | How to claim it |
|---|---|---|---|
| Homestead Property Tax Credit2 | Refunds part of the property tax you paid, up to $1,900 a year | Homeowners with household resources of $71,500 or less and a home taxable value of $165,400 or less. Seniors receive a larger credit | File Form MI-1040CR with the State of Michigan |
| Summer Tax Deferment7 | Postpones your summer tax bill with no penalty or interest. You still owe it later | Owners 62 or older with total household income of $25,000 or less | File Form 471 with your city or township treasurer, by about September 15 |
| Principal Residence Exemption8 | Removes up to 18 mills of local school operating tax from your bill | Owners of the one home they occupy as their primary residence. Second homes and rentals do not qualify | File Form 2368 with your local assessor, by June 1 or November 1 |
| Poverty / Hardship Exemption19 | Lowers your property tax for the year, partly or in full | Owner-occupants who cannot pay their property tax by reason of poverty | Apply to your local Board of Review with Form 5737 |
| Disabled Veterans Exemption9 | Cancels your property tax entirely | Veterans the VA rates permanently and totally disabled from service, and their unremarried surviving spouses | File Form 5107 with your local assessor. Renews automatically once granted |
| Home Heating Credit20 | Helps pay your winter home heating bills | Lower-income residents, with extra help for seniors. No income tax return is needed | File Form MI-1040CR-7, by September 30 |
The Homestead Property Tax Credit figures shown are for the 2025 tax year. Michigan publishes the 2026 figures later in the year.
Confirm your Principal Residence Exemption is on file
The Principal Residence Exemption counts only for the one home you own and live in as your primary residence. If you moved, downsized, or the paperwork was never filed, you could be paying more than you owe. A quick call to your local assessor confirms it.
Selling or downsizing the home
A few things to know before you list a long-time home.
Capital gains tax
When you sell your main home for more than you paid, the profit is a capital gain. A federal rule lets most people keep a large share of that profit completely tax free.
| When you sell your main home | Profit you can keep, fully tax free3 |
|---|---|
| You are a single owner | Up to $250,000 |
| You are a married couple, filing together | Up to $500,000 |
You qualify for that tax-free exclusion if every one of these is true:
- The home was your main home, the place you actually lived.
- You owned it for at least 2 of the last 5 years.
- You lived in it for at least 2 of the last 5 years.
- You have not already used this exclusion on another home sale in the last 2 years.
Any profit above your $250,000 or $500,000 is taxed as a long-term capital gain.
Already moved into a care facility?
If you moved out of your home into a nursing home or assisted living and later sell that home, a special rule still counts that time toward the years above. A senior who has been in care for a year or two can usually still claim the tax-free exclusion when the old home is sold.
Keep your home improvement receipts
Capital improvements such as a new roof, a remodeled kitchen, an addition, or a furnace add to your home’s cost basis, which lowers the taxable gain when you sell. Decades of improvements can total six figures. Without records, none of it counts.
Stepped-up basis
This rule is widely misunderstood. When someone inherits a home, its cost basis is stepped up to the home’s value on the date the previous owner died, not the price they originally paid.
A quick example
Parents buy a home for $40,000 in 1975. It is worth $400,000 when the surviving parent dies. A child who inherits it gets a basis of $400,000, so selling soon after for $400,000 produces almost no taxable gain.10
But if the parents give the home to the child during life, or add the child to the deed, that is a gift. The child takes the parents’ old low basis and can face a large tax bill on a future sale. The well-meant move of “just putting the kids on the house” can cost the family money. Run this past an estate planning attorney first.
The move itself
Downsizing a long-held household is a real project. Senior move managers plan and run the whole move: floor-planning the new place, sorting, coordinating movers, and arranging estate sales or donations. AARP has practical downsizing guidance as well. If selling is on the table, here is how I help sellers.
Be careful with “sale-leaseback” offers
In a sale-leaseback you sell your house and become a renter in it. The FTC warned in 2024 that these deals carry heavy fees, rising rent, and eviction if the rent becomes unaffordable, often with the homeowner getting far less than the home is worth. Pressure to act fast is your signal to stop. Read the FTC alert.
Estate planning for the home
The point here is to spare your family the cost and delay of probate, and to make sure the home goes where you intend.
Wills, probate, and trusts
A will says who receives your property and names a personal representative. It does not skip probate, the court process that distributes a deceased person’s property, and the home is usually the main asset in it. Michigan has a simplified small-estate process for estates of $53,000 or less for a death in 2026.12 A revocable living trust holds property, including the home, so it passes by the trust document instead of through probate.
The Lady Bird deed: a Michigan tool worth knowing
Michigan is one of only a few states that recognize the Lady Bird deed, also called an enhanced life estate deed. You keep complete control of the home while you are alive, including the right to sell it, mortgage it, or change your mind, and a named beneficiary receives the home automatically at your death with no probate.
It avoids probate, does not trigger a property-tax uncapping, preserves the stepped-up basis for your beneficiary, and because you keep the power to revoke it, it is generally not treated as a gift that causes Medicaid trouble. It also keeps the home out of Medicaid estate recovery, explained in the next section.11 An attorney prepares it.
“Just add the kids to the deed” is usually a mistake
Adding an adult child as a joint owner means you cannot sell or refinance without that child’s signature, it exposes your home to that child’s creditors or divorce, and it can forfeit the stepped-up basis described above. A Lady Bird deed passes the home to a child without any of those problems. Michigan Legal Help explains joint ownership.
One more document protects the home itself. A durable financial power of attorney names a trusted person to handle money and legal matters if you become unable to. Without one, nobody, not even a spouse, can sell or refinance the home of an owner who has lost capacity without going to probate court. A Michigan power of attorney signed on or after July 1, 2024 is automatically durable unless it says otherwise.13
Medicaid, long-term care, and your home
This is the area families most often get wrong, and the mistakes are expensive. Here is how long-term care and the family home actually interact.
Long-term care in Michigan runs above the national average. The median nursing home cost is near $135,050 a year for a shared room and $143,628 a year for a private room.14
Medicare does not pay for long-term custodial care
This is the most common and most costly misunderstanding. Medicare covers only limited skilled care, such as a short stay after a qualifying hospital visit. It does not pay for ongoing custodial care, the daily help with bathing, dressing, and eating. For that, the options are paying privately, long-term care insurance bought in advance, or Medicaid. Medicare.gov confirms this.
The asset limit, and how the home is treated
Medicaid pays for long-term care only for people under strict income and asset limits. For a single applicant in 2026, the countable asset limit is about $9,950.15 The home is generally exempt from that limit while a spouse, a minor child, or a disabled child lives there, or while you document an intent to return home. In plain terms, the home usually does not have to be sold to qualify for Medicaid while a spouse still lives in it.
A spouse who stays home is protected
When one spouse needs nursing care and the other stays home, the spouse at home can keep up to about $162,660 of the couple’s assets in 2026, plus a monthly income allowance. One spouse needing care does not leave the other with nothing. See the community spouse rules.
The five-year look-back
Michigan reviews the previous 60 months of your finances when you apply. Money or property given away or sold below value during that window creates a penalty period of ineligibility. Giving the house or the savings to the kids shortly before applying does not work, and it can backfire.15 What works is planned-ahead strategy with an elder-law attorney. For real estate, the Lady Bird deed is the clear example: because you keep full control and the right to revoke it, it is generally not treated as a disqualifying gift.
Estate recovery, and why the Lady Bird deed matters
After a Medicaid long-term-care recipient age 55 or older dies, Michigan’s Estate Recovery Program can file a claim to recover what Medicaid paid.16 It reaches only the probate estate. Property that passes outside probate is generally beyond it. That is why a Lady Bird deed is the standard Michigan tool for keeping the family home out of estate recovery. This is complex, so get individual legal advice. See the MDHHS estate recovery page.
Getting care without leaving home
Two programs help people receive long-term care while staying in their own home. The MI Choice Waiver provides Medicaid-funded support at home for people who medically qualify for nursing-home-level care, though slots are limited. PACE combines Medicare and Medicaid benefits for people 55 and older who need that level of care but can live safely at home with support.
Check the Medicaid dollar figures before relying on them
The 2026 Medicaid figures here are drawn from elder-law sources and are consistent across them, but some pieces update during the year. Confirm the current numbers with MDHHS or an elder-law attorney before making a decision.
Fraud that targets the home
Scams that target older homeowners are built by professionals to fool careful people. Americans age 60 and older reported $4.885 billion in fraud losses to the FBI in 2024.17 Here is how to spot the ones aimed at your house, and who to call.
Home title and deed fraud
Fraudsters forge a deed to move a home’s title into their own name, then borrow against it or try to sell it. Owners who hold their homes free and clear are prime targets. Many county registers of deeds offer a free property-fraud alert that notifies you when a document is recorded against your property. Ask your county about it.
Reverse mortgage scams
Watch for a contractor pushing a reverse mortgage to pay for repairs, anyone steering the proceeds into an annuity or insurance product, logos made to mimic a government agency, and ads claiming the VA offers reverse mortgages. It does not. Most reverse mortgages carry a three-day right to cancel after closing.
Contractor and home repair fraud
Be wary of door-to-door contractors who demand large payments up front, invent unnecessary repairs, or do shoddy work, especially after a storm. Get written estimates, check licensing, and never pay a big sum up front. For vetted local pros, see my Trusted Local Services list.
If you suspect a scam, tell me too
Report it through the agencies below. It also helps to contact me. I see these scams regularly in this area and am glad to take a look. If it is a scam, you are likely not the only target, and I can send a bulletin to MLS agents across the area so they can warn their clients before it spreads. Call or text me at 269-235-9910, or email me.
If you see any one of these, stop
A demand to act right now. A request to keep it secret. A request to pay with gift cards, a wire transfer, or cryptocurrency. Contact you did not start. A threat. An offer that sounds too good to be true. The best defense: hang up, then call the company or agency back at a number you look up yourself.
Who to call
To report fraud or financial exploitation, contact the Michigan Attorney General Consumer Protection team at 877-765-8388, or Michigan Adult Protective Services at 855-444-3911. The federal National Elder Fraud Hotline is 833-372-8311.
Getting help in Michigan
Every place this guide says “talk to a professional” has a destination, much of it free. Start local.
Region IV Area Agency on Aging · Berrien, Cass & Van Buren Counties
The local front door to senior services in Southwest Michigan: in-home care, meals, transportation, caregiver support, and help applying for the programs in this guide. The Info-Line is free.
2900 Lakeview Avenue, St. Joseph, MI 49085
Info-Line: 800-654-2810 areaagencyonaging.orgMichigan 211
A free, confidential statewide service connecting you to local help with housing, utilities, and senior services. Dial 211 or visit mi211.org.
Eldercare Locator
A free federal service connecting older adults and families to local aging services anywhere in the country. Call 800-677-1116 or visit eldercare.acl.gov.
BenefitsCheckUp
A free tool from the National Council on Aging that screens you against nearly 2,000 benefit programs for help with home costs and more. Visit benefitscheckup.org.
HUD Housing Counseling
Free or low-cost, federally approved counseling on reverse mortgages and other home-financing questions. Find a counselor at hud.gov or call 800-569-4287.
Weatherization Assistance Program
Free home energy-efficiency improvements for income-eligible Michigan homeowners, in all 83 counties through local Community Action Agencies. It covers energy work such as insulation and heating, not general repairs. See the MDHHS program page.
Ready to act on any of this?
Most steps in this guide you can start on your own, and every agency and form is linked above. For the real estate side, selling, downsizing, or weighing your options, that part is my job. Call or text any time. No pressure, no commitment.
If you want to bring a son or daughter along, good. That is how it should be.
Call or text: 269-235-9910 Email AlexSources and citations
Every figure in this guide links to its source. Dollar amounts and rules change, so confirm the current numbers with the agency or a professional before you act on them.
- Reverse mortgage eligibility, including the minimum age of 62. CFPB, “Can anyone take out a reverse mortgage loan?”
- 2025 Michigan Homestead Property Tax Credit figures. Michigan Department of Treasury, Tax Year 2025 credit information.
- Capital gains exclusion on the sale of a main home (up to $250,000 single, $500,000 married). IRS Topic No. 701 and IRS Publication 523.
- HECM maximum claim amount for 2026 set at $1,249,125, up from $1,209,750 in 2025. HUD News Release HUD No. 25-145 and HUD HECM program page.
- HECM upfront costs (FHA mortgage insurance premium of 2 percent, lender origination fee, third-party costs) and the ongoing 0.5 percent annual insurance premium. CFPB, “What fees and costs are associated with a reverse mortgage?”
- HUD-approved counseling required before HECM closing, typical fee around $125, and the rule against turning away those who cannot pay. HUD housing counselor search and CFPB on housing counseling.
- Summer Property Tax Deferment for seniors and qualifying owners. Michigan Department of Treasury, Form 471 deferment of summer taxes.
- Principal Residence Exemption from up to 18 mills of school operating tax. Michigan Department of Treasury, Principal Residence Exemption (Form 2368).
- Disabled Veterans Exemption from property tax. Michigan Department of Treasury, Disabled Veterans Exemption (Form 5107).
- Stepped-up basis on inherited property and the gift-basis trap. IRS Publication 523, Selling Your Home and IRS Publication 559, Survivors, Executors, and Administrators.
- Lady Bird deeds in Michigan. MSU Extension, “Overview of Lady Bird deeds in Michigan”.
- Michigan simplified small-estate process. State Bar of Michigan probate resources. The $53,000 small-estate ceiling for deaths in 2026 is adjusted annually for inflation by the Michigan Department of Treasury.
- Michigan durable power of attorney law. Powers of attorney signed on or after July 1, 2024 are durable by default under the Michigan Uniform Power of Attorney Act. Michigan Legal Help, Making a power of attorney.
- Median Michigan nursing home cost. Genworth Cost of Care Survey, Michigan.
- Michigan Medicaid asset limit, home exemption, community spouse resource allowance, and 60-month look-back. Michigan Department of Health and Human Services, Medicaid and federal Medicaid eligibility policy.
- Michigan Medicaid estate recovery scope (probate estate only). MDHHS, Estate Recovery program.
- Reported elder fraud losses of $4.885 billion in 2024. FBI Internet Crime Complaint Center, 2024 Elder Fraud Report.
- HECM principal limit factors by borrower age. HUD HECM program and CFPB on reverse mortgages. The actual factor depends on the age of the youngest borrower and the expected interest rate at closing.
- Poverty / Hardship Exemption from property tax. Michigan Department of Treasury, Poverty Exemption (Form 5737).
- Michigan Home Heating Credit. Michigan Department of Treasury, Home Heating Credit (Form MI-1040CR-7).
This page was written with the help of Claude, an AI assistant. If you spot a mistake or think something should be changed, let me know and I’ll look into fixing it.