Field Guide. Michigan Homeowners 62 and Up.
The Michigan Senior Homeowner’s Guide
A plain-language reference for the real estate decisions that come up later in life.
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.
01. The Loan That Pays You Instead
Reverse Mortgages
A reverse mortgage lets a homeowner 62 or older borrow against home equity and receive money with no monthly mortgage payment. Interest is added to the balance instead, so the balance grows and equity shrinks. It is repaid when the owner sells, moves out, or dies. The owner keeps the title. The common type is the HECM, the only reverse mortgage insured by the federal government, through the FHA.1
Who can get one
Eligibility comes down to a short list. The youngest borrower must be 62 or older. The home must be the main residence, owned outright or with a small enough balance to pay off at closing. The owner must be able to keep paying taxes, insurance, and upkeep. And the owner must complete required counseling first.
Money can be taken as a lump sum, monthly payments, a line of credit, or a combination.
Counseling comes first
HUD-approved counseling is required before closing. The counselor is independent, not from the lender. The fee is often around $125, and an agency cannot turn away someone who cannot afford it.6 Find one at HUD’s counselor search or call 800-569-4287.
HECM for Purchase
A reverse mortgage can also be used to buy a different home, in a single transaction. This option is built for downsizing, so you can move into a smaller place without taking on a monthly mortgage payment. See HUD’s HECM for Purchase page.
How much can you actually tap?
A reverse mortgage does not let you borrow your full equity. It lends only a fraction of the home’s value, set by the borrower’s age and current interest rates, not by equity. Older borrowers get a larger fraction.18
| Age of borrower | Rough share of home value available |
|---|---|
| 62 | about 36 percent |
| 65 | about 38 percent |
| 70 | about 42 percent |
| 75 | about 45 percent |
| 80 | about 49 percent |
| 85 | about 55 percent |
| 90 | about 62 percent |
Two more limits apply. The home value counted toward the loan is capped at $1,249,125 for 2026 (up from $1,209,750 in 2025).4 And in the first year, a borrower generally cannot draw more than 60 percent of the total amount available.
What it costs to get in
The upfront costs of a reverse mortgage are higher than for a typical loan. They include the FHA mortgage insurance premium (2 percent of home value), the lender origination fee (2 percent of the first $200,000 of home value plus 1 percent above, capped at $6,000), and third-party costs for the appraisal, title work, recording, and HUD counseling. Together they commonly total about $7,000 to $20,000 or more, and they are usually rolled into the loan rather than paid out of pocket. There is no real estate commission, because the home is not being sold.5
After closing, the loan also carries interest, a monthly servicing fee, and an annual FHA insurance premium of 0.5 percent of the loan balance. The HECM borrowing cap was $1,209,750 in 2025 and rises to $1,249,125 for loans started on or after January 1, 2026.4 The cap is a ceiling used in the math, not the amount received.
When it makes sense
A reverse mortgage tends to make sense when the home is paid off (or close to it) and the owner plans to stay for years. It tends not to make sense when there is still a large mortgage owed, or when a move is coming within a few years, because the upfront costs are front-loaded and never get spread thin enough to recover.
One homeowner, two situations
Meet Carol. She is 74 and owns a home appraised at $300,000. At her age, her principal limit is about 44 percent of value, which is $132,000. That is the maximum the lender will extend, and it is the same regardless of what she owes today, because the reverse mortgage must pay off any existing mortgage first before any cash reaches her.
| Carol’s $300,000 home, age 74 | If her home is paid off | If she still owes $111,000 |
|---|---|---|
| Home appraised value | $300,000 | $300,000 |
| Principal limit (about 44 percent at age 74) | $132,000 | $132,000 |
| FHA mortgage insurance premium | minus $6,000 | minus $6,000 |
| Lender origination fee | 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 | 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 |
Rule of thumb: the more you still owe, the less a reverse mortgage puts in your pocket. The principal limit is set by age and rates, not by your equity, and any existing mortgage gets paid off the top.
Watch out
A reverse mortgage does not erase the property tax and insurance bills. If those go unpaid, the loan can default and the lender can foreclose. See the CFPB on borrower responsibilities.
Good to know
A HECM is non-recourse. The borrower and heirs never owe more than the loan balance or the home value, whichever is less. See the CFPB on what happens if the balance grows larger than the home value.
What happens at the end
The loan becomes due when the last borrower dies, sells, or stops living in the home as a main residence, including a care-facility stay of more than 12 months. Heirs typically get about 30 days to respond and arrange next steps, and they never have to pay more than 95 percent of the appraised value to keep the home. An eligible non-borrowing spouse can often stay in the home after the borrower dies, as long as the terms of the loan are met.
02. Comparing the Three Big Options
Other Mortgage Options
A reverse mortgage is not the only way to tap home equity. The two most common alternatives are the home equity loan and the home equity line of credit (HELOC). Each works very differently.
| Feature | Reverse mortgage (HECM) | Home equity loan | HELOC |
|---|---|---|---|
| Monthly payment required | 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 over time and equity grows. With a reverse mortgage the balance goes up. Home equity loans and HELOCs cost less to set up, but they require monthly payments, and missing those payments puts the home at risk just like a regular mortgage.
Refinancing the existing mortgage is also an option, though the CFPB cautions against starting a fresh 30-year loan late in life, because it can lock in payments that outlast your retirement income.
Good to know
Under the Equal Credit Opportunity Act, a lender generally cannot deny a loan or charge more because of age, and must count Social Security, pension, annuity, and other retirement income just like wages. See the CFPB on age and source of income in lending.
03. Programs Most Owners Never File For
Michigan Property Tax Relief
Property tax is the recurring bill that most threatens an older owner’s ability to stay home. Michigan has several programs that lower that bill, and many of them go unclaimed because the owner never knew to apply. For the basics of how Michigan property taxes work, see my Michigan property taxes page.
| 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 the summer tax bill with no penalty or interest. The owner still owes it later. | Owners 62 or older with total household income of $25,000 or less. | File Form 471 with the city or township treasurer by about September 15. |
| Principal Residence Exemption8 | Removes up to 18 mills of local school operating tax from the bill. | Owners of the one home they occupy as their primary residence. Second homes and rentals do not qualify. | File Form 2368 with the local assessor by June 1 or November 1. |
| Poverty or Hardship Exemption19 | Lowers the property tax for the year, partly or in full. | Owner-occupants who cannot pay by reason of poverty. | Apply to the local Board of Review with Form 5737. |
| Disabled Veterans Exemption9 | Cancels the property tax entirely. | Veterans the VA rates permanently and totally disabled from service, and their unremarried surviving spouses. | File Form 5107 with the local assessor. Renews automatically once granted. |
| Home Heating Credit20 | Helps pay winter home heating bills. Extra help for seniors. | Lower-income Michigan residents. No income tax return needed. | File Form MI-1040CR-7 by September 30. |
The Homestead figures shown are for the 2025 tax year. Michigan publishes the 2026 figures later in the year.
The key point
The Principal Residence Exemption counts only for the one home you own and live in as your primary residence. If you moved, downsized, or never filed in the first place, you could be overpaying. A short call to the local assessor confirms whether your exemption is on file.
04. What the Tax Code Lets You Keep
Selling or Downsizing the 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 homeowners keep a large share of that profit tax free.3
| Your filing status | Profit you can keep, fully tax free |
|---|---|
| A single owner | up to $250,000 |
| A married couple filing together | up to $500,000 |
To qualify, all of the following must be true:
- The home was your main home, where you actually lived.
- You owned it at least 2 of the last 5 years.
- You lived in it at least 2 of the last 5 years.
- You have not used this exclusion on another home sale in the last 2 years.
Profit above the $250,000 or $500,000 cap is taxed as a long-term capital gain.
Good to know. Already moved into a care facility?
If the owner moved into a nursing home or assisted living and later sells the home, a special rule still counts that time toward the “lived in it” requirement. The owner can usually still claim the full exclusion. See IRS Topic 701.
The key point
Keep home improvement receipts. Capital improvements add to your cost basis, which lowers the taxable gain when you sell. For homes that have appreciated heavily over decades, this matters.
Stepped-up basis on an inherited home
When someone inherits a home, its basis steps up to the market value on the date the previous owner died. That can erase decades of taxable gain.
An example, why this matters
Parents bought a house in 1975 for $40,000. By the time the surviving parent dies in 2026, it is worth $400,000. A child who inherits the home gets a $400,000 basis. If they sell soon after for $400,000, there is almost no taxable gain at all.
But giving the home away during life, or adding a child to the deed, is treated as a gift. The child takes the old low basis ($40,000) and can face a very large tax bill on the same sale. The well-meant move costs the family money.10 See IRS Publication 523.
The move itself
Downsizing is its own project. Senior move managers plan and run the move, sort and pack possessions, and coordinate the small army of contractors that ends up involved. AARP has practical guidance on the process. When you are ready to talk through what your home would sell for and what selling looks like in this market, my seller page has more.
Watch out
Be careful with sale-leaseback offers, where you sell the house to a company and then rent it back from them. The FTC warned in 2024 about heavy fees, rising rent, and eviction risk in these deals. They look like a way to stay in your home and unlock equity. In practice, you can end up paying more in rent than the mortgage would have cost, and lose the home anyway.
05. Passing the Home to the Next Generation
Estate Planning for the Home
Wills, probate, and trusts
A will names a personal representative and says who gets what, but it does not skip probate, which is the court process that distributes a deceased person’s property. For most older Michigan homeowners, the home is the main asset that has to pass through probate.
Michigan does have a simplified small-estate process for estates of $53,000 or less for a death in 2026.12 A revocable living trust is a different tool: property put into the trust passes by the trust document instead of probate, which keeps the matter private and usually faster. See Michigan Legal Help on wills and the State Bar’s probate resources.
The Lady Bird deed, Michigan’s quiet workhorse
Michigan is one of the few states that recognize the Lady Bird deed. It is a powerful, low-cost tool that does several things at once.
The owner keeps full control of the home while alive. That includes the right to sell, mortgage, or even change their mind and revoke the deed. A named beneficiary, often a child, receives the home automatically at the owner’s death, with no probate.
It avoids probate, does not trigger a Michigan property-tax uncapping, preserves the stepped-up basis for the heir, is generally not treated as a gift that causes Medicaid trouble, and keeps the home out of Medicaid estate recovery. An attorney prepares it for a modest fee.11
Read more at MSU Extension on Lady Bird deeds in Michigan.
Watch out. Joint ownership is not the same thing.
Adding an adult child as a joint owner of the home seems like an easy way to “skip probate.” It is not the same as a Lady Bird deed, and it creates real problems. You cannot sell or refinance without the child’s signature. The home is exposed to their creditors and any divorce. The child loses the stepped-up basis. A Lady Bird deed avoids all three. See Michigan Legal Help on jointly owned property.
The durable financial power of attorney
A durable financial power of attorney lets a trusted person handle money and legal matters if the owner becomes unable to. Without one, nobody can sell or refinance the home of an incapacitated owner without going to probate court for a conservatorship, which is slow, public, and expensive. Under Michigan law, a financial power of attorney signed on or after July 1, 2024 is automatically durable.13 See Michigan Legal Help on financial powers of attorney.
06. The Big Risk Most Families Underestimate
Medicaid, Long-Term Care, and Your Home
Long-term care costs are the single largest financial risk for most Michigan seniors, and they fall harder here than in many states. The median Michigan nursing home cost is near $135,050 a year for a shared room and $143,628 for a private room.14 Even modest stays add up quickly.
Watch out. Medicare does not pay for long-term care.
Medicare covers only limited skilled care, usually after a hospital stay, and never long-term custodial care (help with bathing, dressing, eating, mobility). The realistic options are paying privately, using long-term care insurance bought well in advance, or qualifying for Medicaid. See Medicare.gov on long-term care.
The asset limit
A single Medicaid applicant in 2026 has a countable asset limit of about $9,950. Most savings and investments count toward that limit. The home is generally exempt from that count, though, in several situations: while a spouse, a minor child, or a disabled child lives there; or while the owner documents an intent to return home.15
Good to know. The community spouse keeps more.
A spouse who stays in the home (the “community spouse”) can keep up to about $162,660 of the couple’s assets in 2026, plus a monthly income allowance from the institutionalized spouse’s income. The community spouse is not expected to spend down to poverty to qualify their partner for Medicaid.
The five-year look-back
Michigan reviews the previous 60 months of the applicant’s finances. Gifts or below-value transfers made during that window create a penalty period, during which Medicaid will not pay. Translation: last-minute giving the home away does not work. Planned-ahead strategy with an elder-law attorney does work, and the Lady Bird deed is the clearest real estate example.15
The key point. Estate recovery.
After a Medicaid long-term-care recipient age 55 or older dies, Michigan can claim back what Medicaid paid for their care. But the claim reaches only the probate estate. A Lady Bird deed keeps the home out of the probate estate, and so out of estate recovery’s reach. See MDHHS on estate recovery.16
Care at home
Medicaid in Michigan also pays for long-term care delivered at home or in the community, not just in nursing facilities. Two programs to know: the MI Choice Waiver covers in-home services for people who would otherwise need nursing-home care, and PACE (Program of All-Inclusive Care for the Elderly) wraps medical and social services around the goal of keeping the person at home.
Watch out
The 2026 Medicaid figures shown here are best confirmed with MDHHS or a Michigan elder-law attorney before relying on them, since some asset and income limits update during the year.
07. Scams Built to Fool Careful People
Fraud That Targets the Home
Scams aimed at older homeowners are designed by professionals. They are written to fool careful people, not just careless ones. Americans 60 and older reported $4.885 billion in fraud losses to the FBI in 2024.17 The home is the biggest target, because it is the biggest asset.
Home title and deed fraud
Criminals forge deeds to transfer ownership and then borrow against the home. Many county registers of deeds offer a free property-fraud alert that emails you whenever a document is recorded against your property. Worth signing up for.
Reverse mortgage scams
Watch for contractors pushing a reverse mortgage as the way to pay for the work. Watch for anyone steering the proceeds into an annuity or investment. Watch for fake government logos in mail and ads. The VA does not offer reverse mortgages, full stop. If you see an ad claiming otherwise, it is a scam.
Contractor and home repair fraud
Door-to-door pressure, “we noticed something with your roof” pitches, and large up-front cash demands are the signature moves. Get written estimates from companies you found yourself, and check licensing. My Trusted Local Services list is the people I personally use.
If you suspect a scam, tell me too
Report it through the agencies below. Also call or email me. I see these scams regularly in this area, can take a look, and if it is a scam I can send a bulletin to MLS agents across the region so they can warn their clients before it spreads.
The key point. The red flags.
A demand to act now. A request to keep it secret. A request to pay with gift cards, wire transfer, or cryptocurrency. Contact you did not start. A threat. An offer that is too good to be true. If you see any of these, the right move is to hang up, and call back at a number you look up yourself.
Who to call
- Michigan Attorney General Consumer Protection: 877-765-8388
- Michigan Adult Protective Services: 855-444-3911
- National Elder Fraud Hotline: 833-372-8311
08. Free, Local, and Already Set Up to Help
Getting Help in Michigan
The agencies below exist for exactly this purpose. They are funded to help. Most people never call them, so most people miss out.
Region IV Area Agency on Aging
Serving Berrien, Cass, and Van Buren counties. The first call for almost any senior question in this part of the state. They do information and referral, benefits enrollment help, care coordination, and a long list more.
2900 Lakeview Avenue, St. Joseph, MI 49085
Info-Line: 800-654-2810
areaagencyonaging.org
Michigan 211
Dial 211. A free statewide referral line for housing, utility help, food, health, and more. Open 24 hours. mi211.org
Eldercare Locator
Federal service for finding local aging resources anywhere in the US. 800-677-1116. eldercare.acl.gov
BenefitsCheckUp
National Council on Aging screening tool that finds federal, state, and local benefit programs you may qualify for. benefitscheckup.org
HUD Housing Counseling
Free housing counseling from HUD-approved nonprofits. Reverse mortgage, foreclosure, rental, all the way through buying. hud.gov/findacounselor or 800-569-4287.
Weatherization Assistance
Free home energy-efficiency improvements for income-eligible Michigan homeowners. Available in all 83 counties. michigan.gov weatherization
Ready to act on any of this?
Most of these steps can be started on your own, with the agencies linked above. For the real estate side, selling, downsizing, or weighing options, call or text any time. No pressure, no commitment.
Disclaimer. This guide is a working reference compiled from publicly available information. Program details, contacts, dollar amounts, and eligibility change over time, so verify specifics directly with the agencies listed before relying on them. Nothing in this guide is legal, tax, financial, or medical advice. For decisions of any size, consult a licensed Michigan attorney, CPA, financial professional, or elder-law specialist as appropriate.
Sources and Citations
- 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 Mortgagee Letter on HECM limits, see HUD HECM program page and CFPB on reverse mortgage limits.
- HECM upfront costs (FHA mortgage insurance premium of 2 percent, lender origination fee, third-party costs) and 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 rule against turning away those who cannot pay. HUD housing counselor search; 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; 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; 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; CFPB on reverse mortgages. Actual factor depends on 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.