How to pay for home renovations in retirement

There’s no place like home. It was as true for Dorothy Gale in 1939 as it is today.

But, as we get older, our homes don’t always accommodate our changing needs. Many homeowners choose to renovate rather than move, adapting their homes to support these shifts.

So far, Baby Boomers seem up to the task: They accounted for 59% of home renovators in 2024, with a median spend of $20,000. Homeowners aged 79 and older spent even more, with a median of $22,000, according to a 2025 study from home design and renovation platform Houzz.

For retirees, financing these projects often requires a different approach than it did during their peak earning years. Traditional options may rely on employment income or introduce monthly payments that are harder to manage on a fixed income.

As a result, many retirees consider a range of funding strategies—from home equity-based options such as reverse mortgages (HECMs), home equity lines of credit (HELOCs), and home equity loans, to government programs for safety and accessibility improvements, as well as personal savings or retirement account withdrawals. The right approach depends on factors such as available equity, income stability, and whether avoiding monthly mortgage payments is a priority.

Each option involves tradeoffs, making it important to evaluate how these choices align with long-term financial goals.

Below, we’ll walk through common approaches to help you decide how to pay for home renovations in retirement.

Why home renovations in retirement may become more important—and complex

For many retirees, renovations are less about aesthetics and more about safety, accessibility, and long-term comfort at home. Updates like improved bathroom safety, better lighting, and structural changes such as stair lifts or wider doorways may become priorities for aging in place—helping support the ability to remain in the home, as long as loan obligations are met. In some cases, these updates may also increase the home’s value.

At the same time, not all renovation needs are planned. Home systems like roofing, plumbing, and electrical naturally wear down over time, and deferred maintenance may add up—creating a situation where repair needs increase even as budgets become tighter.

Financing adds another layer of complexity. Many traditional options rely on income documentation—such as W-2 earnings—as well as metrics like debt-to-income (DTI) ratios and credit history. For retirees, these measures may not fully reflect their financial picture, particularly if wealth is concentrated in home equity rather than income.

As a result, some retirees look beyond traditional, income-based financing and consider other ways to access the value built up in their homes.

The right to remain in the home is contingent on paying property taxes and homeowner’s insurance, maintaining the home, and complying with the loan terms.

The borrower must meet all loan obligations, including living in the property as the principal residence and paying property charges, including property taxes, fees, and hazard insurance. The borrower must maintain the home. If the homeowner does not meet these loan obligations, then the loan will need to be repaid.

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Home equity-based options for home renovations

Tapping into home equity involves borrowing against the value built up in your home to fund expenses like renovation projects. Several options allow homeowners to do this, although each comes with tradeoffs. They include:

Home equity loans¹

A home equity loan is one of several home improvement loans that provides a lump sum with a fixed interest rate and predictable monthly loan payments. This may work well for specific projects, but eligibility typically depends on income, credit, and DTI ratios. In addition, required monthly payments may strain a fixed income.

HELOCs

A home equity line of credit (HELOC) allows homeowners to access funds as needed during a draw period through a revolving line of credit, followed by repayment. Rates are typically variable, which means payments may fluctuate as interest rates change. This flexibility may be a good fit for ongoing projects, but variable payments and income-based eligibility may present challenges for some borrowers. Because these options use your home as collateral, failing to make payments could put the home at risk.

→Read more in our guide, Is a HELOC a good idea? Here’s how to decide.

Cash-out refinance¹

A cash-out refinance replaces an existing mortgage with a larger loan, allowing you to access the difference in cash for renovation projects. It resets repayment terms and requires monthly principal and interest payments, which may extend the repayment timeline or change the interest rate. The application process typically includes traditional income-based underwriting.

How repayment structure affects your options

All of the options above require monthly mortgage payments, which may be an important consideration for retirees living on a fixed income.

For homeowners with substantial home equity—especially those with a low or no existing mortgage balance—the focus often shifts to how to access that equity in a way that supports long-term financial stability.

Those seeking a different approach to repayment—particularly one without required monthly mortgage payments—may consider a reverse mortgage, also known as a home equity conversion mortgage (HECM).

The borrower must meet all loan obligations, including living in the property as the principal residence and paying property charges, including property taxes, fees, and hazard insurance. The borrower must maintain the home. If the homeowner does not meet these loan obligations, then the loan will need to be repaid.

Reverse mortgages for renovation financing

A HECM is the most common type of reverse mortgage. It allows eligible homeowners to access home equity without required monthly mortgage payments. Instead, repayment is deferred until the borrower sells the home, moves out, passes away, or doesn’t comply with loan terms.

The borrower must meet all loan obligations, including living in the property as the principal residence and paying property charges, including property taxes, fees, and hazard insurance. The borrower must maintain the home. If the homeowner does not meet these loan obligations, then the loan will need to be repaid.

How a HECM works

HECMs have specific eligibility requirements and flexible payout options. To be eligible, homeowners must, at a minimum:

• Be at least 62 years old
• Occupy the home as a primary residence
• Have sufficient equity
• Complete a session with a housing counselor approved by the U.S. Department of Housing and Urban Development (HUD)²

Funds may be received as:

• A lump sum
• A line of credit
• Monthly disbursements
• A combination

This flexibility may make it easier to match funding to the timing and size of a renovation project.

A HECM is a non-recourse loan, meaning the borrower or their heirs will never owe more than the home’s value when the loan becomes due and the home is sold. If the loan balance exceeds the home’s value, insurance from the Federal Housing Administration (FHA) covers the difference.^3,4

To learn more, please visit the CFPB’s “Reverse Mortgage: A Discussion Guide.”

Common misconceptions

Reverse mortgages are often misunderstood. The following points help clarify how HECMs work:

• Ownership: The title remains in your name.
• Inheritance: Heirs may inherit the home and repay the loan to keep the remaining equity.
• Protections: HECMs are insured by the FHA, which helps ensure access to funds—such as guaranteed monthly payments if selected—but the loan must still be repaid.²

The borrower must meet all loan obligations, including living in the property as the principal residence and paying property charges, including property taxes, fees, and hazard insurance. The borrower must maintain the home. If the homeowner does not meet these loan obligations, then the loan will need to be repaid.

Not sure where to start?

Our reverse mortgage specialists will be happy to help you.

Speak to a loan specialist

Second reverse mortgages for home improvements

While HECMs are the most widely used reverse mortgage, they are not the only option. Some homeowners may also consider proprietary reverse mortgage products that offer different structures and features.

That includes HomeSafe Second, a second-lien reverse mortgage designed for older homeowners that allows them to access home equity while keeping their existing low-interest first mortgage. Because it is structured as a second lien, it does not require replacing the primary mortgage.³

The borrower must meet all loan obligations, including meeting those under the first lien mortgage, living in the property as the principal residence and paying property charges, including property taxes, fees, hazard insurance. The borrower must maintain the home. If the homeowner does not meet these loan obligations, then the loan will need to be repaid.

This option may be useful for homeowners who want to preserve their current mortgage terms while accessing funds for home improvements or other expenses. Like other reverse mortgages, it does not require monthly mortgage payments, as long as loan obligations are met.

→ Learn more: HomeSafe Second vs HELOC: What is the difference?

Home equity agreements as an alternative funding option¹

While reverse mortgages are one way to access home equity without required monthly mortgage payments, some homeowners also explore options that are not structured as loans.

Home equity agreements (HEAs), also known as home equity contracts, allow homeowners to access a portion of their home equity without taking on a new loan or making monthly payments.

In exchange for an upfront payment, the homeowner agrees to share a portion of the home’s future value, which may include both appreciation and depreciation.

Terms typically range from 10 to 30 years, with settlement occurring when the home is sold, the term ends, or the homeowner exits the agreement early. At that point, repayment includes the original amount received plus a share of any change in the home’s value over time, as defined by the terms of the agreement.

While this structure may help avoid monthly payment obligations, it also involves tradeoffs. Because repayment is tied to the home’s future value, the total cost may exceed the initial amount received—particularly if the home appreciates over time. Homeowners also give up a portion of their future equity, which may reduce proceeds from a future sale or limit financial flexibility later.

Why some retirees consider this approach

Because HEAs are not structured as traditional loans and do not require monthly payments, some retirees consider them as a way to access funds without adding ongoing monthly obligations. Eligibility is typically based more on the home itself—such as its value, available equity, and property characteristics—rather than employment income.

This structure reflects a trade-off that may be worth evaluating in the context of long-term financial goals.

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Government programs and grants for home renovations

Some retirees explore government programs to help offset renovation costs, particularly for safety and accessibility improvements. These programs may be available at the federal, state, and local levels, although eligibility requirements and funding availability vary. Some programs are designed to support safety-related improvements, such as removing health hazards or improving accessibility. A potential bonus: Energy-efficiency upgrades may also be eligible for federal tax credits, which could help offset costs over time.

While these resources may provide helpful support, they are often designed to supplement—rather than fully cover—the cost of larger renovation or home improvement projects.

Federal programs

Several federal programs offer support for home modifications, particularly for eligible homeowners:

• FHA Title 1 loans: Support home improvements but require repayment and standard eligibility criteria.²
• VA Specially Adapted Housing (SAH) grants: Provide funding to eligible veterans for accessibility-related modifications.
• USDA Section 504 program: Offers loans and grants for low-income homeowners in eligible rural areas.

State and local resources

In addition to federal programs, some homeowners may find support through state and local resources. Programs administered through local organizations like Area Agencies on Aging may offer:

• Grants or low-interest loans for home improvements
• Support for accessibility or energy-efficiency improvements
• Guidance on local resources and services

These programs may help offset certain costs but are often limited in scope. They are typically:

• Income-restricted
• Focused on specific types of improvements
• Subject to funding availability

Personal savings or retirement accounts for renovations

In addition to financing and assistance programs, renovations may also be funded directly using personal assets.

Some retirees use savings, brokerage accounts, or retirement withdrawals to pay for renovations. This approach may help avoid interest and monthly payments, as well as the need to take on new debt, but it also comes with trade-offs. Using these funds may reduce available reserves and limit long-term investment growth, particularly for those early in retirement.

Withdrawals may also have tax implications.⁵

Whether this approach makes financial sense often depends on the scope of the project and overall financial priorities:

When it may make sense	When to evaluate carefully
Smaller, defined projects	Larger projects that may reduce financial flexibility
Essential repairs	Situations where long-term housing plans are uncertain
Sufficient remaining reserves	Projects where the impact of using savings versus spreading costs should be weighed

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How to choose the right home renovation financing option

The right approach depends on how renovations fit into your long-term personal finance strategy.

Assessing how much you can afford before starting a home improvement project may help reduce the risk of financial strain. Key factors to consider include:

• Project size and urgency
• Available equity
• Income stability
• Tax considerations⁵
• Long-term housing plans

The chart below highlights how these options compare:

Option	Payment structure	Eligibility factors	Best fit
Home equity loan¹	Fixed monthly payments	Income, credit, DTI	Predictable, defined projects
HELOC	Variable monthly payments	Income, credit, DTI	Phased renovations
HECM	No required monthly mortgage payments*	Age, equity	Cash flow flexibility
HomeSafe Second3	No required monthly mortgage payments**	Age, equity, existing mortgage	Accessing home equity without refinancing an existing mortgage
Programs/grants	Varies	Income and project-based	Safety or accessibility updates
Savings	No payments	N/A	Smaller projects

*The borrower must meet all loan obligations, including living in the property as the principal residence and paying property charges, including property taxes, fees, and hazard insurance. The borrower must maintain the home. If the homeowner does not meet these loan obligations, then the loan will need to be repaid.

**The borrower must meet all loan obligations, including meeting those under the first lien mortgage, living in the property as the principal residence and paying property charges, including property taxes, fees, hazard insurance. The borrower must maintain the home. If the homeowner does not meet these loan obligations, then the loan will need to be repaid.

Building your home renovation financing plan

Choosing how to pay for home renovations in retirement often comes down to balancing trade-offs across cash flow, predictability, and long-term financial goals.

A few guiding principles may help frame the decision:

• If you want to prioritize cash flow → Choose options without required monthly payments
• If you prefer predictability → Use fixed-payment options for more consistency
• If you want to preserve assets → Weigh using savings versus accessing home equity

No single option is right for everyone. The goal is to identify the approach that best aligns with your financial priorities and long-term plans.

Not sure where to start?

Our reverse mortgage specialists will be happy to help you.

Speak to a loan specialist

How Finance of America may help with home renovation financing

Finance of America offers reverse mortgage products for retirees looking to access home equity while managing their monthly cash flow. With decades of experience serving older homeowners, dedicated loan specialists may help guide you through available options based on your goals and financial situation.

These products include:

• HECMs may allow homeowners age 62 and older to access a portion of their home equity without required monthly mortgage payments, as long as loan obligations are met
• HomeSafe, a proprietary reverse mortgage that may provide access to home equity with flexible payout options for homeowners 55 and up*
• HomeSafe Second, a second-lien reverse mortgage that may allow you to access home equity without refinancing your existing first-lien mortgage³

*For certain HomeSafe products only, excluding Massachusetts, New York, and Washington, where the minimum age is 60, and North Carolina and Texas where the minimum age is 62.

In some cases, a HomeSafe Second line of credit may be available for additional flexibility. However, this option is currently only available in California.

If you’re exploring ways to pay for home renovations in retirement, a Finance of America loan officer may help you evaluate how these options compare with other approaches.

Learn more about Finance of America’s HomeSafe Second reverse mortgage option.

The borrower must meet all loan obligations, including living in the property as the principal residence and paying property charges, including property taxes, fees, and hazard insurance. The borrower must maintain the home. If the homeowner does not meet these loan obligations, then the loan will need to be repaid.

Frequently asked questions

Can I get a home equity loan or HELOC if I’m retired?¹

Possibly. Most lenders consider income from Social Security, pensions, or investments, but eligibility typically depends on credit score and DTI ratios. Even then, both options require monthly payments, which may not align with a fixed-income budget.

What is the difference between a reverse mortgage and a home equity loan?¹

A home equity loan provides a lump sum with required monthly payments. A reverse mortgage (HECM) allows eligible homeowners to access equity without required monthly mortgage payments. Borrowers must continue paying property taxes, maintaining homeowners insurance, and keeping the home in good condition.

The borrower must meet all loan obligations, including living in the property as the principal residence and paying property charges, including property taxes, fees, and hazard insurance. The borrower must maintain the home. If the homeowner does not meet these loan obligations, then the loan will need to be repaid.

Are there grants for home modifications for seniors?

Yes, although availability is limited. Federal, state, and local programs may offer grants or low-cost loans for safety or accessibility improvements. Many programs have income limits, location requirements, or are restricted to specific types of projects.

Are reverse mortgage or HEA funds taxable?

Reverse mortgage proceeds are generally not considered taxable income. Funds from home equity agreements are also typically not taxed when received. Tax treatment may vary, so consider consulting a qualified tax professional.⁵

Will a reverse mortgage affect Social Security or Medicare?

In most cases, no. Reverse mortgage proceeds typically do not affect Social Security or Medicare benefits. However, needs-based programs like Medicaid or Supplemental Security Income (SSI) may be impacted if funds exceed certain limits.

How much equity do I need?

Equity requirements vary by financing option. Traditional loans often require maintaining a certain loan-to-value ratio, while reverse mortgages and home equity agreements consider factors like age, home value, and equity. Having substantial equity—or owning your home outright—may increase available options.

What renovations add the most value for aging in place?

Projects that improve safety and accessibility often provide the most value. Common upgrades include bathroom modifications, improved lighting, accessible entryways, and energy-efficiency improvements—enhancing both day-to-day comfort and long-term usability.

The right to remain in the home is contingent on paying property taxes and homeowner’s insurance, maintaining the home, and complying with the loan terms.

Disclaimers

¹Finance of America does not currently offer home equity loans or cash-out refinances.

² These materials were not provided by HUD or FHA and were not approved by FHA or any government agency.

³The borrower must meet all loan obligations, including meeting all loan obligations under the first lien mortgage, living in the property as the principal residence and paying property charges, including property taxes, fees, hazard insurance. The borrower must maintain the home. If the homeowner does not meet these loan obligations, then the loan will need to be repaid.

⁴A non-recourse reverse mortgage transaction limits the homeowner’s liability to the proceeds of the sale of the home (or any lesser amount specified in the credit obligation).

Non-recourse means that you, or your estate, can’t owe more than the value of your home when the loan becomes due and the home is sold.

Non-recourse means that if you default on the loan, or if the loan cannot otherwise be repaid, the lender cannot look to your other assets (or your estate’s assets) to meet the outstanding balance on your loan.

⁵Not tax advice. Consult a tax professional.