HELOC vs. a Personal Loan for Your Mom’s Assisted Living Costs

The Quick Read: A HELOC fits an adult child with real equity in a personally titled home who accepts a lien on it, while a personal loan fits a borrower with strong credit who wants no lien on any property and can carry a lump-sum obligation. Both are loans to the person who signs, not to Mom. The right choice depends on whose home is pledged, how much equity exists, and how long care will last.

• A HELOC is secured by a property. A personal loan is unsecured.
• On Lendmire’s network, the ceiling depends on how the property is occupied, so an investment-property line sits at a lower cap than a primary-residence line.
• A HELOC cannot be vested in an LLC. Rentals held in an entity usually need a different path.
• A personal loan puts no lien on a home, but a default can still bring collections and credit damage.
• Medicaid look-back rules on asset transfers can affect this decision, so check them before moving any money.

Side-by-Side

The HELOC column reflects select lenders in Lendmire’s wholesale network. The personal loan column shows published industry norms, which vary by lender.

Whose Name, Whose Home?

Settle this before you compare products. Both loans go to whoever signs. If you borrow, you owe the debt, even when every dollar goes to your mother’s facility. A Benzinga account of a family pressing one relative to take a large HELOC for a father’s dementia care makes the same point. The signer stays responsible if family plans change.

There are three common setups:

1. Your home secures the line. You are the borrower. The lender reviews your credit, your debt-to-income ratio, and the equity in your property.

2. Your mother’s home secures the line. She is the borrower, and the lender reviews her credit and income. If you co-sign, the debt follows you too.

3. No property secures the debt. A personal loan rests on your credit and finances alone.

A fourth setup comes up with investors. Your equity may sit inside LLC-titled rentals, not in a home you own personally. A HELOC on the network cannot be vested in an LLC, so those properties do not work as collateral for it.

Key Terms Defined

HELOC: A revolving line of credit secured by a property, with a draw period followed by a repayment period.

CLTV: Combined loan-to-value, which adds every lien on the property and divides by its value.

Unsecured loan: A loan with no collateral, decided on credit and finances.

Look-back period: The span before a Medicaid application during which transfers of money or property are reviewed.

When a HELOC Is the Better Fit

A HELOC is the better fit when you own a personally titled home with solid equity, your credit is strong, and you want a larger limit than most unsecured loans offer. The Consumer Financial Protection Bureau describes a HELOC as an open-end line with a draw period and then a repayment period, often spread over ten or 20 years. It also warns that falling behind could cost you the home.

Here is how that looks on the network. Brokered lines run from $25,000 to $750,000, and a line above $500,000 is for primary residences only. Ceilings depend on occupancy and credit:

• Primary residence: 90% CLTV at 720 or better, on lines up to $500,000. Lines above $500,000 cap at 75% CLTV, need a full appraisal, and require a credit profile of at least 700, or 720 on the 5-year draw and 25-year repayment structure.
• Second home: 90% CLTV at 720 or better, on lines up to $500,000.
• Investment property: 70% CLTV, with a 700 credit minimum and a $500,000 maximum line.

Market surveys differ. NerdWallet reports that many lenders cap an investment-property HELOC at 80%, while many set thresholds below 70%. That describes the broader market. On the network, the investment ceiling is 70% CLTV.

The draw mechanics are the part that surprises people. Across the network, at least 75% of the line is drawn at closing. After that, a subsequent draw is generally at least $1,000 (Texas at $4,000). So a HELOC here is not a pure draw-as-needed account for monthly facility bills. The structures:

• Draw and repayment: a 3-year interest-only draw with a 17-year repayment, or a 5-year interest-only draw with a 25-year repayment. Tennessee shortens both.
• Investment lines: the 5-year draw and 25-year repayment structure only.
• Pricing: variable across the draw and the repayment period. It does not convert to fixed.

Because pricing floats, a multi-year care need has to be stress-tested. The lender reviews your file on the interest-only payment at the maximum draw, with DTI capped at 50% (45% for credit profiles from 600 to 679).

The HELOC also has an advantage when Mom is the one moving. A senior-care education site notes that a HELOC does not require the homeowner to stay in the home. A HELOC on her property can still make sense when she is the borrower and her own credit and income support it.

Availability is narrow. Lendmire brokers these lines in 16 states only: AL, CA, CO, FL, GA, IN, MI, MT, NM, NC, OH, PA, TN, TX, VA, and WA. Texas primary residences are capped at 80% combined loan-to-value and carry a 12-day waiting period. Every figure is subject to lender guidelines and full file review.

When a Personal Loan Is the Better Fit

A personal loan is the better fit when you have no home equity you want to pledge, your equity is trapped in LLC-titled rentals, or you want the debt kept off every property. Your finances and credit score decide whether you qualify. Nothing is appraised, and no lien is recorded.

That simplicity has limits:

• Size: unsecured loans generally top out well below the lines available against equity.
• Shape: the money usually arrives as one lump sum on a fixed schedule. That fits a move-in deposit and first months of fees. It fits a care need that may run for years less well.
• Risk: no property is at stake, but the debt is still yours. Default can lead to collections and damaged credit.

Say you hold three rentals through an LLC and live in a rented home. Your equity is real, but none of it is in your name. A HELOC does not fit that profile. A personal loan or another structure does.

There is a middle path for investors. If equity sits in an LLC-held rental, a DSCR cash-out refinance may be worth discussing. Cash-out on standard rental collateral tops out around 75% LTV across most of the network, and about 6 months of seasoning is the common expectation. A coverage ratio of 1.00 is where many select programs start. Coverage below 1.00 is available through select lenders in the network, with leverage and terms adjusted. Lendmire’s complete DSCR loans guide walks through how those programs work.

DSCR loans are designed for non-owner-occupied investment properties. Because they are business-purpose investor loans, they are reviewed differently from a standard owner-occupied mortgage. Care costs are a personal need. Ask how a lender views the use of proceeds before you plan around a cash-out for this purpose.

What Should You Rule Out First?

Check these before you borrow:

• Your mother’s own income, savings, and benefits.
• Long-term care insurance, if she holds a policy.
• The sale of her home, if she will not return to it.
• A family agreement on who covers what.

Borrowing is the last step, not the first.

Protect Yourself Before You Borrow

Put the arrangement in writing. If you are lending to your mother personally, or paying her facility with borrowed money, a short written agreement says who owes what and how repayment works. Brothers and sisters should see it. The Benzinga story above is about exactly the resentment that unwritten arrangements create.

Medicaid deserves a careful look before any money moves. Elder Law Answers explains that Medicaid reviews transfers made in the 60 months before an application, with California at 30 months. Transfers for less than fair value can trigger a penalty period. You paying her bills from your own pocket is generally not a transfer by her. The risk runs the other direction. If she gives money or property to a child, or pays a relative for care without a written agreement, that can count as a gift. Nolo notes that even paying a relative to provide care can be treated as a gift unless the arrangement is in writing. Medicaid is state-administered, so rules vary.

Whether a loan from you to her is treated differently is a question for an elder-law attorney. Do not guess.

Keep clear records of how the funds are used, and see the tax-deductibility answer in the FAQ below before relying on any deduction.

A Stress-Test Checklist for a HELOC

1. Confirm whose home is pledged and whose name is on the loan.

2. Test the payment if the variable pricing rises, and decide what you would do if care runs longer than planned.

3. Ask whether the 75% closing draw matches your real near-term need.

4. Check your spouse’s consent and your own retirement plans.

5. Ask what happens if the property value falls, since a lender may reduce or freeze a line when a home’s value drops.

6. Confirm the property type is eligible. Manufactured homes, co-ops, condotels, and log homes are not.

7. Confirm title. A property already deeded to an LLC needs a vesting change or a different structure.

8. Check your exposure. The network limits a borrower to three lines and excludes borrowers with more than 15 financed properties.

The Verdict

Neither option wins on its own. A HELOC makes sense when you hold equity in a personally titled home, can accept a lien, and can live with variable pricing over a long runway. A personal loan makes sense when you want no property at risk, your equity is locked in entities, or the need is modest enough for an unsecured amount.

If your wealth lives in LLC-held rentals, the HELOC drops out and the choice is between a personal loan and a business-purpose refinance discussion.

If you are considering a home equity line and want to see how the numbers work, Lendmire can help you compare HELOC options based on the property, the equity available, credit profile, combined leverage, and your goals.

About Lendmire

Lendmire is a mortgage brokerage (NMLS# 2371349) arranging home equity lines of credit — primary-residence, second-home and investment-property lines — through a wholesale lending network in its 16 full-service states. Eligibility is determined by the lender on each file. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.

References

1. Benzinga – Family wants a HELOC for dad’s dementia care

2. CFPB – What is a HELOC

3. NerdWallet – HELOC on investment property

4. PayingForSeniorCare – Home equity

5. Elder Law Answers – Medicaid’s asset transfer rules

6. Nolo – Medicaid look-back