Yes, you can buy a house while on Medicaid, and in most cases the purchase alone won’t cost you your coverage. A primary residence is an exempt asset under Medicaid’s rules, so the home’s value generally doesn’t count against you. What can cost you coverage is the money sitting in your account before closing, the type of Medicaid you’re on, and, years later, a state claim against the house after you die. Each of those needs its own answer.
Which Medicaid You Have Decides Almost Everything
Medicaid splits into two very different worlds for this question, and knowing which one applies to you settles most of it.
If you qualify through the ACA expansion or another income-based pathway (parents, pregnant women, children, most adults under 65), your eligibility uses MAGI-based methodology. There is no asset test. Your savings, investments, and property ownership are irrelevant; only income matters.1Medicaid.gov. Eligibility Policy Buying a house in this group is essentially a personal finance question, not a Medicaid question, as long as your income stays within limits.
If you qualify based on age (65 or older), blindness, or disability, or you’re getting nursing home Medicaid or a home and community-based services waiver, your eligibility follows SSI-based rules that do count assets.1Medicaid.gov. Eligibility Policy These programs cap countable assets at roughly $2,000 for an individual in most states, and this is where buying a home gets complicated. The rest of this article speaks to that group.
How Medicaid Treats the Home Itself
Under asset-tested Medicaid, your things are sorted into countable and exempt. A primary residence sits on the exempt side, as long as you live there or intend to return.
The exemption has a ceiling. Federal law caps the home equity you can hold and still keep the exemption. For 2026, that cap is $752,000 in most states, and states may elect a higher limit up to $1,130,000.2Office of the Law Revision Counsel. 42 USC 1396p – Liens, Adjustments and Recoveries, and Transfers of Assets Equity means fair market value minus the mortgage and any other debt secured by the home, so a $400,000 house with a $350,000 mortgage carries only $50,000 of equity for this test.
The equity cap doesn’t apply at all if your spouse, a child under 21, or a blind or disabled child of any age lives in the home. In those situations the home stays exempt no matter how much equity you hold.2Office of the Law Revision Counsel. 42 USC 1396p – Liens, Adjustments and Recoveries, and Transfers of Assets The statute also allows a reverse mortgage or home equity loan to bring equity below the cap if needed.
The Down Payment Trap
This is where most asset-tested recipients get into trouble. Cash, checking, savings, stocks, and bonds all count toward the roughly $2,000 limit. Money you’re setting aside for a down payment and closing costs is a countable asset every day it sits in your account.
If you’ve built up $15,000 for a down payment, you’ve been over the asset limit since the moment you crossed it. Medicaid doesn’t care that you plan to spend it on something exempt. Until the money converts to home equity at closing, it counts, and being over the limit even briefly can trigger a period of ineligibility.
The window is narrow. You need the cash to close, but holding the cash threatens your coverage. Some buyers receive gift funds from family and move directly to closing so the money never rests in their account long enough to cause a problem. Any gap between receiving the funds and completing the purchase leaves you exposed. Coordinating the timeline with your Medicaid caseworker, and ideally an elder law attorney, is the safest way through.
Getting a Mortgage on Medicaid Income
There’s a practical problem that sits alongside the eligibility rules. If your income is low enough to qualify for asset-tested Medicaid, that same income makes mortgage approval hard. Lenders look at income, debts, and credit; Medicaid benefits themselves aren’t counted as income for mortgage purposes. Property taxes, insurance, and maintenance all have to be affordable on top of any payment.
Some buyers get around this by purchasing outright with inherited money or settlement proceeds. Others use family co-signers or down payment assistance. Medicaid eligibility and mortgage qualification pull in opposite directions: one asks you to have very little, the other asks you to show you can pay.
Reporting the Purchase
Federal rules require you to report changes affecting eligibility within 30 days, and buying a house is one of them.3Centers for Medicare & Medicaid Services (CMS). Change in Circumstances Some states use shorter deadlines, so check yours.
Skipping this can be treated as fraud or lead to an overpayment determination, where the state demands repayment for benefits paid while you were technically ineligible. Even though the residence itself is exempt, the agency still needs to verify your equity, that you’re living in the home, and that the funds used for the purchase didn’t push you over the asset limit along the way. Reporting on time is the cleanest way to keep the purchase from becoming a coverage problem.
What Happens After You Die: Estate Recovery
Your home can be exempt your entire life and still end up with a state claim against it after you’re gone. Federal law requires every state to run a Medicaid Estate Recovery Program (MERP), which seeks repayment for certain medical costs Medicaid covered.4Medicaid.gov. Estate Recovery
Recovery targets people who were 55 or older when they received Medicaid-funded nursing facility services, home and community-based services, and related hospital and prescription drug costs. States can expand recovery to all Medicaid services provided after age 55, though not all do.4Medicaid.gov. Estate Recovery The state’s claim cannot exceed what Medicaid actually spent on your care.5U.S. Department of Health and Human Services. Medicaid Estate Recovery
For most people the home is the biggest asset in the estate. If Medicaid spent $200,000 on your care and your house is worth $300,000, the state’s claim is $200,000. Heirs keep the rest, but the house often has to be sold to satisfy the debt.
Recovery is blocked while certain family members survive you: a spouse, a child under 21, or a child of any age who is blind or permanently disabled. Once those protections lapse, the state can pursue its claim. Every state also has an undue hardship waiver process, but the waiver isn’t automatic; someone has to apply for it and make the case.4Medicaid.gov. Estate Recovery
Protecting the Home, and the Five-Year Look-Back
Because MERP goes after assets that pass through probate, the common protective tools try to move the home out of your probate estate before you die. Two show up most often. A life estate deed lets you keep the right to live in the house for life while a named person automatically takes full ownership at your death. An irrevocable trust does something similar: the home is transferred to a trust, and the trust holds it at your death rather than your estate.
Both come with a serious catch. Federal law imposes a 60-month look-back on asset transfers.2Office of the Law Revision Counsel. 42 USC 1396p – Liens, Adjustments and Recoveries, and Transfers of Assets If you transfer the home into a trust or create a life estate deed and then apply for Medicaid long-term care within five years, the agency treats the transfer as a gift and imposes a penalty period of ineligibility. The penalty length is the transferred value divided by the state’s average monthly cost of nursing home care, so a large home transfer close in time to a Medicaid application can produce years of ineligibility.
These strategies only work when put in place well before you need long-term care. Waiting until a health crisis hits is too late. If protecting the home from eventual recovery matters to you, that conversation belongs with an elder law attorney early, not after an application is on the table.