How to Pay For a Care Home with No Money

Care home fees in the UK can top £67,000 a year for residential care and nearly £80,000 for nursing care. Those are numbers that would make anyone’s stomach drop.

And if your savings are running low, or you never had much to begin with, you might be wondering: what happens now?

Here is the good news. You are not expected to simply find that money from thin air. There are several government-backed schemes, benefits, and practical options designed to help people in exactly this situation. Most families just do not know they exist.

In this guide, I will walk you through every realistic option for funding care home fees when money is tight. From local authority support and NHS-funded care to deferred payment agreements, property-based options, and benefits you might be missing.

No jargon. No waffle. Just clear, actionable steps.

How Much Does a Care Home Actually Cost in 2026?

Before looking at funding options, it helps to understand exactly what you are dealing with.

Care home costs vary significantly depending on where you live and the level of care needed. But here are the current UK averages for self-funders:

Source: Carehome.co.uk, 2026 self-funder averages

London and the South East tend to be significantly more expensive. Care homes in the North West and South West are generally cheaper, but even at the lower end, the costs are substantial.

The point is this: very few people can comfortably afford these fees from savings alone. That is perfectly normal. And there is help available.

The Means Test: How Your Finances Are Assessed

When you approach your local council for help with care home fees, they carry out a financial assessment (sometimes called a means test). This determines how much, if anything, you need to contribute.

The assessment looks at your income (pensions, benefits, other earnings) and your capital (savings, investments, and in some cases, property).

Here is how the capital thresholds work in 2026:

Source: DHSC Local Authority Circular, 2025/26

These thresholds have not changed for several years. The government’s planned charging reform (which would have raised the upper limit to £100,000) was scrapped in July 2024, so the £23,250 and £14,250 limits continue for 2026/27.

What counts as “capital” in the means test?

The council will look at:

• Savings accounts and cash
• Investments and shares
• Property (with some important exceptions, covered below)
• Premium Bonds and ISAs
• Jointly held assets (your share is assessed)

Things that are not counted include:

• Personal possessions (furniture, jewellery, car)
• The surrender value of life insurance policies
• Attendance Allowance or Disability Living Allowance payments

When Your Home Is Protected from the Means Test

This is one of the most misunderstood areas of care funding. Many people assume the council will automatically force them to sell their home. That is not always the case.

Your property is completely excluded from the financial assessment if any of the following people still live there:

• Your spouse or civil partner
• A relative aged 60 or over
• A relative who is disabled or incapacitated
• A child under 18 whom you are legally responsible for

In these situations, the value of your home is disregarded entirely for as long as the qualifying person continues to live there. The council cannot include it in the means test.

There is also a discretionary disregard. If someone who is not on the list above (for example, a carer or a friend who has been living with you) would be left without somewhere to live, the council can choose to disregard your property. This is not automatic, but it is worth asking.

Option 1: Local Authority Funding

If your capital is below £23,250 (England) or £50,000 (Wales), your local council has a legal duty to arrange and fund your care.

Here is how it works in practice:

1. Contact your local council’s adult social care team. Ideally, do this around three months before care is needed so there is time to carry out assessments.
2. Needs assessment. A social worker assesses your care needs. This is free and not means-tested. Everyone is entitled to a needs assessment.
3. Financial assessment. If the needs assessment confirms you need residential care, the council then assesses your finances to determine your contribution.
4. Care placement. The council arranges a suitable care home placement. You contribute what you can from your income and assessed capital. The council covers the rest.

What if I have no savings at all?

If you have no capital and minimal income, the council will fund your care almost entirely. You will still be expected to contribute from your income (pension, benefits), but you will be left with a Personal Expenses Allowance of at least £31.80 per week (2026/27 rate) for personal spending.

The key message: nobody is left without care because they cannot afford it. Your council has a legal obligation under the Care Act 2014 to ensure your needs are met. (In Wales, the equivalent legislation is the Social Services and Well-being (Wales) Act 2014, which places the same duty on Welsh local authorities.)

Option 2: NHS Continuing Healthcare (CHC)

This is the one most people do not know about. And it could mean your care is fully funded by the NHS at no cost to you.

NHS Continuing Healthcare is a package of care arranged and paid for entirely by the NHS. It is available to adults who have what is called a “primary health need.”

Here is the crucial part: it is not means-tested. Your savings, income, and property are completely irrelevant. If you qualify, the NHS pays everything.

What is a “primary health need”?

There is no fixed list of conditions that qualify. Instead, the assessment looks at four factors:

• Nature: The type of care needs you have and their effects
• Complexity: How many needs interact with each other
• Intensity: How much care you need and how often
• Unpredictability: How quickly your condition can change or deteriorate

If these factors, taken together, indicate that your primary need is for healthcare (rather than social care), you should qualify for CHC.

How to apply

The process starts with a Checklist assessment, which can be carried out by any health or social care professional. If the checklist suggests eligibility, you move to a full Decision Support Tool (DST) assessment carried out by a multidisciplinary team.

Be aware that many initial applications are turned down. This does not mean you are not eligible. There is a formal appeals process, and many decisions are overturned on review.

NHS-Funded Nursing Care (FNC): The partial alternative

If you do not qualify for full CHC but you are in a nursing home and receive care from a registered nurse, you may qualify for NHS-Funded Nursing Care.

This is a flat-rate contribution paid by the NHS directly to the care home towards the cost of nursing care. As of April 2026, the standard FNC rate is £267.68 per week (a 5.4% increase from the previous rate of £254.06).

FNC does not cover all your care costs, but it reduces the amount you (or the council) need to pay. It is automatic for anyone in a nursing home who does not qualify for full CHC, so you should not need to apply separately.

Option 3: The 12-Week Property Disregard

If you own a home and are moving into permanent residential care, this rule gives you some breathing room.

For the first 12 weeks of your permanent stay in a care home, the value of your property is completely ignored in the financial assessment. Even if your home is worth hundreds of thousands of pounds, for those first 12 weeks, it does not count.

This means that if your other savings are below the upper capital limit (£23,250 in England), the council will fund your care during this period as though you did not own a property at all.

Why does this exist?

The 12-week disregard is designed to give you time to make a considered decision about your property. Selling a home is a major step, and nobody should feel pressured into a rushed sale just because they need care.

Who qualifies?

To be eligible, you need to meet these conditions:

• Your other savings and assets are below the upper capital threshold (£23,250 in England)
• You were living in the property as your main home immediately before entering care
• Your move into care is permanent (not a respite stay)

What happens after the 12 weeks?

Once the 12-week period ends, the value of your property is included in the financial assessment. At that point, you have several choices:

• Sell the property and use the proceeds to fund care
• Set up a Deferred Payment Agreement (see below) to delay the sale
• Rent out the property and use the rental income towards fees

Option 4: Deferred Payment Agreements (DPAs)

A Deferred Payment Agreement is essentially a loan from your local council, secured against your property, that pays your care home fees so you do not have to sell your home straight away.

Think of it as the council saying: “We will pay your care fees now, and the debt gets repaid later when the property is eventually sold.”

How it works

• The council pays your care home fees on your behalf
• A legal charge is placed against your property (similar to a mortgage)
• Interest accrues on the outstanding balance. The current rate (January to June 2026) is 4.75% per annum
• Administration fees also apply (these vary by council)
• The loan is repaid when the property is sold, or from the estate after death

How much can you defer?

Councils will typically allow you to defer up to 70-80% of your property’s value. They keep a margin to cover selling costs, accumulated interest, and any fluctuations in property value.

Source: DHSC Local Authority Circular, 2025/26

Is a DPA right for you?

A DPA can be a good option if:

• You want to keep your home for now (perhaps a family member might move in, or you want to see how things go)
• The property market in your area is slow and selling would take months
• You want time to make a considered decision rather than rushing into a sale

But keep in mind: interest is building up the whole time. At 4.75%, on a £200,000 property, that is roughly £9,500 per year in interest alone. Over several years, this can significantly eat into the value of the property.

Option 5: Attendance Allowance

Attendance Allowance is a tax-free, non-means-tested benefit for people of State Pension age who need help with personal care due to a disability or illness.

It will not cover your entire care home bill. But it can make a meaningful contribution, and a surprising number of people who are entitled never claim it.

2026/27 rates

Source: GOV.UK, 2026/27 rates

At the higher rate, that is nearly £6,000 a year towards care costs.

The care home catch

There is one important rule to be aware of. If you are a self-funder (paying your own care home fees in full), you can claim Attendance Allowance while in a care home.

However, if the local authority contributes to your care home fees, your Attendance Allowance payments will stop after 28 days. This is because the council’s funding is considered to already include an element for personal care.

So Attendance Allowance is most useful for:

• Self-funders who want to reduce their out-of-pocket costs
• People receiving care at home (where it can help fund home care services)
• The period before entering a care home

Option 6: Equity Release

Equity release allows homeowners aged 55 or over to access some of the value tied up in their property without selling it. The money released can then be used towards care costs.

There are two main types:

• Lifetime mortgage: A loan secured against your home. No monthly repayments are required. The loan, plus accumulated interest, is repaid when the property is sold (usually when you die or move into long-term care).
• Home reversion: You sell part or all of your property for a lump sum or regular payments. You keep the right to live there rent-free, but you give up some or all ownership.

The pros

• You can stay in your home while accessing funds
• No monthly repayments with a lifetime mortgage
• The money can be taken as a lump sum or drawn down over time

The cons

• Interest compounds over time and can significantly reduce the value of your estate
• Releasing equity increases your capital, which could affect your eligibility for means-tested council support
• Arrangement fees, valuation fees, and legal fees can run to £1,000-£3,000 or more
• You will almost certainly receive less than the full market value of the equity released

Equity release vs selling: which releases more value?

This is an important comparison. With equity release, you typically access only a proportion of your property’s value. With an outright sale, you release the full amount.

For someone whose care needs are likely to be long-term and expensive, the limited amount released through equity may not be enough. If care fees are running at £67,000+ per year, a £100,000 equity release could be exhausted within 18 months.

Selling the property outright releases its full value and avoids the compound interest that accumulates on a lifetime mortgage.

Option 7: Selling Property to Fund Care

For many families, selling the property is the most straightforward way to access a significant sum to pay for care.

It is not a decision anyone takes lightly. But in practical terms, if the person needing care is permanently in a care home, the property is often sitting empty. Maintenance costs, insurance, council tax (even at the empty-property rate), and the risk of deterioration are all ongoing concerns.

Your selling options

Why speed often matters with care funding

When care fees are running at over £1,200 a week, every month of delay costs thousands. If you are self-funding from savings while waiting for a property sale to complete, those savings can deplete quickly.

An open-market sale through an estate agent will usually get the highest price, but the average time from listing to completion in England is around 5-6 months. Estate agent fees (typically around 1.5% of the sale price) and solicitor fees also reduce the net proceeds.

A faster sale, even at a lower price, can sometimes make financial sense if the alternative is burning through savings at £5,000+ per month on care fees while waiting for a buyer.

Renting out the property instead

Rather than selling, some families choose to rent out the property and use the rental income towards care fees. This preserves the asset for the family while generating ongoing income.

The downsides: rental income rarely covers care home fees in full (the average UK rent is well below £1,298+ per week), you still have landlord responsibilities, and the property remains in the means test as capital. However, the rental income is taken into account in the financial assessment, which may reduce how much you need to contribute from other sources.

What About Deprivation of Assets? (The Rules You Must Know)

This is where people sometimes get into serious trouble.

Deprivation of assets means deliberately reducing your savings or giving away property to avoid paying care home fees. If the council believes you have done this, the consequences can be severe.

What counts as deprivation?

• Gifting large sums of money to family members
• Transferring your property to someone else (including children)
• Selling property below market value
• Suddenly spending large amounts on non-essential purchases

What happens if the council suspects deprivation?

The council can treat you as though you still own the assets. This is called “notional capital.” In other words, even though you have given the money or property away, the council will calculate your fees as if you had not.

It gets worse. The council can also pursue the person who received the asset to recover the difference between what you should have paid and what you actually paid.

How does the council decide if it was deliberate?

The council considers three things:

1. Timing: When were the assets transferred? Was it around the time care was being discussed?
2. Motive: Was avoiding care fees a significant factor in the decision?
3. Reasonableness: Would a reasonable person in your situation have foreseen the need for care?

If you gave money to your children years before any health issues arose, with no thought of future care needs, the council would find it hard to argue deprivation. But if you transferred your house to your daughter the month before entering a care home, that is a different story entirely.

What Happens When the Money Runs Out?

This is a worry for many families. You start off self-funding, and then the savings dwindle. What then?

The answer is straightforward: the local authority steps in.

Once your capital drops below £23,250 (England), contact your local council’s adult social care team immediately. Do not wait until you are down to your last pound. Ideally, get in touch about three months before you expect to cross the threshold. This gives the council time to carry out a financial assessment and arrange funding.

If you are already in a care home, the council will typically take over funding at its standard rate. If your care home costs more than the council’s standard rate, a third-party top-up arrangement will need to be agreed.

A Step-by-Step Action Plan

If you or a family member needs care and money is tight, here is what to do:

1. Request a needs assessment from your local council. This is free, and everyone is entitled to one regardless of financial situation. It establishes what level of care is needed.
2. Ask about NHS Continuing Healthcare. Request a CHC Checklist assessment from your GP, hospital, or social worker. If there is any possibility of a primary health need, pursue this first as it covers everything.
3. Claim Attendance Allowance. If you are of State Pension age and need help with personal care, apply now. It takes time to process, and it is not means-tested. Call the Attendance Allowance helpline on 0800 731 0122.
4. Understand the 12-week property disregard. If you own a home, confirm with the council that the 12-week disregard will apply. This buys you time to make property decisions without pressure.
5. Explore a Deferred Payment Agreement. If you do not want to sell your home immediately, ask the council about a DPA. Get the terms in writing, including interest rate and fees.
6. Take professional advice on property options. Whether selling, renting, or considering equity release, speak to a solicitor and/or independent financial adviser. For equity release specifically, FCA-regulated advice is essential.
7. Keep records of everything. Every assessment, every payment, every conversation with the council. If you ever need to appeal a decision or challenge a financial assessment, documentation is your strongest tool.

Selling Your Property to Fund Care: How Property Rescue Can Help

At Property Rescue, we regularly work with families who need to sell a property to fund care. It is one of the most common reasons people come to us, and we understand how stressful and time-sensitive the situation can be.

We buy properties directly for cash, in any condition. There is no chain, no estate agent fees, and we cover your legal fees when you use our recommended solicitor (an independent, established firm). On average, we complete in around 28 days, though we can work faster when the situation demands it.

We typically offer around 80% of market value. That is less than you might achieve on the open market given enough time, but the trade-off is speed, certainty, and zero fees. When care fees are accumulating at over £1,200 a week, getting funds released quickly can actually save money overall.

We do not see many sellers who have equity release on their property, to be honest. If they have already released equity, they have got their money and do not usually need to sell. The ones who do come to us have typically maxed out what the provider will give them, and selling is the only way to access what is left. The equity release charge just needs to be redeemed at completion. It is not usually an issue. Where we occasionally cannot help is when the debt has grown so much there is not enough equity left for the numbers to work.

My advice? With equity release you only get a small amount. With selling, you release the full value of your property.

Frequently Asked Questions

What happens if I refuse to sell my house to pay for care?

You cannot be forced to sell your home while you are alive. However, if your property is included in the financial assessment and you refuse to sell, the council may offer a Deferred Payment Agreement so that care can continue. The debt is then repaid from the property when it is eventually sold or from your estate after death.

Can the council take my house to pay for care?

The council cannot force you to sell your home during your lifetime. However, they can place a charge on the property (for example, through a Deferred Payment Agreement). After death, the outstanding debt would be recovered from the estate, which may require the property to be sold by the executors.

Does a spouse have to sell the house to pay for care?

No. If your spouse or civil partner still lives in the property, it is fully disregarded from the means test. The council cannot include its value in the financial assessment.

Can I gift my property to my children to avoid care fees?

Technically, you can transfer your property. But if the council believes the transfer was made to avoid paying care fees, it will be treated as a deprivation of assets. The council can treat you as still owning the property and can also pursue your children to recover the costs. There is no time limit on this. It is a strategy that frequently backfires.

What is the difference between residential care and nursing care?

Residential care provides help with daily living (washing, dressing, eating, medication). Nursing care includes all of that, plus medical care from qualified nurses. Nursing care is more expensive (averaging £1,535/week vs £1,298/week), but if you need nursing care, you may qualify for NHS-Funded Nursing Care (£267.68/week in 2026/27) to help with the cost.

How do I apply for NHS Continuing Healthcare?

Ask your GP, hospital consultant, or social worker for a CHC Checklist assessment. This is the initial screening. If the checklist indicates a potential primary health need, a full assessment will be arranged with a multidisciplinary team. If you are turned down, you have the right to appeal. Many families succeed on review, so do not give up after the first decision.

What benefits can I claim to help with care home fees?

The main benefit is Attendance Allowance (up to £114.60/week for self-funders). If you are under State Pension age, you may be eligible for the daily living component of Personal Independence Payment (PIP) instead. Pension Credit may also boost your income. If you are in a nursing home, NHS-Funded Nursing Care (£267.68/week) is paid automatically if you do not qualify for full CHC.

What if I need care but have not yet reached the capital threshold?

If your capital is above £23,250, you are classed as a self-funder. You pay your own fees until your capital drops below the threshold. However, you are still entitled to a free needs assessment from the council, and you can ask the council to arrange your care placement (even if you are paying for it yourself). This can be useful because councils often negotiate lower rates with care homes than private individuals can.