Primary Residence Exclusion: Medicaid, SSI, SNAP & FAFSA

The primary residence exclusion for Medicaid, SSI, and FAFSA means the home you live in generally does not count against you when these programs decide whether you qualify. All three treat your principal dwelling differently from bank accounts, investments, or other property. The mechanics are not identical, though, and Medicaid attaches conditions serious enough that the exclusion can feel far less protective than it sounds.

What Counts as a Primary Residence

A primary residence is the place you actually live day to day. The category is broader than a traditional house. Mobile homes, condominiums, cooperative apartments, and houseboats all qualify if one of them is your main living space.¹ The exclusion generally extends to the lot the dwelling sits on and structures on that lot, such as a garage or shed.

Occupancy is what matters. A vacation home, rental property, or second residence does not qualify regardless of its value, because it is not your principal dwelling. Some programs allow temporary absences without losing the exclusion, but the rules differ, and those differences are where problems start.

Medicaid’s Home Equity Cap

Medicaid’s home exclusion is the most complex of any benefit program because it only applies up to a dollar cap on your equity. Under 42 U.S.C. § 1396p(f), if you are applying for nursing home care or other long-term care services and your equity in the home exceeds the federal threshold, you can be denied coverage.² Equity means the home’s current market value minus any outstanding mortgage or lien balance.

For 2026, the federal minimum equity limit is $752,000 and the maximum is $1,130,000.³ Each state sets its own limit within that range. Most states use the $752,000 floor; roughly ten states and the District of Columbia use the $1,130,000 ceiling. California imposes no home equity limit at all. These amounts are adjusted annually for inflation.

The cap does not apply if certain people are lawfully living in the home. Federal law waives it entirely when your spouse lives there, when a child under 21 lives there, or when a blind or disabled child of any age lives there.² A sibling living in the home does not lift the equity cap; the sibling protections come up separately, in the transfer and estate recovery rules below.

Transfers Within the Five-Year Look-Back

Even when your home qualifies for the exclusion, giving it away or selling it below market value can trigger a serious penalty. Medicaid reviews all asset transfers made within 60 months before your application for long-term care.² If you transferred your home for less than fair market value during that window, Medicaid imposes a penalty period during which it will not pay for nursing home care. The penalty’s length is the value of the transfer divided by the average monthly cost of nursing home care in your area.

The timing is what catches families out. The penalty clock does not begin when you make the transfer. It starts only once you are in a nursing home, have spent down to Medicaid’s asset limit, and have applied for coverage. Someone who gives a home away four years before applying can still face months of uncovered nursing home bills.

Federal law does allow some home transfers without penalty. You can transfer the home to your spouse without any restrictions. You can transfer it to a child under 21, or to a blind or disabled child of any age. A transfer to a sibling with an equity interest in the home is exempt if the sibling lived there for at least one year immediately before you entered a nursing facility. And a transfer to a caretaker adult child is exempt if the child lived in the home for at least two years immediately before your institutionalization and provided care that allowed you to stay at home rather than move to a facility.²

The caretaker child exception is the one families ask about most and the one most often denied for lack of documentation. The state has to be satisfied that the child’s care actually delayed nursing home admission. A physician’s statement about the level of care needed, along with records showing the child lived at the address and provided that care, does a lot of work here. Vague claims without paperwork tend to fail.

Estate Recovery After Death

Here is the part that surprises families: even though the home is excluded for eligibility while you are alive, federal law requires every state to seek repayment from your estate after you die. Under 42 U.S.C. § 1396p(b), states must recover the costs of nursing facility care, home and community-based services, and related hospital and prescription drug services paid on behalf of anyone 55 or older when they received them.² The home you were allowed to keep often becomes the primary target.

Recovery is not immediate. Federal law delays the claim until after your surviving spouse has also died. Recovery is also deferred if a child under 21, or a blind or disabled child of any age, survives you. A sibling who lived in the home for at least a year before your institutionalization is protected from a lien-based recovery on the home, and so is a caretaker child who lived there for at least two years and provided qualifying care.²

States must offer an undue hardship waiver, but the standards vary. Families who inherit a home after a Medicaid recipient’s death should check their state’s estate recovery procedures quickly, because the deadlines for requesting a hardship waiver can be tight.

SSI: Full Home Exclusion, No Equity Cap

The SSI home exclusion is simpler and more generous than Medicaid’s. Under 20 C.F.R. § 416.1212, your home is excluded from countable resources entirely, with no cap on equity.⁴ A $3 million house and a $30,000 mobile home receive identical treatment. As long as the property is your principal place of residence, it does not count toward SSI’s $2,000 resource limit for individuals or $3,000 limit for couples.⁵

If you enter a nursing home or hospital, the home stays excluded as long as you intend to return. There is no time limit on that absence, which allows for long medical stays without jeopardizing benefits. A subjective statement of intent is generally enough. If you cannot express that intent, the home remains excluded automatically as long as your spouse or a dependent relative continues living there.⁶

The picture changes when you leave with no plan to come back. On the first day of the following month, the home becomes a countable resource. If its value pushes you over the resource limit, you lose SSI eligibility until you spend down.

Selling Your Home While on SSI

If you sell your excluded home, the proceeds stay excluded for three months as long as you intend to buy a replacement residence. Any portion you reinvest in a new home within that window remains excluded. Anything left over after three months becomes a countable resource.⁶ The three-month deadline matters. An SSI recipient who sells in a slow market and cannot close on a new place in time can temporarily lose benefits.

SNAP: Home Doesn’t Count

The Supplemental Nutrition Assistance Program excludes the home you live in from its resource calculation entirely, with no cap on equity. In states that still apply an asset test, the federal limits are $3,000 for most households or $4,500 for those with an elderly or disabled member, but the home is not part of that calculation.⁷

In most places the asset test is not a factor at all. Over 40 states have eliminated it through broad-based categorical eligibility, meaning they look only at income.⁸ In those states, even non-home assets like savings accounts are irrelevant to SNAP eligibility.

FAFSA: Home Is Not an Asset

Federal student aid follows the clearest rule of all: the family’s primary residence is not an asset for FAFSA purposes. Under 20 U.S.C. § 1087vv(f)(2), the definition of “assets” for federal need analysis explicitly excludes the net value of the family’s principal place of residence.⁹ The 2026–27 FAFSA form confirms this, instructing applicants that “investments do not include the home you live in.”¹⁰ The rule applies equally to dependent students reporting parental assets and to independent students reporting their own.

A family with $800,000 in home equity and modest savings is treated the same as a renting family with the same savings for Pell Grant and federal loan eligibility. For middle-income households whose wealth sits mostly in their home, this is the single most impactful asset exclusion in the federal aid formula.

The CSS Profile Is Different

Private colleges that use the CSS Profile for their own institutional aid often do count home equity. The Profile asks for the home’s purchase price, current value, and outstanding debt, and calculates equity from those figures. Many schools cap the equity they consider at a multiple of the family’s total income to avoid penalizing families in high-cost housing markets who lack liquid wealth, but the policies vary school by school.

A student can receive a generous federal aid package because the FAFSA ignores the home, then see a much smaller institutional grant from a private school that factored in several hundred thousand dollars of home equity. When comparing aid offers from schools that use the CSS Profile, ask each financial aid office how it treats home equity before assuming the numbers will look like the FAFSA’s.

1
Internal Revenue Service. Publication 523 – Selling Your Home
2
Office of the Law Revision Counsel. 42 USC 1396p – Liens, Adjustments and Recoveries, and Transfers of Assets
3
Medicaid.gov. 2026 SSI, Spousal Impoverishment, and Medicare Savings Program Resource Standards
4
eCFR. 20 CFR 416.1212 – Exclusion of the Home
5
eCFR. 20 CFR 416.1205 – Couples Resource Limits
6
Social Security Administration. Code of Federal Regulations 416.1212
7
Food and Nutrition Service. SNAP Eligibility
8
Food and Nutrition Service. Broad-Based Categorical Eligibility (BBCE)
9
Office of the Law Revision Counsel. 20 USC 1087vv – Definitions
10
Federal Student Aid. 2026-27 FAFSA Form