Grant or Loan? The Simple Guide Seniors Need Before They Sign (Lien, Repayable, Taxable)
Updated: January 13, 2026
Many seniors look for “grants” and “help.” Some help is truly free. Some is a loan. Some is “free later” only if you follow rules.
This guide explains the words that often confuse people. These words can decide if you must pay money back, if your home is involved, or if you may owe taxes.
Important: This page is general information. Rules change by program and by state. Ask the program to explain the rules in writing before you sign.
The 3-Question Test (read this first)
If you feel rushed, ask these three questions:
- Will I ever have to pay this back? When?
- Will you put a lien (a legal claim) on my home?
- Will I get a tax form (like a 1099) for this money?
If they can’t answer clearly, say:
“Please send me the payback, lien, and tax rules in writing.”
Quick Summary Table
| Word you see | What it often means | Home involved? |
|---|---|---|
| Grant | Usually no payback (if rules are followed) | Usually no |
| Loan | Payback is required | Sometimes |
| Forgivable loan | Payback only if rules are not met | Often yes |
| Deferred loan | Pay later (often when you sell or move) | Often yes |
| Repayable | Not free | Depends |
| Lien | A legal claim on the home/property | Yes |
| Recapture / clawback | Program can take money back if rules are broken | Sometimes |
| Overpayment | Agency may take money back or reduce future checks | Usually no |
| Taxable | Not payback, but you may owe tax | Usually no |
Key Takeaways (simple truths)
- The word “assistance” does not always mean free.
- A forgivable loan is not a grant until it is forgiven.
- A lien usually does not mean you lose your home today. It often means payback can happen later.
- Taxes and payback are different. The IRS explains what is taxable and what is not in Publication 525.
- Real government grants do not ask you to pay a fee to “get the money.” The FTC warns about grant scams.
Where these problems show up (so you don’t panic)
These “fine print” words are common in:
- Home repair help (roof, heating, ramps, safety fixes)
- Housing help (repair loans, special rehab programs)
- Property tax delay programs (pay later)
- Income-based benefits (overpayment can happen)
- Long-term care benefits (some rules can affect estates)
This does not mean every program is bad. It means you should slow down and ask the right questions.
The words that matter (plain English + examples)
1) Grant
What it means: Money you usually do not pay back.
Where you see it: Local programs, nonprofits, some government programs.
What can still cause trouble: If rules are broken, the program may ask for money back.
Example:
A city gives a senior $3,000 to build a wheelchair ramp. If the ramp is built as approved, there is no payback. If the money is used for something else, they may ask for it back.
Ask: “Is this 100% a grant with no payback? What rules must I follow?”
2) Loan
What it means: Money you pay back (sometimes with interest).
Where you see it: Home repairs, housing help, “low-interest help.”
Example:
A program offers a 1% home repair loan. It sounds gentle, but it is still a loan. You still owe the money back.
Ask: “What is the interest rate, and what is the total payback amount?”
3) Repayable (this is the “not free” warning word)
What it means: Payback can happen (sometimes always).
Where you see it: “Repayable assistance,” “repayable funds,” “recoverable.”
Example:
A program says: “This is repayable if you move within 3 years.” That means moving can create a bill.
Ask: “Exactly what events make it repayable?”
4) Forgivable loan (free later if you follow rules)
What it means: Starts like a loan. Becomes free later if rules are met.
Common rule: Stay in the home for a set number of years.
Example:
A program gives $10,000 for repairs. It forgives $2,000 each year for 5 years.
- If you stay 5 years: you owe $0.
- If you move after 2 years: you might owe $6,000.
WARNING: Forgivable does not mean free today.
Ask: “How long must I stay, and how much do I owe if I move early?”
5) Deferred loan (pay later)
What it means: You may pay nothing now, but you pay later.
Common trigger: Selling the home, refinancing, moving out, or changing ownership.
Example:
A county lets a senior delay property taxes. The taxes do not disappear. They are paid later, often when the home is sold.
WARNING: Deferred often means “a bill later.”
Ask: “What exact event makes the balance due?”
6) Lien (home involved)
What it means: A legal claim recorded against your home or property.
What it usually means in real life: You often do not pay today, but payback can happen later.
Real program example (federal):
USDA’s home repair loans and grants program explains how the help works and includes rules about security/repayment in certain situations.
WARNING: A lien usually does not mean you lose your home today. But it can affect selling or refinancing.
Ask:
- “Will you record a lien?”
- “When is the lien removed?”
- “What triggers payback?”
7) Recapture / clawback / recovery
What it means: The program can take money back if rules are not followed.
Common trigger: Selling too soon, leaving early, using money the wrong way.
Example:
A repair program pays $8,000 and requires you to live in the home 3 years. If you sell in year 1, they may recapture some of the money.
Ask: “If I leave early, how much do I owe?”
8) Overpayment (benefit paid too much)
What it means: You got more than allowed (sometimes by mistake).
What can happen: They may ask for payback or reduce future checks.
Example:
A benefit is based on income. Income changes, and the agency later says there was an overpayment.
Ask: “If I am overpaid, do you reduce future checks or send a bill?”
9) Taxable / non-taxable (tax is different from payback)
What it means: This is about taxes, not repayment.
Trusted rule: IRS Publication 525 explains what kinds of income are taxable or not.
A clue: IRS Form 1099-G is used for certain government payments, including taxable grants.
Example:
You receive a payment and later get a 1099-G. That can be a sign the payment may need to be reported on taxes.
Ask: “Will I get a 1099? If yes, is this money taxable?”
10) Medicaid estate recovery (important for some long-term care)
What it means: Medicaid programs must recover certain benefits paid on behalf of a person. For people 55 or older, states are required to seek recovery for certain long-term care services and related hospital and prescription drug services.
Example:
Medicaid pays for nursing home care. After the person dies, the state may seek recovery from the estate, depending on the situation and state rules.
Ask: “Does estate recovery apply in my case? What services does it apply to?”
More examples (so it’s easy to spot)
Example A: “Grant” with a time rule
The program calls it a grant, but says: “If you sell within 3 years, you repay.”
That is a grant with a rule that can cause payback.
Example B: Forgivable loan + moving for health
You get repairs and plan to stay, but later you must move to assisted living.
Ask the program what happens in that case. Some programs forgive part each year.
Example C: Deferred loan + refinancing
You refinance to lower your payment. The program says refinancing triggers payback.
That can happen with deferred help tied to a home.
Example D: Scam “grant” call
A stranger says you “won a grant,” but you must pay a fee first.
The FTC says offers of free money from “government grants” are scams.
Grants.gov also posts scam alerts.
Phone script (copy and use)
- Is this a grant or a loan?
- Will I ever pay it back? When?
- Will you record a lien on my home?
- What events trigger payback (sell, move, refinance, change ownership)?
- Is there a rule that I must live here for a number of years?
- Is there interest or fees?
- If I break a rule, do you take money back (recapture)?
- Could there be overpayment? What happens then?
- Will I get a tax form (like a 1099-G)?
- Can you send these rules in writing before I sign?
FAQs (short and honest)
Does a lien mean I lose my house?
Usually no. It often means a legal claim exists that can lead to payback later.
Is a forgivable loan the same as a grant?
No. It becomes “like a grant” only after it is forgiven.
Can something be free but still taxable?
Sometimes. The IRS explains taxable and non-taxable income.
Where can I get trusted housing help?
HUD’s housing counseling network can help. You can call HUD or search online.
The CFPB also has a tool to find a HUD-approved counselor.
Trusted resources (government / well-known)
Grants.gov: Grant Scam & Fraud Alerts
USDA: Single Family Housing Repair Loans & Grants
IRS: Publication 525 (Taxable and Nontaxable Income)
IRS: Instructions for Form 1099-G (includes “taxable grants”)
HUD: Housing Counseling (official page + phone)
CFPB: Find a housing counselor (HUD-approved)
State note: Programs and rules can be different by state and county. If you’re not sure, call your local Area Agency on Aging or a HUD-approved housing counselor before you sign anything.