Care Home Funding: 8 Options Most Families Miss

Care home funding in the UK comes from eight main sources: NHS Continuing Healthcare (fully funded), NHS-Funded Nursing Care (£267.78 per week), local authority means-tested funding, deferred payment agreements, Attendance Allowance (up to £114.60 per week), self-funding, equity release, and charitable grants. Most families qualify for at least two of these — but many claim only one because they do not know the others exist.

This is the one page that covers every funding option for care home fees in England. Each section gives you enough to understand whether it applies to your situation, with links to our detailed guides where you need more depth.

This guide covers England only. Scotland, Wales, and Northern Ireland have different care funding systems.

Last updated: March 2026.

Quick-Reference Funding Table

Most families should check at least three of these. NHS CHC and Attendance Allowance are frequently missed even though they are worth the most.

Option 1: NHS Continuing Healthcare (Free Care)

NHS Continuing Healthcare (CHC) is the single most valuable funding route. If approved, the NHS pays for all care costs — including the care home fees, accommodation, and personal care. There is no means test. It does not matter if the person has £1 million in savings.

Who qualifies

CHC is for people with a "primary health need" — meaning their care requirements are mainly due to a health condition rather than social care needs. This includes advanced dementia, stroke, cancer, neurological conditions, and complex medical needs.

The assessment is carried out by a multidisciplinary team from the local Integrated Care Board (ICB). It evaluates 12 care domains including behaviour, cognition, breathing, continence, and skin integrity.

Why most families miss it

Many eligible people are never assessed. GPs and social workers do not always know to refer for CHC, and the initial screening tool (the Checklist) is often applied too conservatively. If the person has significant health needs, insist on a full assessment — the Checklist is a screening tool, not a final decision.

Fast-track CHC

If the person has a rapidly deteriorating condition and a prognosis of weeks to months, fast-track CHC can be arranged within 48 hours. A clinician completes a fast-track pathway tool and the NHS takes over funding almost immediately. This is the option most families at end of life miss.

If refused

You have the right to appeal. Our guide to appealing a CHC decision explains the process step by step.

For full eligibility criteria and how to apply, see our CHC guide for dementia. The principles apply to all conditions, not just dementia.

Option 2: NHS-Funded Nursing Care (FNC)

If the person is in a nursing home (not a residential care home) and does not qualify for full CHC, the NHS still contributes £267.78 per week towards the cost of nursing care. This is called NHS-Funded Nursing Care (FNC).

FNC should be applied automatically. In practice, it is sometimes missed — particularly for self-funders whose fees are paid directly to the home without council involvement. If your parent is in a nursing home and you are paying the full fee, check whether FNC has been applied. It could save over £13,000 per year.

FNC is assessed by the ICB. It is not means-tested.

Option 3: Local Authority Means-Tested Funding

If the person's capital falls below £23,250, the local council helps pay for care under the Care Act 2014. This is the most common funding route.

How the means test works

The council assesses the person's capital (savings, investments, and usually property) and income (pension, benefits).

Income is also considered. The person keeps a "personal expenses allowance" of £31.80 per week. The rest of their income (pension, benefits) goes towards the care home fees.

Property in the means test

The person's home is usually included in the capital assessment — but not immediately. A 12-week property disregard means the home is ignored for the first 12 weeks. After that, it is counted unless:

• A spouse or civil partner still lives there
• A relative over 60 still lives there
• A dependent child or disabled relative still lives there

If none of these apply, the property value is added to the person's capital — potentially pushing them above £23,250 and into self-funding. A deferred payment agreement (see below) can prevent the need to sell.

For the full breakdown, see our care home means test guide.

Option 4: Deferred Payment Agreement (DPA)

A deferred payment agreement is effectively a loan from the council. The council pays the care home fees while the person keeps their property. The debt is repaid later — usually when the property is sold or from the estate after death.

Who qualifies

DPAs are available if:

• The person's main asset is their home
• Their non-property capital is below £23,250
• The council is satisfied that the property provides adequate security

How it works

The council places a charge on the property (similar to a mortgage). Fees accrue as a debt against the property value. Interest is charged at a rate set by the government — 4.75% APR from January 2026.

Key considerations

DPAs avoid a forced sale, but they are not free. The interest accumulates, and administration fees apply. Over a typical 2-3 year care home stay, the total cost of interest can be £5,000-£15,000 depending on the weekly fee.

For full details, see our guide to deferred payment agreements. For the broader question of whether selling the house is necessary, see our guide on selling a parent's house to pay for care.

Option 5: Attendance Allowance

Attendance Allowance is a weekly benefit paid to people over state pension age who need help with personal care. It pays:

• Lower rate: £76.70 per week — if help is needed during the day OR night
• Higher rate: £114.60 per week — if help is needed during the day AND night

Why it matters

Attendance Allowance is not means-tested. It does not matter how much the person has in savings. If they need help with personal care, they can claim.

For self-funders, this is £5,960 per year at the higher rate — a meaningful contribution towards care home fees. It can also tip someone from just above the council threshold to just below it.

Important: it stops if council-funded

If the person is council-funded in a care home, Attendance Allowance stops after 28 days. If self-funding, it continues. This is one of the lesser-known financial disadvantages of council funding versus self-funding.

How to claim

Apply directly to the DWP. The form (AA1) can be completed by the person, a family member, or an adviser. There is no medical examination — the decision is based on the information you provide. Describe the worst days, not the best.

Option 6: Self-Funding (and How to Pay Less)

If the person's capital exceeds £23,250, they pay the full cost of care. In 2026, this means £800-£1,500 per week depending on the type of home and the region. Over a typical 2-3 year stay, total costs can reach £80,000-£200,000.

How to reduce the cost legally

Self-funding does not mean you are without options. Several legitimate strategies can reduce what you pay:

• Negotiate fees with Data — RightCareHome has analyzed the Market Sustainability and Improvement Fund (MSIF) data to reveal the exact rates local councils pay. Private families are routinely quoted 30-40% more than the council rate. Our guide to negotiating care home fees using MSIF data explains how to use this as leverage.
• Claim Attendance Allowance — £5,960/year at the higher rate, regardless of savings
• Check for CHC eligibility — even if not obvious, it is worth an assessment
• Request a deferred payment agreement before selling the property — the house may appreciate while in a DPA
• Monitor the threshold — as assets reduce towards £23,250, request a financial reassessment from the council

For a comprehensive guide to reducing costs, see our article on how to reduce care home fees legally.

Worked Scenario: Funding a £1,200/Week Care Home

Let's look at how multiple funding streams can combine for a typical family:

The Situation: Arthur (82) has £40,000 in savings and a property worth £250,000. He needs to move into a residential care home quoting £1,200 per week. His state and private pensions total £250 per week.

The Funding Stack:

1. Self-Funding (Initially): Because his assets (savings + property) exceed £23,250, Arthur is a self-funder. He must cover the £1,200/week fee.
2. Attendance Allowance: The family immediately applies for the higher rate of Attendance Allowance. Arthur receives £114.60/week.
3. Income Contribution: Arthur applies his £250/week pension toward the fees.
4. Deferred Payment Agreement (DPA): Instead of selling the house, the family sets up a DPA with the local council.
5. The Math: The fee is £1,200. Arthur's income + Attendance Allowance = £364.60. The remaining £835.40/week is paid by the council directly to the care home, but accrued as a debt against Arthur's property (plus 4.75% interest).

Result: Arthur gets the care he needs immediately, the family avoids a forced fire-sale of the property, and his liquid savings are preserved.

What the rules say about 2026

There is no lifetime cap on care costs. The planned £86,000 cap was scrapped by the Labour government in July 2024. The current system remains unchanged, with the means-test thresholds set at 2010 levels. For full details on what changed (and what didn't) in 2026, see our guide.

Option 7: Equity Release

Equity release allows homeowners aged 55+ to access the value of their property without selling it. In the care context, it can provide a lump sum or regular income to pay care home fees while the person (or their spouse) remains in the home.

How it works

The most common form is a lifetime mortgage. A lender advances a percentage of the property value as a loan. No monthly repayments are required — the loan plus accumulated interest is repaid when the property is eventually sold (usually after death or when the last person moves out).

Risks and costs

• Interest compounds rapidly. A £100,000 loan at 6% grows to £180,000 after 10 years. The debt can consume a large portion of the property value
• Reduces inheritance. The equity released plus interest comes out of the estate
• Early repayment charges may apply if circumstances change
• It may affect means-test eligibility. The capital released becomes cash — which IS counted in the council's means test. Taking out equity release can push someone above the £23,250 threshold

When to consider it

Equity release is typically a last resort for care funding. It makes most sense when:

• The person does not qualify for CHC, council funding, or a DPA
• The property is the main asset and the person or their spouse still lives there
• The family has taken independent financial advice

Always seek advice from an Equity Release Council member. This is not an area where general guidance is sufficient — the financial implications are significant and irreversible.

Option 8: Charitable Grants and Benevolent Funds

Several charities and benevolent funds provide financial support for care home fees. These are often overlooked but can make a real difference, particularly for people who are just above the council funding threshold.

Royal British Legion — grants for veterans and their dependants. Can contribute towards care home fees, adaptations, and other care costs. Contact: 0808 802 8080.

SSAFA (Soldiers, Sailors, Airmen and Families Association) — financial assistance for serving and ex-serving personnel and their families. Contact: 0800 731 4880.

The Hospitality Industry Trust — grants for former hospitality workers facing hardship, including care costs.

The Charity for Civil Servants — for current and former civil servants and their dependants.

Turn2Us — a free, searchable database of charitable grants. Enter the person's circumstances (age, location, former occupation, condition) to find grants they may be eligible for. This is the best starting point if you are unsure which charities to approach.

Local authority hardship funds — some councils have discretionary funds for people who fall between the gaps. Ask the council's adult social care team.

How to apply

Most charities have online application forms or helplines. Applications typically require:

• Proof of income and savings
• Details of care needs and costs
• Evidence of connection to the charity's criteria (former employer, service record, etc.)

Processing times vary from days to weeks. Apply to multiple charities simultaneously — there is no rule against receiving support from more than one.

How to Find Out Which Options Apply to You

The funding landscape is complex, and every family's situation is different. The combination of assets, income, health condition, property ownership, and marital status determines which options are available and which are most valuable.

Start here

1. Request a care needs assessment from your local council — this is free, anyone can request one, and it triggers the financial assessment process. See our guide to how to prepare for a care needs assessment
2. Ask the GP about CHC — if the person has significant health needs, a CHC assessment should be requested regardless of the means test outcome
3. Claim Attendance Allowance — if not already claiming, apply immediately. It takes 6-8 weeks to process and is backdated to the application date

Or get a personalised report

Our Funding Calculator checks all eight routes and tells you which apply to your specific situation — savings, property, income, health condition, and benefits. It provides a personalised breakdown in one report rather than leaving you to navigate each route separately.

Get Your Custom Funding Action Plan

Changes on the Horizon

The UK care funding system has been "about to change" for over a decade. Here is where things actually stand in 2026:

• The £86,000 lifetime cap was proposed in 2021, delayed, and scrapped by the Labour government in July 2024
• The National Care Service commission was established in 2024 and will report recommendations by 2028. No legislation is expected before 2029 at the earliest
• The means-test thresholds (£23,250 and £14,250) have not changed since 2010. There is no announced plan to increase them
• Benefit rates are updated annually. The 2026/27 rates are reflected throughout this guide

For details on what was supposed to change and what actually did, see our guide to new rules for care home payments in 2026.

The practical implication: do not wait for the system to change. Plan on the current rules. If changes eventually come, they will be welcome — but planning around them is not prudent.

Quick Eligibility Summary

Sources

• NHS — Continuing Healthcare
• NHS — Funded Nursing Care
• Care Act 2014 — Full text
• GOV.UK — Care and Support Statutory Guidance: Charging
• GOV.UK — Attendance Allowance
• GOV.UK — Care and Support Statutory Guidance: Deferred Payments

Further Reading

• New Rules for Care Home Payments 2026: What Actually Changed
• Care Home Means Test UK 2026: How the Financial Assessment Works
• How to Reduce Care Home Fees Legally
• Care Home Fees: What Happens When the Money Runs Out?
• Do Dementia Patients Have to Pay Care Home Fees?
• Deferred Payment Agreements: How to Keep Your Home While Paying for Care
• Attendance Allowance and Care Homes: How to Claim
• How Much Does a Care Home Cost UK 2026?