Reverse Mortgage and OAS/GIS: Will It Affect Your Government Benefits?

Understanding how a reverse mortgage interacts with government benefits is critical for retirement planning. Here is a complete breakdown of how OAS, CPP, GIS, and other provincial programs are affected.

OAS (Old Age Security)

Reverse mortgage proceeds do not count as income for OAS purposes. There is no OAS clawback triggered by receiving reverse mortgage funds. The OAS clawback (officially called the "OAS Recovery Tax") is triggered when your net income exceeds approximately $90,997 (2026 threshold). Reverse mortgage funds are not income and do not count toward this threshold.

CPP (Canada Pension Plan)

CPP benefits are not income-tested. They are based on your contributions during your working life. A reverse mortgage has absolutely no impact on your CPP payments.

GIS (Guaranteed Income Supplement) — Read Carefully

GIS is different — it is income-tested. The reverse mortgage proceeds themselves are not income and do not affect GIS. However, the investments or interest generated by how you use those funds can create income that affects GIS.

For example: if you take $100,000 from a reverse mortgage and deposit it into a savings account earning 4% interest, you have created $4,000/year in interest income that would affect your GIS calculation. If you spend the funds directly on living expenses, home improvements, travel, or gifts to children — no new income is created.

Provincial Benefits

Ontario's GAINS (Guaranteed Annual Income System) follows the federal GIS calculation. Reverse mortgage funds themselves don't affect GAINS, but income generated from investing the funds may.

Our Recommendation

For GIS recipients, we always recommend meeting with a financial advisor who specializes in government benefits before finalizing a reverse mortgage. The planning around how to receive and use the funds (lump sum vs. monthly draw) can significantly affect your benefit calculations.