Do we tell Mom w/ mild dementia, who keeps asking when she will be going home, that she isn't and we are selling her house for Medicaid?

Do not second guess your decision to put Mom in a facility. I’m sure it’s not one you made casually and/or quickly. The facility where my mom was took wonderful care of her. It was clean, bright and the people were friendly and kind. She was always well-fed. Her room was cleaned every day. Her clothes were laundered, brought back to her room and hung in her wardrobe. She got regular manicures and had monthly in-house hair salon visits. There were daily discussion groups over coffee and weekly activities. If I ever had any questions, there was always someone who could answer them. Everyone involved with her attended the Care Conference meetings.

I was content to know she was safe and well-cared for.

Like said, fib. Tell her when the doctor says she is ready. Let her be mad at him. I would not tell her you need to sell the house. As her Dementia progresses, "home" could be where she grew up not the last place she lived.

She is now in a safe place. A lot of responsibility will be taken off your hands.

It's called therapeutic fibbing. Just keep telling her that the doctor has ordered that she stay until she gets stronger.

Do you have the legal documents you need to sell her home?