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For an individual on Medicaid their homestead and a car are an exempt assets under Medicaid LTC rules by & large for all states. But due to the copay or SOC (share of cost) of their monthly income that GuestShoppe wrote about, the Medicaid applicant/NH resident will not have $ realistically to support the costs of the property.

If they want to keep the house &/or car they can, but somebody is going to need to pay all costs & deal with the whatever’s on the place or the car from day 1 of medicaid till beyond death and then deal with Medicaid Estate Recovery (MERP) system & perhaps open probate. It can be done but to me, if there is a mortgage it doesn’t make sense as the costs probably get to be too much and you have doubled risk (mortgage co & MERP) on $ & time associated with a property you don’t own & may not ever own.

Some states have waivers to deal with mortgage situation. I’d suggest that you clearly ask the Medicaid caseworker if your state does a time limited waiver of part of the SOC to pay the mortgage. When I did my mom’s Medicaid application in TX, the caseworker told me about the waiver. The waiver for TX is for mortgage costs IF property has a current MLS listing with a Realtor... property is expected to be sold within 3-6 months. So no FSBO nonsense. It makes sense for states to do a waiver like this as once house sells hopefully there is equity back to Medicaid the owner once mortgage is paid; AND that equity $ then becomes a spend down to be used for their care. So less costs for Medicaid. Much better than letting it fall to foreclosure and likely getting nothing but maybe a 1099-C to deal with for taxes. 

Also something to think about..... if you (you not your elder) spend $ to do anything to the property to make it market ready (like new carpeting, landscaping) or to be compliant for mortgage requirements (insurance, utilities active), you cannot be easily repaid your costs from the proceeds of the sale of the home. The property is in your elders name so when it sells and mortgage paid off any $ left over is theirs. And property sales are recorded at the courthouse to the penny. So Medicaid will fully expect all of the $ from sale after mortgage paid off to be used in a spend down. And only until the spend down is properly done & they find themselves financially impoverished again can they reapply for Medicaid. 
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Nursing homes don’t take assets. Nursing homes are paid by a state and federal government program called Medicaid. Medicaid files a lien which means you can’t sell the house and keep the money without repaying the lien. Once a person goes into nursing home on Medicaid, all their income goes to the nursing home minus a small personal needs allowance, usually $60-100. There is no money left to pay mortgage. Or taxes. Or utilities. The nursing home does not pay mortgage, it does not own house. Family pays mortgage and all other house costs, or person allows bank repossess house. If there is a spouse that needs part of the income to live, you talk to Medicaid about spouse allowance. But nursing home or Medicaid do not pay mortgage.
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