Both turn home equity into cash. A HELOC needs monthly payments and an income that qualifies; a reverse mortgage, for homeowners 62 and older, needs no monthly mortgage payment (taxes, insurance and upkeep still apply), and the balance is repaid when you sell or move.
Side by side
| Reverse mortgage (HECM) | HELOC | |
|---|---|---|
| Who can get it | Homeowners 62 and older, living in the home | Homeowners of any age who qualify on income and credit |
| Monthly payment | None required; you keep paying taxes, insurance and upkeep | Required, and it rises when repayment begins |
| Balance | Grows over time as interest is added | Falls as you repay |
| Line of credit | The unused part grows each year and can’t be frozen while you meet the loan terms | The lender can freeze or reduce it if values fall |
| Upfront cost | Higher: FHA insurance, fees and required counseling | Usually lower |
| Repaid | When the last borrower sells, moves out or passes away | On a schedule, like any loan |
When a reverse mortgage (HECM) fits
- You’re 62 or older and plan to stay in the home.
- You want to stop making a mortgage payment, or never start one.
- Your retirement income wouldn’t qualify for a HELOC.
- You want a line of credit that can’t be cut.
When a HELOC fits
- You need a modest amount for a short time.
- You want the lowest upfront cost.
- You’re under 62.
- You want to leave as much equity as possible to your heirs.
Guides and calculators
Questions
Is a reverse mortgage better than a HELOC?
For a homeowner 62 or older who plans to stay and wants no monthly payment, often yes. For a short-term need with income that covers the payments, a HELOC usually costs less.
Can I get a reverse mortgage line of credit?
Yes. With an FHA-insured reverse mortgage, the unused part of the line grows each year, and the lender can’t freeze or reduce it as long as you live in the home and keep up taxes, insurance and upkeep.
What is the 95% rule on a reverse mortgage?
When the loan comes due, your heirs can keep the home by paying the balance or 95% of the home’s appraised value, whichever is less. If they sell, they keep anything above the balance.
