Updated June 17, 2026
A reverse mortgage requires no monthly repayment and is available only to homeowners 62 and older. A HELOC requires monthly interest payments from the start and is open to any qualifying homeowner. The right choice depends on your income, how long you plan to stay in the home, your need for flexibility, and how important it is to preserve equity for heirs.
How Each Product Works
Reverse Mortgage (HECM)
A Home Equity Conversion Mortgage is an FHA-insured loan that pays you rather than requiring you to pay. You receive funds as a lump sum, monthly payments, a line of credit, or a combination. No monthly mortgage payment is required. Interest and mortgage insurance accrue on the balance instead, and the loan is repaid when you sell, permanently move out, or pass away. The HUD HECM page covers the full program requirements.
Home Equity Line of Credit (HELOC)
A HELOC is a revolving line of credit secured by your home, similar in structure to a credit card. During the draw period (typically 10 years), you borrow as needed and pay at least the monthly interest. After the draw period ends, a repayment period begins (typically 10 to 20 years) during which you repay principal and interest. HELOCs are available from banks, credit unions, and mortgage lenders to any homeowner with sufficient equity and qualifying income.
Side-by-Side Comparison
| Feature | Reverse Mortgage (HECM) | HELOC |
|---|---|---|
| Minimum age | 62 | None |
| Monthly payment required | No | Yes (interest during draw period) |
| Income requirement | Financial assessment; income helps but is not disqualifying on its own | Traditional income and DTI requirements |
| Loan balance over time | Grows (interest accrues) | Fluctuates with use and repayment |
| Upfront costs | High (MIP, origination, closing) | Low to moderate |
| Interest rate | Variable (fixed available for lump sum only) | Variable |
| Risk of foreclosure | Yes, if tax/insurance obligations are not met | Yes, if payments are not made |
| Federally insured | Yes (HECM) | No |
| Counseling required | Yes (HUD-approved) | No |
| Impact on heirs | Reduces equity; non-recourse protection | Reduces equity; heirs inherit remaining balance |
When a Reverse Mortgage May Be the Better Choice
You Have Limited or Fixed Income
If monthly income is tight, a HELOC's required payments may strain your budget or disqualify you at application. A reverse mortgage carries no monthly repayment requirement, which can make it accessible when a HELOC is not.
You Want a Long-Term Income Stream
The tenure payment option on a reverse mortgage continues as long as you live in the home as your primary residence. For borrowers who are concerned about outliving their savings, that ongoing payment can provide real stability.
You Plan to Stay in the Home Long-Term
The high upfront costs of a reverse mortgage are easier to justify the longer you remain in the home. If you expect to stay 10 or more years, the per-year cost of those fees is more manageable.
When a HELOC May Be the Better Choice
You Are Younger Than 62
HECMs require borrowers to be at least 62. A HELOC is open to homeowners of any age who qualify based on income and equity. For homeowners in their 50s who need access to equity, a HELOC is the available option.
You Have Reliable Income to Make Payments
If you have a pension, steady investment income, or are still working, you can service HELOC payments and avoid the compounding balance of a reverse mortgage. That typically preserves more equity over time.
You Want Lower Upfront Costs
HELOCs generally carry modest or no origination fees and no mortgage insurance premium. If cost at closing is a priority, a HELOC is considerably cheaper to open.
You May Need to Move in the Near Future
If there is a reasonable chance you will relocate, downsize, or move to assisted living within a few years, the high upfront cost of a reverse mortgage makes it a poor fit. A HELOC can be paid off and closed without the same cost penalty for short-term use.
Risks That Apply to Both Products
Both a reverse mortgage and a HELOC use your home as collateral. Missing HELOC payments can trigger default quickly; failing to pay property taxes and insurance on a reverse mortgage carries the same foreclosure risk. The Consumer Financial Protection Bureau covers these risks on its reverse mortgage tools page, and comparable guidance exists for HELOCs.
Both products reduce the equity available to you or your heirs. Interest rates on both are typically variable, so costs can rise as rates move.
A Note on Proprietary and Jumbo Options
For higher-value homes, some private lenders offer jumbo reverse mortgages outside the HECM program. These are not FHA-insured and carry different terms. Some lenders also offer fixed-rate HELOCs or home equity loans (a lump-sum, fixed-rate alternative to the revolving line). Both variations are worth exploring with a licensed advisor.
How to Estimate Your Options
Before committing to either product, use our home equity calculator to see how much equity you have and how each option might perform over time. Then consult a HUD-approved counselor (required for a HECM, and free or low-cost) and an independent financial advisor who does not earn a commission on the product you choose. Visit HUD.gov for a list of approved counselors near you.