Both let older homeowners use their equity. They work in opposite directions.

HELOC

  • Requires income that supports the monthly payment.
  • Variable rate on what you draw; the balance goes down as you pay.
  • No age requirement and usually lower upfront costs.

Reverse mortgage

  • From age 55 on select programs (60 or 62 in some states), 62 for the FHA-insured HECM.
  • No monthly mortgage payment; interest and fees are added to the balance.
  • You still pay property taxes, insurance and upkeep and live in the home.
  • A HECM line of credit can grow over time if you don’t use it.

Which fits?

If you have comfortable income and want to keep as much equity as possible for heirs, a HELOC is often cheaper. If eliminating a monthly payment or adding cash flow in retirement is the goal, a reverse mortgage may fit better. Counseling with a HUD-approved counselor is required for a HECM and is worth doing either way.

Examples are for illustration only. Not a rate quote, a credit decision or a commitment to lend. Programs, terms and timelines vary by lender, property and borrower and are subject to approval. Larz Martin NMLS #2026245, Lumin Lending, Inc. NMLS #2716106. Equal Housing Opportunity.