Homeowners over 62 are sitting on more equity than any generation before them, and two very different tools compete for that equity: the home equity line of credit and the reverse mortgage. One asks you to keep making payments and rewards you with a lower rate. The other removes the payment altogether and charges more for that relief over time. Picking the wrong one can cost tens of thousands of dollars, or leave a retiree stretched thin trying to cover a monthly bill they did not need to take on.
This guide breaks down how a HELOC and a reverse mortgage differ on eligibility, cost, and what each does to your home equity over ten years, so you can walk into a lender’s office already knowing which questions to ask.
What a HELOC Is, Quickly
A home equity line of credit is a revolving credit line secured by your home, similar in structure to a credit card. You are approved for a credit limit based on your home’s value, your existing mortgage balance, and your credit profile, then you draw what you need during a set draw period, typically 10 years, and repay it with interest. For a full walkthrough of how the product works, see What Is a HELOC and How Does It Work? on FinanceDevil.
Monthly payments during the draw period are usually interest only, and most lenders require a credit score of at least 620, verifiable income, and 15% to 20% equity retained after borrowing. There is no minimum or maximum age requirement for a HELOC, which is one of the biggest structural differences from a reverse mortgage.
What a Reverse Mortgage Is, Quickly
A reverse mortgage flips the typical mortgage relationship. Instead of you paying the lender every month, the lender pays you, using your home’s equity as the source of funds. The most common version is the Home Equity Conversion Mortgage, a loan insured by the Federal Housing Administration and available only through HUD-approved lenders.
Borrowers must be at least 62 years old, occupy the home as a primary residence, and either own the property outright or carry a mortgage balance low enough that the reverse mortgage proceeds can pay it off at closing. No monthly mortgage payment is required for as long as the borrower lives in the home and meets the loan terms. Instead, interest and fees accrue and are added to the loan balance, which is repaid when the last borrower sells, moves out permanently, or passes away.
| BY THE NUMBERS: 2026 HOME EQUITY SNAPSHOT• U.S. homeowners held roughly $34 trillion in combined home equity in 2026, according to the Federal Reserve.• The 2026 HECM lending limit is $1,249,125, meaning proceeds are calculated on whichever is lower, the home’s value or that cap.• Average HELOC rates ran between about 7.1% and 7.4% through the first half of 2026, per Bankrate and Curinos survey data.• HECM origination fees are capped by law at $6,000, and roughly 98% of borrowers finance their closing costs into the loan rather than paying cash upfront. |
Eligibility Side by Side
| Factor | HELOC | Reverse Mortgage (HECM) |
|---|---|---|
| Minimum age | None | 62 |
| Credit score | 620 minimum, 700+ for best rates | Not a qualifying factor |
| Income requirement | Verified, documented income required | None; must show ability to pay taxes and insurance |
| Equity needed | 15% to 20% retained after borrowing | Roughly 50% or more, varies by age and rate |
| Existing mortgage | Can remain in place, HELOC sits behind it | Must be paid off at closing, often from proceeds |
| Primary residence rule | Not required | Required for the life of the loan |
How the Money Actually Moves
With a HELOC, money moves toward you when you draw it, and away from you every month as you repay interest, and eventually principal. With a reverse mortgage, money moves toward you as a lump sum, a monthly tenure payment, a line of credit, or some combination, and nothing moves back toward the lender until the loan is repaid at the end. That single difference explains almost every other tradeoff between the two products.
Payout Options
HELOC funds are accessed only as a revolving draw. A HECM offers more flexibility: a lump sum at a fixed rate, ongoing tenure payments at a variable rate for as long as you live in the home, a standby line of credit that grows over time if left untouched, or a blended structure combining any of these.
Cost Comparison in 2026
HELOCs and reverse mortgages are priced completely differently, and comparing the headline rate alone is misleading. A HELOC’s ongoing interest rate tends to run lower, but a reverse mortgage’s upfront fee structure is heavier.
| Cost Component | HELOC | HECM Reverse Mortgage |
|---|---|---|
| Typical 2026 rate | About 7.1% to 7.4% variable | Generally higher than HELOC rates, fixed or variable by payout type |
| Origination or closing costs | Often $0 to $500; many no-closing-cost options | Origination fee capped at $6,000 by HUD formula |
| Mortgage insurance | None | 2% upfront, 0.5% annually on the loan balance |
| Typical total upfront cost | Near zero on most lines | Roughly $10,000 to $15,000, usually financed into the loan |
| Monthly payment | Interest only during the draw period | None required while living in the home |
| EXPERT INSIGHT“Overall, most seniors will qualify for reverse mortgages much easier than HELOCs.”Eric Elkins, CEO of Double E Financial and host of The One Percent Show, quoted by CBS News, 2026 |
What Happens to Your Home Equity Over Time
This is the part many borrowers underestimate. With a HELOC, your equity position depends on your own repayment behavior. Draw the funds, pay them back on schedule, and your equity largely recovers. With a reverse mortgage, the loan balance grows every single year by design, since interest and mortgage insurance are added to the balance rather than paid out of pocket. That structural difference means a reverse mortgage will almost always erode more home equity over a 10-year horizon than a HELOC that is being actively serviced.
A Worked Example: $150,000 Tapped Each Way Over 10 Years
Consider a homeowner with a $450,000 home who accesses $150,000 of equity through each product. Figures below are illustrative, based on the rate and fee assumptions described, and will vary by lender, credit profile, and how rates move over the decade.
| HELOC | HECM Reverse Mortgage | |
|---|---|---|
| Amount accessed | $150,000 | $150,000 |
| Estimated upfront costs | $0 to $500 | About $17,500 (MIP, origination, third-party fees), financed into the loan |
| Rate assumption used | 7.1% variable, held flat for the model | About 7.75% plus 0.5% annual MIP, compounding with no payments |
| Out-of-pocket cost over 10 years | Roughly $106,500 in interest-only payments | $0; no payments required |
| Loan balance after 10 years | $150,000 principal still owed, unchanged if only interest was paid | Roughly $368,000, more than double the amount drawn |
The HELOC borrower pays real money every month but keeps the principal balance flat. The reverse mortgage borrower pays nothing out of pocket but watches the balance owed against the home roughly double over the same period. Neither outcome is automatically wrong; it depends on whether monthly cash flow or long-term equity preservation matters more to the household.
Who Should Choose Each Option
A HELOC Tends to Fit Homeowners Who:
Have reliable monthly income from Social Security, a pension, or investments, and can comfortably absorb an interest-only payment. Want to preserve as much home equity as possible for heirs. Need funds for a specific, time-limited purpose such as a renovation or medical expense rather than ongoing income. Qualify comfortably on credit score and documented income.
A Reverse Mortgage Tends to Fit Homeowners Who:
Are on a genuinely fixed income and cannot absorb a new monthly payment under any circumstance. Own their home outright or have very little mortgage balance remaining. Plan to stay in the home long term and are less concerned with maximizing what heirs eventually receive. Want the non-recourse protection that comes with an FHA-insured HECM, meaning neither they nor their heirs will ever owe more than the home is worth.
Risks to Understand Before You Decide
Both products use your home as collateral. With a HELOC, missing payments can lead to foreclosure, and because most HELOC rates are variable, a payment that is manageable today could climb if the Federal Reserve reverses course. Lenders can also freeze or reduce a HELOC if your home’s value drops significantly, cutting off access when you may need it most.
With a reverse mortgage, there is no monthly payment to miss, but borrowers must keep property taxes, homeowners insurance, and home maintenance current. Falling behind on any of those can trigger a default and, in the worst case, foreclosure. The loan balance also reduces what is left for heirs, which matters if passing the home down intact is a priority for your family.
The Bottom Line
There is no single right answer between a HELOC and a reverse mortgage for homeowners over 62. A HELOC costs less over time but requires a payment you have to be able to make. A reverse mortgage removes that payment entirely but grows more expensive the longer it runs, and it reduces what is left for the next generation. The right choice comes down to three questions: can you comfortably handle a monthly payment, how important is preserving equity for heirs, and how long do you realistically plan to stay in the home. Answer those honestly, run the numbers on your specific home value and age, and talk to a HUD-approved counselor before signing anything tied to a reverse mortgage.
Frequently Asked Questions
Can I have both a HELOC and a reverse mortgage at the same time?
Not usually in the way you might expect. A reverse mortgage generally requires that any existing mortgage, including a HELOC balance, be paid off at closing, either from your own funds or from the reverse mortgage proceeds themselves. Once the HECM closes, you cannot open a new HELOC behind it in first position without the reverse mortgage lender’s consent, since the HECM must remain the primary lien.
What happens if I outlive the reverse mortgage proceeds?
With a HECM tenure payment option, you continue receiving monthly payments for as long as you live in the home as your primary residence, even if the loan balance eventually exceeds the home’s value. The non-recourse structure protects you and your heirs from owing more than the home is worth at repayment.
Can my spouse stay in the home if I pass away first?
If your spouse is a co-borrower on the HECM, they can remain in the home under the same terms. If they are not a co-borrower but qualify as an eligible non-borrowing spouse under HUD rules, they may also be allowed to stay, provided they keep up with taxes, insurance, and maintenance.
Will a HELOC or reverse mortgage affect my Social Security or Medicare?
Reverse mortgage proceeds are loan advances, not income, so they do not affect Social Security or Medicare eligibility. However, if funds are not spent promptly and accumulate in a bank account, they could affect need-based programs like Medicaid or Supplemental Security Income. A HELOC works the same way. Speak with a benefits counselor if you receive need-based assistance.
Is HELOC interest tax deductible for retirees?
The same federal rules apply regardless of age. Interest is deductible only when the funds are used to buy, build, or substantially improve the home securing the loan, and only if you itemize deductions. Reverse mortgage interest is generally not deductible until it is actually paid, which typically happens when the loan is repaid.
How much home equity do I need to qualify for a reverse mortgage?
Most HECM lenders look for at least 50% equity, though the exact figure depends on your age, current interest rates, and the value of the home. Older borrowers can typically access a larger share of their equity than younger ones, since HECM proceeds are calculated using a principal limit factor tied to age.
What credit score do I need for a HELOC after 62?
Age has no bearing on HELOC underwriting. Most lenders look for a credit score of at least 620, though scores above 700 typically unlock the most competitive rates. Retirees relying on Social Security, pension, or investment income can generally use that documented income to qualify.
Which option preserves more for my heirs?
As a general rule, a HELOC that is actively repaid preserves more equity than a reverse mortgage, because a reverse mortgage balance grows every year that it goes unpaid while a serviced HELOC balance can shrink. If leaving the maximum possible equity to heirs is your top priority and you can comfortably manage monthly payments, a HELOC or a smaller reverse mortgage draw are usually the stronger paths.
Related Reading on FinanceDevil
For more on how HELOCs work before you compare them to a reverse mortgage, see What Is a HELOC and How Does It Work? The Beginner’s Guide and HELOC vs. Home Equity Loan: Which Is the Smarter Choice in 2026?.
Disclaimer: This article is for educational purposes only and does not constitute financial, legal, or tax advice. Reverse mortgage and HELOC terms, rates, and fees vary by lender, state, and individual qualification. Homeowners considering a reverse mortgage are required to complete counseling with a HUD-approved counselor before applying. Consult a licensed mortgage professional, financial advisor, or tax professional before making decisions about borrowing against your home.
Sources and Citations
2. Bankrate: Current HELOC and Home Equity Rates
3. CBS News: HELOC vs. Reverse Mortgage, What Experts Think in 2026
4. LendingTree: Reverse Mortgage vs. Home Equity Loan or HELOC
5. The Mortgage Reports: Reverse Mortgage vs. HELOC for Retirement
6. Chase: HELOC vs. Reverse Mortgage, What’s the Difference?
7. PNC Insights: Reverse Mortgage vs. Home Equity Loan or HELOC
8. ConsumerAffairs: Reverse Mortgage vs. Home Equity Loan vs. HELOC (2026)
9. ARLO / reverse.mortgage: Current Reverse Mortgage Rates and 2026 HECM Limits
10. Finance of America: Reverse Mortgage Fees and Costs Explained
11. Mo the Broker: Reverse Mortgage Closing Costs 2026
12. Consumer Financial Protection Bureau: Reverse Mortgages
13. U.S. Department of Housing and Urban Development (HUD): HECM Program
14. FinanceDevil: What Is a HELOC and How Does It Work? The Beginner’s Guide
15. FinanceDevil: HELOC vs. Home Equity Loan, Which Is the Smarter Choice in 2026?
