Homeowners 62 and older often ask: "Should I get a reverse mortgage or a HELOC?" Both let you tap home equity, but they work very differently. Here's a straightforward comparison so you can see which might fit your situation.
What’s a HELOC?
A Home Equity Line of Credit (HELOC) is a revolving line of credit secured by your home. You borrow when you need it and make monthly payments (interest, and often principal) on what you've drawn. You typically need sufficient income and credit to qualify, and the line is usually limited to a draw period (e.g., 10 years), after which you must repay or refinance. If you miss payments, you can lose your home.
What’s a Reverse Mortgage (HECM)?
A HECM is an FHA-insured reverse mortgage for homeowners 62+. The lender pays you (or makes funds available via a line of credit, monthly payments, or lump sum). You don't make monthly principal and interest payments. You must still pay property taxes, insurance, and maintenance and live in the home as your primary residence. The loan is repaid when you no longer live in the home. You retain title; the loan is non-recourse (FHA insurance means you or your heirs won't owe more than the home's value).
Key Differences
**Monthly payments.** With a HELOC, you make payments on the amount you've borrowed. With a HECM, you typically don't make monthly mortgage payments — that's the defining feature for many retirees.
**Qualification.** HELOCs rely on income, credit, and debt-to-income ratios. HECMs require age 62+, sufficient equity, and a financial assessment focused on your ability to pay taxes, insurance, and maintenance — not on monthly loan payments.
**Line of credit growth.** A HELOC doesn't grow; you have a credit limit and you draw against it. A HECM line of credit can grow over time (at a rate tied to the loan's interest rate plus ongoing MIP), so the amount you can draw later can be larger than what you left in. That's unique to the HECM.
**Repayment.** With a HELOC, you're expected to make ongoing payments. With a HECM, the loan becomes due when the last borrower (or eligible non-borrowing spouse) no longer lives in the home — you're not required to pay it down while you live there.
When a HELOC Might Make Sense
A HELOC can be a good fit if you're still working or have strong income, need a smaller amount for a short-term need (e.g., a renovation or bridge expense), and are comfortable making monthly payments. If you have a one-time, short-term need and will pay it off quickly, a HELOC might be simpler.
When a Reverse Mortgage Might Make Sense
A HECM often fits better if you're 62+, don't want monthly mortgage payments, want a line of credit that can grow for future use, or want to eliminate an existing mortgage payment by paying it off with the HECM. It's also designed for primary residence only and comes with mandatory counseling and FHA protections.
Can You Have Both?
In some cases, you might have an existing HELOC that gets paid off when you get a HECM (the HECM would be in first position). You can't typically have an open HELOC and a HECM on the same property in a way that leaves two separate lines — the HECM would replace or pay off the HELOC. Your loan officer can explain how it would work for your situation.
The bottom line: if you want no monthly payments and the possibility of a growing line of credit, a reverse mortgage is built for that. If you want a traditional line of credit with monthly payments and you qualify, a HELOC may work. I'm happy to help you compare the numbers and the tradeoffs so you can choose with confidence.
Have questions about reverse mortgages or want to see how much you might access? Try our calculator or schedule a conversation with Jerry.