If you’ve owned your home for a while, you’re likely sitting on one of your largest financial assets: your equity. The good news is you don’t have to put a “For Sale” sign in the yard to put that equity to work.
Two of the most popular ways to turn home equity into usable cash are a home equity line of credit (HELOC) and a reverse mortgage. They sound similar — both let you borrow against your home’s value while you keep living in it — but they’re built for very different homeowners, at very different stages of life. Here’s a side-by-side look so you can decide in a couple of minutes.
Option 1: Reverse Mortgage
If you’re 62 or older, the equity in your home could become cash you can use now. A reverse mortgage lets eligible homeowners convert part of their home equity into funds — while keeping ownership of their home.
What it could help you do:
Free up your monthly budget with no required monthly mortgage payment*
Cover everyday expenses or build an emergency cushion
Make home improvements
Supplement your retirement income and fund the lifestyle you want
Option 2: HELOC (Home Equity Line of Credit)
A home equity line of credit (HELOC) lets you tap your home’s equity to consolidate high-interest debt, fund home improvements, or cover a large expense — typically at a lower rate than credit cards or personal loans.
Money.com’s home equity table lets you compare current HELOC rates and offers from multiple lenders in one place, so you can see what you may qualify for in just a couple of minutes.
Side-by-side: how they really compare
Reverse Mortgage
HELOC
Who it’s for
Homeowners 62 and older
Homeowners of any age who qualify on income & credit
Monthly payments
No required monthly mortgage payment*
Monthly payments are required
How you get the money
Lump sum, monthly advances, or a line of credit
A revolving line of credit you draw from as needed
When it’s repaid
When you sell, permanently move out, or pass away
Over time, during and after the draw period
What lenders weigh most
Your age, home value, and equity
Your income, credit, and equity
Typical cost
Closing costs & fees apply; the balance grows over time
Often a lower rate than credit cards or personal loans
Best when you want to
Stay in your home and ease monthly cash flow in retirement
Borrow flexibly and repay while you’re still earning
So which one is right for you?
A reverse mortgage may fit if you…
Are 62 or older and plan to stay in your home long-term
Want to stop making a monthly mortgage payment and free up your budget*
Are retired or on a fixed income and want to supplement it without a new monthly bill
Care more about cash flow today than about preserving every dollar of equity
A HELOC may fit if you…
Want flexibility — borrow only what you need and reuse the line as you repay it
Have income and credit to comfortably make monthly payments
Have a specific goal: consolidate high-interest debt, renovate, or cover a one-time expense
Want a lower rate than your credit cards — and want to compare multiple lenders first
The bottom line
It often comes down to two questions: How old are you, and do you want a monthly payment?
If you’re 62 or older and would rather not carry a monthly mortgage payment, a reverse mortgage is built for exactly that. If you’re still earning, want flexibility, and are comfortable making payments at a lower rate than your credit cards, a HELOC likely gives you more control. Either way, the equity is already yours — the only question is how you want to use it.
Not ready to borrow against your home? Consider a third option
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Stop bogging yourself down with high-interest credit card payments that limit your spending power. If your monthly interest is creeping out of control, it’s time to switch to a card with a 0% intro APR.
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Frequently asked questions
How much can I get from a reverse mortgage?
It depends on the age of the youngest borrower, your home’s value, and current interest rates — generally, the older you are and the more equity you have, the more you can access. The FHA sets an annual lending limit for the most common (HECM) reverse mortgages, and your exact figure is confirmed during the application.
What disqualifies you from a reverse mortgage?
Common roadblocks include being under 62, not having enough equity, the home not being your primary residence, unpaid federal debt, or being unable to keep up with property taxes, homeowners insurance, and upkeep. A reverse mortgage specialist can tell you where you stand.
How much can I borrow with a HELOC?
Many lenders let you tap up to roughly 85% of your home’s value, minus what you still owe on your mortgage (your combined loan-to-value). The exact amount depends on your equity, income, and credit profile.
What credit score do I need for a HELOC?
Many lenders look for a score in the low-to-mid 600s or higher, with the best rates going to stronger credit. Comparing several lenders online is the fastest way to see what you’d actually qualify for.
Reverse mortgage or HELOC — which is cheaper?
A HELOC often carries lower up-front costs and a lower rate than many alternatives, but it requires monthly payments. A reverse mortgage removes the monthly payment* but typically has higher fees and a balance that grows over time. The “cheaper” option depends on your age, how long you’ll stay in the home, and whether you can make monthly payments.
*With a reverse mortgage, there is no required monthly mortgage payment, but you remain responsible for property taxes, homeowners insurance, and home maintenance. The loan balance grows over time as interest and fees are added, which reduces the home equity available to you and your heirs. The loan becomes due when the last borrower sells the home, no longer lives in it as a primary residence, or passes away. A reverse mortgage is not a government benefit. Eligibility requirements apply, and prospective borrowers are encouraged to speak with a HUD-approved counselor before proceeding.
This content is for informational purposes only and is not financial, tax, or legal advice. Rates, terms, and eligibility vary by lender and are subject to change. Compare offers and confirm details directly with the lender before applying.
Credit card offers, including intro APR periods, rewards rates, and annual fees, are subject to the card issuer’s terms and may change. Rewards categories and 0% intro APR durations vary by card; review the issuer’s terms for current details before applying.
