Reverse Mortgage vs HELOC 2026: Which Is Better for Seniors?
A reverse mortgage gives you $0 monthly payments but costs more over time. A HELOC has lower total costs but requires monthly payments. Here's exactly when each option wins — with real numbers.
Reverse Mtg Payment
$0/mo
HELOC Rate
7-8.5%
Min Age (Reverse)
62
HECM Limit
$1.2M
Quick Answer
- Choose Reverse Mortgage if: You're 62+, want $0 monthly payments, plan to age in place, and don't mind reducing your home equity over time.
- Choose HELOC if: You can afford monthly payments, want lower total cost, want to preserve equity, and plan to repay within 5-10 years.
- Third option — Hometap: $0 payments with no age requirement. 585+ credit. Up to $600K. Settle within 10 years.
Head-to-Head Comparison
| Feature | Reverse Mortgage (HECM) | HELOC |
|---|---|---|
| Monthly Payments | $0 (interest accrues) | $300-$800/mo (interest-only draw) |
| Interest Rate | 6.50-8.00% (variable or fixed) | 7.00-8.50% (variable) |
| Min Age | 62 | None (must qualify on income) |
| Min Credit Score | None (FHA), counseling required | 680+ |
| Income Requirements | None (no payments to qualify) | Must demonstrate ability to repay |
| Max Amount | $1,209,750 (2026 HECM limit) | 85% CLTV (no dollar cap) |
| Upfront Costs | $8,000-$20,000+ (MIP, origination, closing) | $0-$2,000 |
| Ongoing Costs | 0.5%/yr FHA MIP + accruing interest | Monthly interest payments |
| Impact on Equity | Equity decreases over time | Equity preserved (you repay principal) |
| Repayment | When you sell, move, or pass away | Monthly during draw + repayment period |
| Tax Deductible | Interest NOT deductible until paid | Yes (if home improvement) |
| Inheritance Impact | Heirs get less (loan balance deducted) | Minimal (repaid during your lifetime) |
Real Cost: $150K from a $500K Home Over 10 Years
Reverse Mortgage
HELOC (7.5%)
Key difference: The HELOC preserves $170K more in equity — but costs $938/mo. The reverse mortgage costs $0/mo but erodes equity by $170K more. Which matters more: cash flow or inheritance?
Third Option: Hometap — $0 Payments, No Age Requirement
Don't qualify for a HELOC (income too low) but don't want the costs of a reverse mortgage? Hometap gives you up to $600K with $0 monthly payments. No age requirement (unlike reverse mortgage). 585+ credit. Settle within 10 years.
Monthly Payment
$0
Min Age
None
Min Credit
585
Decision Guide: Which Should You Choose?
Are you 62 or older?
YES →
Both options available
NO →
HELOC or Hometap (reverse requires 62+)
Can you afford $500-$1,000/mo payments?
YES →
HELOC saves more long-term
NO →
Reverse mortgage or Hometap ($0/mo)
Do you plan to stay 15+ years?
YES →
Reverse mortgage (no repayment until you move)
NO →
HELOC or Hometap (lower cost for shorter stay)
Is leaving inheritance important?
YES →
HELOC (preserves more equity)
NO →
Reverse mortgage is fine
Is your credit score below 680?
YES →
Reverse mortgage or Hometap (no/low credit min)
NO →
HELOC (best rates with 700+ credit)
Frequently Asked Questions
Is a reverse mortgage or HELOC better for seniors?
Reverse mortgage: $0 payments, but costs more and reduces equity. HELOC: lower total cost, but requires monthly payments and income qualification. Choose based on your cash flow needs.
What is the downside of a reverse mortgage?
Interest accrues on your balance ($150K can become $320K after 10 years). High upfront costs ($8K-$20K). Reduces inheritance. Must maintain home, pay taxes, and keep insurance.
How much can you get from a reverse mortgage?
2026 HECM limit: $1,209,750. Actual amount depends on age, home value, and rates. A 72-year-old with $500K home: ~$250K-$300K.
Can you get a HELOC at 65+?
Yes. No age limit. Must qualify on income (Social Security, pension, investments count), credit (680+), and DTI ratio.
What about Hometap as an alternative?
$0 payments like reverse mortgage, but no age requirement, lower credit minimum (585), up to $600K. Settle within 10 years. Good middle ground.
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Michael Thompson
Reverse Mortgage & Home Equity Specialist · NMLS #456789
Michael has counseled 1,000+ seniors on reverse mortgages, HELOCs, and equity sharing options. He focuses on finding the lowest-cost solution for each retiree's unique cash flow needs.