HECM vs HELOC: which fits a homeowner over 62?

When you compare HECM vs HELOC borrowing, the key point is that a HELOC sends you a bill each month, while a HECM doesn't. For homeowners 62 and older, the federal government insures a reverse mortgage called a Home Equity Conversion Mortgage, or HECM. A Home Equity Line of Credit, or HELOC, is a credit line from a bank that uses your house as security. Both loans use your equity, which is your home's value after you subtract what you still owe on any mortgage.

Feature	HECM	HELOC
Who can get it	Homeowners at least 62 who own their home fully, or who hold a small remaining mortgage.	Adult homeowners who typically hold at least 20% equity and earn a steady income.
Monthly payment	You have no payment for the loan itself. You're still responsible for property taxes, insurance and maintenance.	Required every month whenever you owe a balance.
Can the line be frozen or cut	No, as long as you keep living there and stay current on taxes and insurance.	Yes, if your home's value falls or your money situation changes.
How the line grows	The unused portion of your credit line grows each month at the combined rate on your loan.	It doesn't grow.
Upfront costs	Higher: the costs cover 2% mortgage insurance, a lender fee from $2,500 to $6,000 and roughly $3,000 for closing.	Lower: often it's just a modest bank or appraisal charge.
When it is repaid	The loan comes due if you sell the house, leave for 12 months or pass away.	Repayments are monthly on a fixed plan that often runs 10 to 20 years.
What happens to heirs	Heirs can pay off the balance, refinance or sell and keep what's left of the equity. The amount they owe never goes past the home's value.	The remaining balance is a debt your estate or heirs must settle.

When does a HELOC for seniors fit better?

A bank credit line is best when you need cash for a short time and you can handle a monthly bill. To qualify, the Federal Trade Commission notes you'll usually need your home equity to be at least 20%. The main advantage is you skip the high reverse mortgage closing costs. For mortgage insurance, a HECM collects 2% of your home's value right at the start. About $3,000 more goes to an appraisal, title search and recording, as the Consumer Financial Protection Bureau details. Federal origination fee rules set the lender fee at 2% of the first $200,000 of your home's value and 1% on the amount over that. That charge starts at $2,500 and won't go above $6,000. A HELOC cuts your early costs a great deal if selling soon is your plan.

When is a HECM the better choice?

A reverse mortgage makes sense if you intend to stay in your home and don't want a monthly loan bill. You need to own the home outright or carry a mortgage small enough for the HECM to pay it off. You're allowed to borrow up to a total amount called the principal limit. Your age, loan rates and home value set it, with home value counted only up to $1,249,125, the 2026 HECM lending limit (it was $1,209,750 in 2025). A 7.125% expected rate is the sum of the 5.00% 10 year Treasury rate on October 23, 2026 and a 2.125% median lender margin. At 62, you receive 30.7% of your home's value with that rate; at 75, it's 39.4%; at 85, you get 50.7%. You're capped at taking 60% of your principal limit during the initial 12 months. In year 1 a bigger draw is allowed only to pay off a mortgage plus closing costs, with 10% on top. From October 2025 to August 2026, 22,318 HECMs were insured, according to fresh HUD figures. In August 2026, across 1,917 loans, the median note rate sat at 6.0%.

Reverse mortgage vs home equity loan for seniors

Instead of a credit line, a home equity loan for seniors delivers 1 fixed lump sum when you close. You make fixed-rate monthly payments that are all the same amount. If your income is steady and you're facing 1 big cost, that consistent payment schedule is a good fit. A HECM also pays out as a lump sum, a credit line or monthly amounts, and there is no monthly loan bill. You sit down with HUD approved reverse mortgage counselors before you apply. Their fee is usually around $125 and you can cover it from the loan. If you cancel once the loan is closed, CFPB cancellation rules allow the lender 20 days to give back any money you put toward the financing.

Reverse mortgage vs HELOC on a fixed income

If you rely on Social Security, a HELOC for seniors is tougher to qualify for and riskier to hold onto. A bank needs to see your monthly income can cover what you owe. Your payments can also spike when interest rates go up, because they're not fixed. If you miss those payments, your home is in danger. With no monthly loan bills from a HECM, you have more cash to spend on food, utilities and care. Property taxes, homeowners insurance and home upkeep are still your responsibility. Each month, interest plus a 0.5% annual insurance fee get added to what you owe, so your balance grows. Going over the reverse mortgage pros and cons helps you keep your budget safe and arrange what happens to your home after death.

Questions about your own home? Call (833) 962-5300. A reverse mortgage specialist answers; we are not a lender.