If you own your home and need access to cash in retirement, two options come up most often: a reverse mortgage and a Home Equity Line of Credit (HELOC). Both let you borrow against the equity you have built up over the years — but they work very differently, and the right choice depends on your situation.

This guide breaks down the key differences so you can make an informed decision.

A Home Equity Line of Credit is a revolving credit facility secured against your home. Your lender sets a credit limit — typically up to 65% of your home's appraised value — and you can draw from it, repay it, and draw again as needed.

Key features of a HELOC:

• You must make monthly interest payments on the amount you have drawn
• The interest rate is variable, tied to the prime rate
• You must qualify based on income, credit score, and debt ratios
• The lender can reduce or freeze your credit limit if your home value drops or your financial situation changes
• It is typically available to homeowners of any age who qualify

A reverse mortgage is a loan secured against your home that requires no monthly payments. Interest accumulates on the loan balance and is repaid — along with the principal — when you sell the home, move out permanently, or pass away.

Key features of a reverse mortgage:

• No monthly payments required
• Available only to homeowners aged 55 and older
• Qualification is based on age and home value — not income or credit score
• The lender cannot reduce or cancel the loan as long as you meet basic obligations (property taxes, insurance, maintenance)
• You are guaranteed to never owe more than your home is worth

A HELOC may be the better choice if:

• You are under 55 and do not yet qualify for a reverse mortgage
• You have reliable income and can comfortably make monthly interest payments
• You need a short-term credit facility — for example, to bridge a real estate transaction
• You plan to repay the balance quickly and want to minimize total interest costs
• You want the flexibility to borrow and repay repeatedly

A reverse mortgage tends to be the stronger fit when:

• You are 55 or older and want to eliminate monthly payment obligations
• Your income has dropped in retirement and you no longer qualify for a HELOC
• You want certainty — a loan that cannot be frozen, reduced, or called
• You need long-term, ongoing access to your home equity
• You want to age in place without the stress of monthly debt payments
• You are concerned about cash flow and want to keep more money in your pocket each month

One common concern about reverse mortgages is that their interest rates are typically 1–2% higher than HELOC rates. This is true, and it matters — because interest compounds on the loan balance over time.

However, this comparison only tells part of the story. With a HELOC, you are making monthly payments that reduce your cash flow. With a reverse mortgage, you keep that cash in your pocket. Depending on how you use the funds and how long you hold the loan, the total cost difference may be smaller than it appears.

A qualified reverse mortgage specialist can run the actual numbers for your situation.

Not simultaneously. If you have an existing HELOC, it must be paid off before (or with proceeds from) a reverse mortgage. You cannot hold both products on the same property at the same time.

Neither product is universally better — the right choice depends on your age, income, cash flow needs, and how long you plan to stay in your home.

If you are 55 or older, have limited monthly income, and want to access your home equity without the burden of monthly payments, a reverse mortgage deserves serious consideration.

If you are younger, have strong income, and need short-term flexible credit, a HELOC may serve you better.

Want to compare the numbers for your specific situation? Book a free, no-pressure conversation with our team.