HELOC vs. Home Equity Loan vs. Reverse Mortgage
Primavera Realty · Resource Guide
HELOC vs. Home Equity Loan vs. Reverse Mortgage
Three common ways to tap the equity in your home — how each works, who they suit, and the trade-offs to weigh.
Three ways to borrow against your home
If you’ve built equity, you have options to access it without selling. The right one depends on your age, income, how much you need, and whether you want a lump sum or a flexible line — and whether you want monthly payments at all.
Side by side
| HELOC | Home Equity Loan (2nd mortgage) | Reverse Mortgage (HECM) | |
|---|---|---|---|
| How you get funds | Revolving line you draw from as needed | One lump sum upfront | Lump sum, line of credit, or monthly payments to you |
| Monthly payments? | Yes (interest-only during the draw period, then principal + interest) | Yes, fixed principal + interest from the start | No monthly payments required |
| Rate | Usually variable | Usually fixed | Fixed or variable; higher, plus mortgage-insurance costs |
| Who qualifies | Income + credit; typically ~20% equity | Income + credit; typically ~20% equity | Age 62+, substantial equity, HUD counseling required |
| Repayment | During/after the draw period | Over the loan term | When you sell, move out, or pass away |
| Often best for | Flexible/ongoing needs, like a remodel | A known, one-time expense | Retirees who want cash flow and no monthly payment |
How to choose
A HELOC shines when you want flexibility and may not need all the money at once. A home equity loan suits a single, defined cost with the certainty of a fixed payment. A reverse mortgage can help homeowners 62+ turn equity into cash flow without a monthly payment — though it carries higher costs and reduces the equity left to heirs.
Rates and limits move with the market, so compare current offers from a licensed lender before deciding.
Please note: This is general educational information, not financial advice, and rates, limits, and eligibility change. Compare current terms with a licensed mortgage lender or financial advisor for your situation.
Weighing your options?
We can connect you with trusted local lenders and help you think through whether tapping equity — or selling — makes the most sense.