Both are lines of credit against your house. One is cheap but needs payments and can be frozen. The other costs more, needs no payments and grows. Here is the trade, in numbers.
A HELOC and a reverse mortgage line of credit both let you draw money as you need it. The HELOC is far cheaper to open, but you make monthly payments, the rate floats, and the bank can freeze or shrink the line. The reverse mortgage line is expensive to open and the balance grows instead of being paid down, but there is no monthly payment, the line can’t be frozen because home values fall, and the unused part grows.
A 70-year-old with a $400,000 paid-off house draws $60,000 in the first year and nothing after.
| HELOC (7.30%, 10-year draw) | Reverse mortgage (HECM) | |
|---|---|---|
| Monthly payment, years 1-10 | $372 (interest only, rate can change) | $0 (taxes, insurance and upkeep still yours) |
| Monthly payment, years 11-30 | $486 (principal and interest) | $0 |
| Still owed after 10 years | $61,200 | $158,700 |
| Can the lender freeze or cut the line? | Yes, e.g. if your home’s value drops a lot or your finances change | No, not for those reasons |
| Unused credit | Stays the same until the draw period ends (often 10 years), then closes | Grows every month |
Rates: national averages from our rate tracker (2026-08): home equity loan 8.13% APR, HELOC 7.30% APR (variable; we hold it flat here). Home equity loan and HELOC closing costs assumed at 2% of the amount borrowed. Reverse mortgage as below.
Assumptions: principal limit from HUD’s official table at a 7.68% expected rate; balance and unused credit line grow 7.5% a year (7.0% interest + 0.5% annual mortgage insurance); upfront costs = 2% FHA mortgage insurance + the HUD-capped origination fee + about $3,000 of other closing costs. Illustrations, not quotes. Your lender’s rate and a HUD counselor give exact figures.
The HELOC costs about $372 a month for ten years, then about $486 a month once repayment starts, and that is with the rate held flat; in reality it moves with the prime rate. The reverse mortgage costs nothing monthly, but by year ten the balance is about $158,700.
Many people open a line “just in case”. Here the two behave very differently.
| Untouched line | HELOC (sized at the $60,000 you need; a lender might offer more on a paid-off home) | HECM line at 70 on a $400,000 home |
|---|---|---|
| At opening | $60,000 | $121,000 |
| After 5 years | $60,000 | $173,700 |
| After 10 years | $0 (draw period ends) | $249,400 |
(In the first 12 months only about 60% of the HECM’s principal limit can be drawn, costs included; the full line opens after that.) The HECM line costs far more to open (about $17,000 here), which is the price of a line that grows and can’t be cut back for a falling housing market. A HELOC lender can freeze or reduce your line if your home’s value drops significantly or your finances change for the worse, which is exactly when you might need it. Read more in HELOCs for seniors and how the reverse mortgage line grows.
You can’t keep both on the same house: a reverse mortgage must be the first lien, so an open HELOC is usually paid off and closed when the reverse mortgage closes. If the HELOC is less than a year old, HUD limits how much of the reverse mortgage can go toward paying it off. The CFPB’s own guide for older homeowners suggests looking at lower-upfront-cost options like a HELOC before a reverse mortgage, so it is worth pricing both.
For a retiree who wants no monthly payment and a reserve that can’t be frozen, often yes. For someone with income who needs money for a few years and will repay it, a HELOC is far cheaper.
Yes. Federal rules let a HELOC lender freeze or reduce the line in specific cases, including a significant drop in the home’s value or a material change in the borrower’s finances. A HECM line can’t be frozen for those reasons.
Not in practice. The reverse mortgage must be the first lien, so any HELOC is paid off and closed when the reverse mortgage closes.
A HELOC, by far, if you can make the payments. A reverse mortgage has 2% upfront FHA mortgage insurance, other closing costs, and a balance that compounds.
Educational, not individual financial advice. The Equity Ledger doesn’t originate loans. Reverse mortgages are complex and the right answer depends on your specific situation — confirm the details with a HUD-approved counselor before you decide.
Rules and figures are from U.S. government program materials current at publication; HECM limits and rates change — verify with HUD/FHA or a HUD-approved counselor.