Reverse Mortgage Vs HELOC
Both let you borrow against the equity in your home. They differ in who qualifies, how money is paid out, how much is available, and what each one asks of you. Here are the facts side by side, with no pick made for you.
The two side by side
Each line compares one rule. HECM rules come from FHA and our reverse mortgage program. HELOC rules come from the HELOC programs we offer, which differ from one another.
- Age: every HECM borrower must be 62 or older at closing, with no maximum age. At least one HELOC we offer states only a federal and state minimum age requirement.
- Credit: a HECM has no minimum credit score, though a credit report is still obtained. At least one HELOC we offer accepts scores from 600, and others require 640 or a score above 620.
- Income: a HECM uses a residual income test, the income left after monthly expenses compared with a table by family size and region. The HELOCs we offer cap debt-to-income between 45 and 55 percent, depending on program, score and occupancy.
- Access: a fixed rate HECM pays one lump sum at closing, and a line of credit is available only on an adjustable rate HECM. At least one HELOC we offer requires at least 75 percent of the line drawn at closing, and at least one draws the full line at closing.
- Amount: a HECM’s principal limit depends on the age of the youngest borrower or eligible non-borrowing spouse, the expected rate, and the maximum claim amount. HELOC lines we offer run from $5,000 to $1,000,000 across programs.
- Existing HELOC: our reverse mortgage program does not allow subordinate financing, so a HELOC on the home is paid off at or before the HECM closing.
Age rules differ
Credit is weighed differently
Income tests differ
Money is paid out differently
Amounts are set differently
Any HELOC is paid off
How Each One Works
A HECM is an FHA-insured reverse mortgage for homeowners 62 and older. The HELOC programs we offer are home equity lines qualified on credit and income. Each has its own rules.
FHA describes a HECM as a non-recourse reverse mortgage that gives access to the equity in your principal residence. Every borrower must be at least 62 and must complete counseling with a HUD-approved HECM counselor. The amount available is your principal limit, based on the age of the youngest borrower or eligible non-borrowing spouse, the expected rate, and the maximum claim amount, which cannot exceed $1,249,125 for 2026. You keep paying property taxes, insurance and any HOA dues, and you keep the home in repair.
The HELOC programs we offer let you borrow against your home equity. They qualify you on credit score, income and debt-to-income. All of them lend on primary residences, and some also lend on second homes. Each accepts fixed or retirement income in some form. At least one counts Social Security and pension income, and at least one can qualify you using retirement balances such as an IRA or 401(k).
The two do not combine easily. Our reverse mortgage program does not allow subordinate financing, and a HECM must be a first lien, so a HELOC on the home has to be paid off by closing. HECM proceeds can be used to pay off existing liens on the home, and the lender will need your most recent HELOC statement. A HELOC opened within the last 12 months may face separate, limited payoff rules. Going the other way, at least one HELOC we offer declines a home that already has a reverse mortgage on it. For how a HECM can clear an existing balance, see our reverse mortgage payoff page.
Why families ask Saxton
This page is for homeowners 62 and older, and the adult children helping them, who are weighing a reverse mortgage against a HELOC. We offer both, so the facts below sit side by side with no product pushed.
Two Different Age Rules
Every HECM borrower must be at least 62 at closing, and FHA sets no maximum age. At least one HELOC we offer states only that applicants must meet federal and state minimum age requirements.
Credit Scores Work Differently
FHA sets no minimum credit score for a HECM, and scores are not a criterion for evaluating one. A credit report is still obtained. The HELOC programs we offer set minimum scores: at least one accepts 600, another requires 640, and another requires a score above 620. Second homes, investment properties and larger lines can need more.
Income Is Tested Differently
A HECM includes a financial assessment with a residual income test. Income must be reasonably likely to continue for at least the first three years, and liquid assets can be converted into income for the test. The HELOC programs we offer use debt-to-income caps, from 45 to 55 percent depending on the program, credit score and occupancy.
Who Can Be A Borrower
Our reverse mortgage program does not accept non-occupant co-borrowers, and the home must be each borrower’s principal residence. On the HELOC side, at least one program allows non-occupant co-borrowers, at least one does not allow non-occupant borrowers on a primary residence, and at least one takes a single applicant only.
Credit Line Is Adjustable Only
A HECM line of credit is available only on an adjustable rate HECM. You draw at times and in amounts you choose, the principal limit increases each month, and first-year draws are restricted. A fixed rate HECM pays one lump sum at closing with no later draws, except from a set-aside created at closing. At least one HELOC we offer allows later draws an unlimited number of times, subject to its draw rules.
A HECM Has Ongoing Duties
With a HECM you keep paying property taxes, homeowners insurance, any required flood insurance, and HOA, condominium or PUD fees. You keep the home in repair and certify each year that it is still your principal residence. If these obligations are not met, the loan can become due.
Hear From Homeowners Like You
Frequently Asked Questions
Common questions from homeowners and families comparing a HECM and a HELOC.
For a HECM, every borrower must be at least 62 at closing, the home must be each borrower’s principal residence, and counseling with a HUD-approved HECM counselor is required. Our program does not accept non-occupant co-borrowers. For a HELOC, the programs we offer look at credit score, income and debt-to-income. They lend on primary residences, and some also lend on second homes. At least one HELOC we offer takes one applicant only.
Not for a HECM. FHA sets no minimum credit score, and scores are not a criterion for evaluating a HECM. The lender still obtains a credit report and reviews your willingness and capacity to meet your financial obligations. For a HELOC, yes. At least one program we offer accepts 600, another requires 640, and another requires a score above 620. Higher scores can be needed for second homes, investment properties or larger lines.
It can. At least one HELOC we offer uses Social Security, disability and VA income and recognizes pension deposits. At least one accepts pension, annuity and 401(k) or IRA distribution income, and Social Security income, when they meet Fannie Mae standards. At least one can count retirement and investment balances toward income, and counts retirement balances in full for applicants older than 59.5. If you are still over that program’s debt-to-income cap after assets are added, the application is declined.
A HECM’s amount is its principal limit, set by the age of the youngest borrower or eligible non-borrowing spouse, the expected rate, and the maximum claim amount, which cannot exceed $1,249,125 for 2026. Closing costs and other initial payments come out of it, and first-year draws are restricted. HELOC lines we offer range from $5,000 in at least one program up to $1,000,000 in others, with the largest lines requiring higher credit scores.
No. Our reverse mortgage program does not allow subordinate financing, and a HECM must be a first lien, so an existing HELOC must be paid off by closing. HECM proceeds can pay it off, and the lender needs your most recent HELOC statement. A HELOC opened within the last 12 months may face separate, limited payoff rules. Adding a HELOC after a HECM is limited too: at least one HELOC we offer declines a home that has a reverse mortgage on it.
Property charges: property taxes, hazard insurance, any required flood insurance, ground rents, condominium, PUD and HOA fees, and special assessments. If HECM funds cannot cover unpaid property charges, not paying them within 30 days of the due date makes the loan due and payable. You must also keep the home in repair. If it deteriorates, you get 60 days to begin repairs.
A HECM has no fixed maturity date. With HUD’s approval it can be called due when no surviving borrower lives in the home as a principal residence, when a borrower is away more than 12 consecutive months because of illness and no other borrower lives there, or when a loan obligation is not met. It also becomes due when a borrower conveys all title and no other borrower keeps title. A HECM can be prepaid in whole or in part without penalty. A HELOC’s terms are set by each program and vary from one to another.
Find out what you qualify for
Tell us about your home, what you owe on it now, and what you want the money to do, and we will walk through how each option would apply to you.
Get Pre-Qualified- U.S. Department of Housing and Urban Development, FHA and housing resources
- U.S. Department of Housing and Urban Development, FHA mortgage insurance premiums
Loan amounts, rates, terms, and eligibility are subject to credit approval, asset and income verification, appraisal, and program guidelines. Program availability varies by state. Not all applicants will qualify. Saxton Mortgage, LLC is an Equal Housing Lender.