# Can Home Equity Fund Your Retirement? A 62+ Guide

By Manny Hernandez (@mannyhernandez) · Published 2026-09-16

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For homeowners 62 and older, tapping home equity for retirement usually comes down to three choices: a **Home Equity Conversion Mortgage (HECM)**, a **home equity line of credit (HELOC)**, or a **cash-out refinance**. The right pick depends less on who offers the lowest rate and more on whether you want no monthly payments, a flexible line, or a single lump sum — and how much you care about protecting your heirs' inheritance.

#### Key Takeaways

-   A HECM reverse mortgage is the only option with optional monthly payments — ideal for stretching cash flow, but the balance grows over time and shrinks your legacy.
-   A HELOC gives you a flexible line you can draw as needed, but payments resume and typically jump when repayment begins.
-   A cash-out refinance delivers a lump sum at a fixed or low rate, yet it requires monthly payments and keeps your debt on the books.
-   Age 62 is the minimum to qualify for a HECM; HELOCs and cash-out refis mostly depend on credit and income instead.

62minimum age to qualify for an HECM reverse mortgageConsumer Financial Protection Bureau

Your **equity is one of the largest assets you own**, but the way you unlock it changes your monthly budget, your tax picture, and what your family inherits. A HECM lets you convert equity into cash **without a required monthly payment** — interest simply accrues and the balance grows (CFPB). A HELOC gives you a revolving line, **but payments pause only during the draw period** and resume once repayment begins. A cash-out refinance hands you a lump sum, **but it is a conventional mortgage with mandatory payments**. This guide breaks the three apart so you can match one to your situation — not to a sales pitch.

## How the three options stack up

Buyer concern

HECM reverse mortgage

HELOC

Cash-out refinance

**The key question it answers**

Can I get cash without a monthly payment?

Can I draw funds as needs come up?

Do I want a lump sum on one fixed loan?

**Age requirement**

**62+** — required by law (CFPB)

None, but underwriting and income matter

None, but credit and income matter

**Monthly payments**

Optional by design; interest accrues ([CFPB](https://www.consumerfinance.gov/ask-cfpb/what-is-a-reverse-mortgage-en-224))

Interest-only during draw, then principal + interest

Required for the full life of the new loan

**Effect on equity over time**

Balance grows, equity shrinks

Stable unless you draw; dips while drawn

Stable; you owe the new balance

**Best for**

Retirees who need steady cash flow and want to stay put

Households that need a flexible reserve

Borrowers who want the lowest rate on a big lump sum

**Main limitation**

Growing balance cuts the inheritance you leave

Payment shock when repayment begins

You take on a fresh mortgage with payments

These are the three levers available to most homeowners 62 and older, and each trades a different cost for the cash it frees. On the pages that follow, I go through what each one really costs, when it shines, and where the fine print hides.

## The reverse mortgage reality check

The most talked-about option is the HECM — the only reverse mortgage backed by the federal government (CFPB). It is a special home loan that lets you borrow against your equity **without making monthly mortgage payments** and, critically, you keep title to the house ([CFPB](https://www.consumerfinance.gov/ask-cfpb/what-is-a-reverse-mortgage-en-224)). The catch is invisible at closing: interest and fees are added to the balance each month, so **what you owe rises over time** even while you are not paying a dime.

## HELOC vs. HECM: the payment gap

A HELOC is a revolving line of credit secured by your home, much like a credit card with your equity as the limit. Most HELOCs pair a 10-year draw period with a ~20-year repayment period — during the draw, you can borrow, repay, and re-borrow, but once repayment begins, **new borrowing stops and your payment rises** because you must repay both principal and interest (Lower Mortgage).