How a reverse mortgage compares
Unlike a HELOC or personal loan—where you make monthly payments—a reverse mortgage allows you to defer repayment² until you leave, sell, or transfer your home, giving you access to a portion of your home’s equity.
| HELOC | Personal loan | |
|---|---|---|---|
| Monthly Payment | No2 | Yes7 | Yes |
| Amortization type | Negative8 | Varies8 | Typically fully amortizing8 |
| Interest rate type | Fixed or variable | Typically variable | Fixed |
| Funds disbursement | Lump sum or line of credit | Line of credit | Lump sum |
| Minimum credit score | No minimum-6409 | 580-680 | 580-700 |
| Minimum age | Yes | 18 | 18 |
| Collateral | Secured by home | Secured by home | Typically unsecured |
2The borrower must meet all loan obligations, including meeting all loan obligations under the first lien mortgage, living in the property as the principal residence and paying property charges, including property taxes, fees, hazard insurance. The borrower must maintain the home. If the homeowner does not meet these loan obligations, then the loan will need to be repaid.
7If no balance on LOC there may be no monthly mortgage payment required.
8Negative amortization means that the amount you owe grows over time because unpaid interest and certain fees are added to your principal balance (common with reverse mortgages that don’t require monthly payments). Interest-only payments (e.g., many HELOCs) cover just interest for a time, so the balance doesn’t decrease and later payments may rise during the repayment phase. Fully amortizing loans include both principal and interest payments each month, so the balance steadily declines to $0.
9There is no minimum credit score and a full financial assessment required for a HECM. Certain proprietary products have a minimum credit score requirement of 640.
This is general information about HELOCS and personal loans—terms vary by lender. Chart does not display all lending products available in the market.
