Quick answer
For most homeowners 62 and older who plan to stay in their home, a reverse mortgage (HECM) is worth comparing first: it's federally insured, has no deadline while you live in the home, and lets you keep all of your home's appreciation. An HEI can fit if you're under 62, want to keep your existing mortgage, plan to sell within the term, or expect modest appreciation.
Side by side
| Reverse mortgage (HECM) | HEI | |
|---|---|---|
| Minimum age | 62 | No age minimum (adult homeowners) |
| Monthly mortgage payment | None required | None |
| How cost grows | Interest and mortgage insurance accrue on the balance | Investor's share of your home's value |
| Deadline | None while you live in the home and meet loan terms | End of term, often 10–30 years |
| Your existing mortgage | Must be paid off with the proceeds (the HECM becomes the first lien) | Usually stays in place |
| Your appreciation | 100% yours | Shared |
| Protections | FHA-insured, mandatory HUD-approved counseling, non-recourse | Contract-based; varies by state and provider |
| Ways to receive money | Lump sum, monthly payments, a line of credit, or a mix | Lump sum |
| Upfront costs | Can be significant, including a 2% upfront mortgage insurance premium | Typically about 3–5% plus third-party costs |
With either option you still pay property taxes, homeowners insurance, and upkeep.
How the costs compare over 10 years
Say you take $50,000 from a $500,000 home and hold it 10 years.
- Reverse mortgage: the balance grows with interest and mortgage insurance. At an example combined rate of 7.5%, $50,000 grows to about $103,000 in 10 years, regardless of what your home is worth.
- HEI (example: 25% of appreciation): about $50,000 if values are flat, $93,000 at 3% a year, and $129,000 at 5% a year.
In this example the HEI costs less if your home grows less than about 3.6% a year, and the reverse mortgage costs less above that. The comparison leaves out the upfront costs, which can be higher for a reverse mortgage. What it can't show is the biggest difference: the reverse mortgage has no end date while you live there, and it's non-recourse, so you or your heirs never owe more than the home is worth when it's sold.
Illustration only. Rates and terms are examples, not offers.
When a reverse mortgage fits better
- You're 62+ and plan to stay in the home for the rest of your life.
- You want to eliminate an existing mortgage payment.
- You want a growing line of credit or monthly income rather than one lump sum.
- You expect your home to appreciate and want to keep that growth for yourself or your heirs.
- You want federal insurance and required counseling.
Learn more at our sister site, reverse.audigarner.com.
When an HEI fits better
- You're under 62, or you're 62+ and don't want a reverse mortgage.
- You have a low-rate mortgage you want to keep.
- You plan to sell or move within the next 10 years or so.
- You need a moderate amount and expect modest appreciation.
What your heirs should know
With a reverse mortgage, heirs can keep the home by paying the loan balance (or 95% of the appraised value if that's lower), or sell it and keep any remaining equity. With an HEI, heirs settle the investment through a sale, refinance, or cash payment, based on the contract terms. Either way, talk with your family before you sign.
How we help
We offer reverse mortgages, HEIs, and HELOCs, so we can put all three side by side for your home and your plans. There's no reason for us to push one over another.
Compare an HEI and a HELOC for your home
Tell us how much you need. We'll show the HELOC payment and total cost next to the HEI settlement under flat, moderate, and strong appreciation.
FAQ
Is an HEI or a reverse mortgage better for seniors?
For homeowners 62+ who plan to stay in their home long term, a reverse mortgage is often the better fit because it has no deadline while you live there, is federally insured, and lets you keep all appreciation. An HEI can fit if you plan to sell within the term, want to keep your existing mortgage, or expect modest appreciation.
Do you have to make payments on an HEI or a reverse mortgage?
Neither requires a monthly mortgage payment. With both, you must keep paying property taxes, homeowners insurance, and maintenance.
Can I get an HEI if I'm under 62?
Yes. HEIs don't have the age-62 minimum that applies to HECM reverse mortgages, which makes them one of the few no-payment options for younger homeowners.
Which costs more, an HEI or a reverse mortgage?
It depends on appreciation. In a 10-year example on $50,000, a reverse mortgage balance at an example 7.5% combined rate grows to about $103,000, while an HEI costs about $50,000 if values are flat and $129,000 at 5% annual appreciation. Reverse mortgages can also have higher upfront costs.
What happens to my heirs with an HEI or a reverse mortgage?
With a reverse mortgage, heirs can pay off the balance (or 95% of the appraised value if lower) to keep the home, or sell and keep any remaining equity. With an HEI, heirs settle the investment through a sale, refinance, or cash payment under the contract.
Talk to a licensed HELOC lender
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Keep reading
What Is an HEI? The Complete Guide
How HEIs work, what they cost, and the 10-year math vs. a HELOC.
HELOC vs. Reverse Mortgage
Another option for homeowners 62+.
Reverse Mortgages Explained
Our sister site on HECMs.