Using Home Equity After 62: A Guide to Conversion Options

Retirement often changes how people think about their home: not only as a place to live, but also as a store of value that may help fund everyday expenses, healthcare, home updates, or long-term plans. For homeowners 62 and older, there are specific ways to turn housing wealth into accessible funds while staying in the property, but the trade-offs can be significant. Understanding the mechanics, eligibility rules, and alternatives can help you choose a conversion approach that fits your household.

Reverse mortgage explained: what it is and how it works

A reverse mortgage is a type of home loan that allows eligible homeowners—typically age 62 or older—to convert part of their home equity into cash. Instead of making monthly payments to a lender (as with a traditional home loan), interest and fees are generally added to the loan balance over time. Repayment usually happens when the borrower sells the home, moves out permanently, or passes away.

The home remains in the borrower’s name, but the loan is secured by the property. One commonly discussed structure in the U.S. is the FHA-insured Home Equity Conversion Mortgage (HECM). HECM loans include consumer protections such as mandatory counseling and limits on certain features, though they still involve costs and responsibilities.

Home equity conversion options beyond a reverse loan

Not every household needs a reverse mortgage to access equity, and “home equity conversion options” can include several approaches with different risk profiles.

A home equity loan or HELOC (home equity line of credit) can provide a lump sum or a revolving credit line, often at rates tied to the broader interest-rate environment. These options typically require monthly repayment and income/credit qualification, so they may be less suitable for borrowers who want to minimize ongoing payment obligations.

Downsizing is another conversion method: selling the current home, buying a less expensive one, and using the difference to support retirement cash flow. Some homeowners consider a cash-out refinance, but that also creates a new monthly payment and depends heavily on current rates and underwriting. In practice, the “right” option depends on budget stability, how long you expect to stay in the home, and whether you want to preserve equity for heirs.

Reverse mortgage requirements and ongoing borrower duties

“Reverse mortgage requirements” generally include an age threshold (commonly 62+ for HECM), occupying the home as a primary residence, and having sufficient equity. The property must meet eligibility standards (for example, certain single-family homes, FHA-approved condos, and some multi-unit properties where the borrower occupies one unit). Borrowers may also need to address any existing liens—such as paying off an existing home loan—using proceeds at closing.

A key point that is sometimes missed: while there may be no required monthly principal-and-interest payment, borrowers are typically responsible for property taxes, homeowners insurance, and maintaining the home. Failure to keep up with these obligations can lead to default. Many programs also include a financial assessment to evaluate whether the borrower can meet these ongoing costs.

Senior reverse mortgage plans: common structures to compare

“Senior reverse mortgage plans” often fall into two broad buckets: FHA-insured HECM loans and proprietary (non-government) reverse mortgages offered by private lenders. HECMs are standardized in many respects, while proprietary products may serve higher-value homes or offer different lending limits, depending on the lender’s guidelines.

How you receive funds can also vary. Some borrowers use a lump sum (often associated with fixed-rate structures), while others prefer a line of credit that can be drawn as needed. There are also options that provide scheduled payments for a set term or for as long as eligibility requirements are met. Each structure affects flexibility, interest accrual, and how quickly the balance grows.

Below are examples of well-known U.S. lenders that originate reverse mortgage products (availability, loan types, and eligibility details can vary by state and by borrower profile).

When comparing providers, the most meaningful differences are often practical: how clearly costs are disclosed, how responsive the loan team is, whether servicing is handled smoothly, and how carefully the lender explains borrower responsibilities (taxes, insurance, occupancy) that must be maintained.

Reverse mortgage calculator: what it can and can’t tell you

A “reverse mortgage calculator” is typically designed to estimate how much you might be able to access based on factors such as the youngest borrower’s age, home value, current interest rates, and existing liens. These tools can be useful for early planning, especially when you are comparing scenarios like taking a line of credit versus drawing a lump sum.

However, calculators rarely capture every real-world detail. Closing costs, servicing fees, mortgage insurance (for HECM), and the impact of choosing fixed versus variable structures can change outcomes. A calculator also won’t fully reflect personal factors such as how long you plan to remain in the home, whether your budget can reliably cover taxes and insurance, and how important it is to preserve equity for heirs. Treat calculator results as a starting point, then verify assumptions carefully during counseling and lender disclosures.

Using home equity after 62 can be a practical way to improve cash flow, but it is not a one-size-fits-all decision. The most informed approach is to understand how equity conversion changes the loan balance over time, what obligations you must continue to meet as a homeowner, and which alternatives could achieve similar goals with fewer trade-offs. By comparing structures and asking detailed questions early, households can choose an option aligned with both financial needs and long-term housing plans.