By Mike Fake · October 2026 · 6 min read
A lot of San Diego retirees are what I call "house rich, cash careful." You've paid down your mortgage, your home has appreciated a ton, and you'd like some of that value to work for you in retirement. Maybe that's covering rising costs, helping the grandkids, or just sleeping better at night.
The two tools that come up most are a HELOC (home equity line of credit) and a reverse mortgage (usually an FHA-insured HECM). They sound similar. They work very differently.
The quick version
| HELOC | Reverse Mortgage (HECM) | |
|---|---|---|
| Monthly payment required? | Yes | No mortgage payment required* |
| Who qualifies | Based on income and credit | Age 62+, primary residence, financial assessment |
| Rate type | Usually variable | Fixed or adjustable options |
| Can the line be frozen or reduced? | Yes, by the lender | Unused line of credit can't be frozen while you meet loan terms, and it grows over time |
| Best for | Short-term needs with income to repay | Long-term retirement cash flow |
*You still pay property taxes, homeowners insurance, and upkeep, and must live in the home as your primary residence.
When a HELOC makes sense
A HELOC is a great tool if you still have steady income, need money for a defined project (a remodel, a short-term expense), and plan to pay it back fairly soon. The catch for retirees is that HELOC payments begin right away and usually adjust with rates. And lenders can freeze or reduce a HELOC line when the economy gets shaky, which tends to be exactly when you'd want it most.
When a reverse mortgage makes sense
A reverse mortgage lets homeowners 62 and older convert part of their equity into cash, a monthly payment, or a line of credit, with no required monthly mortgage payment. The loan is repaid when you sell, move out permanently, or pass away. For 2026, the FHA limit on the home value a HECM can use is $1,249,125, which matters a lot in San Diego, where many homes are worth that or more.
It's a strong fit if you plan to stay in your home long-term, want to reduce monthly outflow, or want a growing line of credit as a safety net.
Clearing up the big myth
"The bank takes your house." Nope. You keep title to your home. Your heirs can keep the home by paying off the loan or refinancing, or sell it and keep any equity left over. And because HECMs are non-recourse, neither you nor your heirs will ever owe more than the home is worth when it's sold. (I wrote a whole post on reverse mortgage myths if you want more.)
The honest trade-offs
- Reverse mortgages have upfront costs, including FHA mortgage insurance, so they're best for people staying put.
- The loan balance grows over time, which reduces the equity left for heirs.
- You must keep paying taxes, insurance, and maintenance. Missing those can put the loan in default.
- HUD-approved counseling is required before you get a HECM, and I think that's a good thing.
How I'd decide
I like to sit down with you (and your kids, if you'd like them there) and model both side by side: what each costs today, what it looks like in 5 and 10 years, and what's left for your family. No pressure, just the numbers in plain English.
Quick Answers
What is the difference between a reverse mortgage and a HELOC?
A HELOC requires monthly payments and is based on income and credit, and the lender can freeze the line. A reverse mortgage (HECM) is for homeowners 62 and older, requires no monthly mortgage payment, and is repaid when the home is sold or the borrower moves out permanently. Taxes, insurance, and upkeep are still required.
What is the 2026 reverse mortgage limit?
For 2026, the FHA HECM maximum claim amount is $1,249,125.
Can my heirs keep my house if I have a reverse mortgage?
Yes. Heirs can keep the home by paying off or refinancing the loan, or sell it and keep any remaining equity. HECMs are non-recourse, so heirs never owe more than the home is worth.
Mike Fake is a licensed mortgage broker (NMLS #125241) in Encinitas, CA, with 20+ years helping North County San Diego families buy, refinance, and plan for retirement. 5.0 stars from 107 client reviews.
Compare Both Side by Side
I’ll model a reverse mortgage and a HELOC on your actual home, in plain English. Family welcome.
Get My ComparisonThis article is general information, not a commitment to lend. Loan programs, terms, and guidelines vary by lender and change over time. All loans subject to credit approval. Mike Fake, NMLS #125241, Arbor Financial Group.