HELOC vs. reverse mortgage: Which will be better for seniors in 2026? Here's what experts think.

The financial stress is mounting for many Americans, particularly seniors tied to limited budgets. With inflation and higher interest rates to contend with and finite resources to tap into, rising expenses for this demographic are often hard to deal with each day, let alone each year. 

While credit cards are an option, they are expensive and come with double-digit rates. For senior homeowners, a better option might be one tied to the property — like a home equity line of credit (HELOC) or reverse mortgage. Still, both leverage the equity in your home to help you make ends meet, so they will need to be approached strategically, especially in the developing economic climate of early 2026.

To that end, below we'll break down what you need to know about these two products and which might be better as we get further into 2026.

Start by seeing how much home equity you could borrow with a HELOC here.

HELOC vs. reverse mortgage: Which will be better for seniors in 2026?

There is no uniform answer to this question, according to the experts we spoke to. Instead, the right choice will depend on your goals, budget and outlook for the 2026 market. Here's how to better determine when one may be preferable:

Why a HELOC could be better for seniors in 2026

One big reason a HELOC may be a better option for seniors this year is that it comes with lower upfront expenses. This can be helpful for those who don't have a ton of cash — or can't afford to cough up much for closing costs and fees in today's rising-cost market. 

"A HELOC's adjustable rate will generally be higher, but on a total fee basis, reverse mortgage fees will usually be higher than a HELOC," says Jeff Taylor, board member for the Mortgage Bankers Association and founder/managing director at Mphasis Digital Risk. 

Pros say upfront origination fees for reverse mortgages can often range from between $2,000 and $6,000. There's also an upfront mortgage insurance premium and ongoing mortgage insurance. HELOCs don't have mortgage insurance and closing costs could be manageable.

Another perk to using a HELOC in today's environment comes down to projected Federal Reserve moves. Because most HELOCs have variable rates that are tied to the prime rate, any Fed rate cuts will directly impact rates on HELOCs, too. That means if you take one out today and the Fed cuts rates in March, your rate will likely adjust downward, reducing your interest costs and monthly payment in step.

"HELOCs are typically variable-rate loans that adjust month-to-month," says Jordan Del Palacio, loan partner at Churchill Mortgage. "So when the Federal Reserve raises and lowers rates, HELOCs follow the trends more closely."

According to the most recent projections from the Fed, most members expect to reduce rates at least a few more times this year. For HELOC borrowers, that would mean several drops in their HELOC's rate as well.

Get started with a HELOC online today.

Why a reverse mortgage could be better for seniors in 2026

HELOCs aren't always the right fit. For example, they come with monthly payments — something reverse mortgages don't require. This can make the latter a smart choice for seniors on limited incomes. 

"The reason HELOC adjustable rates are generally higher is because HELOCs are tied to the prime rate, which today is 6.75%," Taylor says. "Reverse mortgage adjustable rates are tied to the secured overnight financing rate, which today is around 3.7%."

Reverse mortgages can also be easier to qualify for in today's climate. Unlike HELOCs, which require you to meet certain credit score and debt-to-income thresholds, reverse mortgage eligibility is largely based on equity. And today's homeowners are sitting on a lot of that, with equity levels hitting a record high in 2025.

"Overall, most seniors will qualify for reverse mortgages much easier than HELOCs," says Eric Elkins, CEO of Double E Financial and host of "The One Percent Show" financial podcast.

Pros say there can also be more protections with a reverse mortgage when compared to a HELOC — especially if the market takes a turn. For one, with a HELOC, lenders can freeze your credit line if home values fall, cutting off access to a much-needed financial safety net in hard times. With government-backed reverse mortgages, this isn't a possibility. 

Reverse mortgages also come with the guarantee that you'll never owe more than your home is worth. So even if your home does lose value and your reverse mortgage proceeds have exceeded that number, you (or your heirs) will never owe more than your home sells for. With long-term home price growth unknown, these protections can be a significant benefit for aging homeowners.

Another point to consider: The economy could also worsen again. If this occurs, it could make it hard for seniors to afford payments on a HELOC, eventually leading to foreclosure. With reverse mortgages, no payments are required until the homeowner has died or until they elect to sell the property.

"Reverse mortgages allow seniors to gain access to cash without the worry of monthly repayment obligations," Elkins says. "This makes this tool more reliable during periods of economic downturns."

Learn more about your reverse mortgage options here.

The bottom line

HELOCs and reverse mortgages can both be smart options for the right borrowers. There are also additional products you can consider, like home equity loans or cash-out refinances. If you're not sure which option is the best way to tap your home equity and borrow funds, talk to a financial advisor or mortgage professional. They can help point you in the right direction for your goals and budget and help answer any specific questions you may have.