Other Ways to Get Cash From Your Home Without a Reverse Mortgage
What you can do instead of a reverse mortgage
A reverse mortgage is not the only way to turn your home's value into money you can use now. A home equity line of credit (HELOC), a home equity loan, a cash-out refinance, or selling and downsizing can all put money in your pocket while you still own your home — and some of these routes cost less, let you keep more control, or leave a larger inheritance. The right choice depends on how much money you need, whether you can handle a monthly payment, and what happens to your home after you're gone.
Each option has different costs, timelines, and requirements. Some let you stay in your home while borrowing; others require you to move. Some have monthly payments; others don't. Understanding the real differences helps you pick the path that fits your situation and your goals for your home.
Key Takeaways
- Home equity loans and HELOCs let you borrow against your home's value without refinancing your entire mortgage, and you keep the title in your name.
- A cash-out refinance replaces your current mortgage with a larger one and gives you the difference in cash, but your monthly payment will likely change.
- Downsizing or selling your home outright gives you a lump sum with no monthly payments, but you'll need to move or rent.
- Unlike a reverse mortgage, most of these options require you to may have access to based on income and credit, and you'll owe money back while you're still living in the home.
- The costs — interest rates, closing fees, and how long you plan to stay in your home — vary widely between options and should be compared before you decide.
Home equity loans and lines of credit
A home equity loan is a lump sum you borrow against the value of your home. You get the money all at once, pay it back in fixed monthly payments over a set period (usually 5 to 15 years), and the interest rate is typically lower than a credit card or personal loan because the lender can take your home if you don't pay. A home equity line of credit (HELOC) works differently: the lender approves you for a credit limit based on your home's equity, and you draw money as you need it, paying interest only on what you've borrowed.
Both require you to have built up equity in your home — usually at least 15 to 20 percent of its value — and both require you to pass a credit check and show that you have income to make the payments. Unlike a reverse mortgage, you'll have a monthly bill from day one. The upside is that you keep the title to your home, you're not required to live in it full-time (so you can rent it out or move if circumstances change), and your heirs inherit the home without having to repay the lender first. The downside is that if you can't make the payments, the lender can foreclose.
HELOCs often have a variable interest rate, which means your payment can go up if rates rise. Home equity loans usually have a fixed rate, so your payment stays the same. Both are faster and cheaper to set up than a reverse mortgage — closing costs typically run 2 to 5 percent of the loan amount — but you'll need to may have access to based on income and credit history, which rules out some older adults on fixed income alone.
Cash-out refinancing
A cash-out refinance means replacing your current mortgage with a new, larger one and taking the difference in cash. If your home is worth $300,000 and you owe $150,000, you could refinance for $200,000 and walk away with $50,000. The new loan covers your old one, so you have only one monthly payment instead of two.
The catch is that your new payment will likely be higher than your current one, because you're borrowing more money. You'll also pay closing costs again — typically 2 to 5 percent of the new loan amount — and you'll restart the clock on your mortgage term. If you had 10 years left on a 30-year mortgage, refinancing for another 30 years means you could be paying a mortgage into your 90s. This option makes sense if you have a low interest rate on your current mortgage and rates have risen (so refinancing doesn't hurt you much), or if you can afford the higher payment and plan to stay in the home long enough to recoup the closing costs.
Like a home equity loan, a cash-out refinance requires you to pass a credit check and show income. It's slower than a HELOC or home equity loan — expect 30 to 45 days — but it can be cheaper overall if you're borrowing a large amount, because the interest rate on a mortgage is usually lower than on a home equity loan.
Selling your home or downsizing
Selling your home outright and moving to a smaller, less expensive place is the simplest way to unlock cash without borrowing. You pay off your mortgage, cover the realtor's commission (typically 5 to 6 percent of the sale price) and closing costs, and keep the rest. If you've owned the home for a long time, you may owe little or nothing on the mortgage, which means most of the sale price is yours to keep.
This option requires you to move, which is a major life change and not right for everyone. But it has real advantages: no monthly payments, no interest, no risk of foreclosure, and a clean break. You can downsize to a smaller home, rent an apartment, move closer to family, or relocate to a lower cost-of-living area. Some people use the proceeds to buy a smaller home outright with cash, eliminating a mortgage payment entirely.
The downsides are the time it takes to sell (usually 30 to 90 days in a normal market, longer if the market is slow), the cost of moving, and the emotional weight of leaving a home you may have lived in for decades. If you're not ready to move but want to explore this option, you can also rent out your home and use the rental income to cover expenses while you decide.
Comparing costs and timelines
| Option | Time to get cash | Typical closing costs | Monthly payment required? | Who qualifies |
|---|---|---|---|---|
| Home equity loan | 7 to 14 days | 2 to 5% of loan amount | Yes, fixed | Must show income and pass credit check |
| HELOC | 7 to 14 days | 2 to 5% of credit limit | Yes, variable rate | Must show income and pass credit check |
| Cash-out refinance | 30 to 45 days | 2 to 5% of new loan amount | Yes, likely higher than current | Must show income and pass credit check |
| Sell or downsize | 30 to 90 days | 5 to 6% realtor commission plus closing costs | No (if you buy with cash) | Must own the home outright or have equity |
The fastest route to cash is a home equity loan or HELOC, both of which can fund in a week or two. A cash-out refinance takes longer but may have a lower interest rate if you're borrowing a large amount. Selling takes the longest but gives you the most cash upfront and eliminates monthly payments entirely.
Interest rates vary by lender, your credit score, and current market conditions. Home equity loans and HELOCs typically charge 1 to 3 percentage points more than a primary mortgage, while a cash-out refinance uses your primary mortgage rate. A reverse mortgage has no monthly payment but charges higher fees upfront and interest compounds over time, meaning the amount you owe grows each year.
When each option makes sense
Choose a home equity loan if you need a specific amount of cash, can handle a monthly payment, and want to know exactly what you'll owe and when. This works well for one-time expenses like medical bills, home repairs, or helping a family member.
Choose a HELOC if you're not sure how much you'll need or expect to draw money over time. This works for ongoing expenses like healthcare costs or gradual home improvements. Keep in mind that the interest rate can change, so your payment may go up.
Choose a cash-out refinance if you're borrowing a large amount, have a high interest rate on your current mortgage, and plan to stay in the home long enough to recoup the closing costs (usually at least 5 to 7 years).
Choose selling or downsizing if you're ready to move, don't want a monthly payment, or need a large lump sum all at once. This also works if you're concerned about leaving debt for your heirs or if you want to relocate closer to family or to a lower cost-of-living area.
Frequently Asked Questions
Can I get a home equity loan or HELOC if I'm on Social Security only?
Most lenders require proof of income to may have access to, and Social Security counts as income. However, you'll also need to pass a credit check and have enough equity in your home. Some lenders are stricter than others, so if you're turned down by one bank, try another. A mortgage broker can help you find lenders who work with fixed-income borrowers.
What happens to a home equity loan if I can't make the payments?
The lender can foreclose on your home, just as they would with a primary mortgage. This is different from a reverse mortgage, where you don't have to repay while you're living in the home. If you're worried about affording payments, a reverse mortgage or selling your home might be safer options.
Do I have to pay taxes on the cash I get from a home equity loan or sale?
No. Borrowed money is not taxable income. If you sell your home, you may owe capital gains tax on the profit, but most homeowners over 55 can exclude up to $250,000 of gain ($500,000 if married) from taxes. Talk to a tax professional about your specific situation.
Can I use a home equity loan to pay off credit card debt?
Yes, and it often makes financial sense because the interest rate is lower. However, you're replacing unsecured debt (credit cards) with secured debt (a loan backed by your home), which means the lender can take your home if you don't pay. Only do this if you're confident you can make the payments.
How much equity do I need to borrow against my home?
Most lenders want you to have at least 15 to 20 percent equity and will let you borrow up to 80 to 85 percent of your home's total value. If your home is worth $200,000 and you owe $100,000, you have $100,000 in equity and could borrow up to $60,000 or more depending on the lender.