Compare Your Options
There are several ways to access your home equity. Here's how a Home Equity Agreement compares to HELOCs, home equity loans, and reverse mortgages.
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See how key features compare across different equity access options.
| Feature | Home Equity Agreement | HELOC | Home Equity Loan | Reverse Mortgage |
|---|---|---|---|---|
| Monthly Payments | None* | Yes (interest + principal) | Yes (fixed payments) | None |
| Cost of Capital | Settlement Multiplier | Variable (Prime + margin) | Fixed rate | Fixed or variable |
| Income Requirements | Minimal | Debt-to-income ratio required | Debt-to-income ratio required | Minimal |
| Credit Score Impact | Equity-focused qualification | Credit score dependent | Credit score dependent | Less credit-focused |
| When You Repay | At sale, refi, or end of term | Monthly during draw/repayment | Monthly for loan term | At sale or move-out |
| Age Requirement | Must be 18+ | Must be 18+ | Must be 18+ | Must be 62+ |
| Impact on Home Equity | Share of future value | Debt against equity | Debt against equity | Debt grows over time |
| Risk if Home Value Drops | Settlement amount decreases | Full balance still owed | Full balance still owed | Non-recourse (limited) |
*With a Home Equity Agreement, there are no monthly payments. A Final Settlement Amount based on your home's value at that time is due at the end of the Investment Period or upon sale or refinance. In a high-appreciation scenario, this amount may substantially exceed the investment proceeds received. You share a portion of your home's future value with Mend. The total settlement amount depends on your home's value at the time of settlement.
Detailed Comparison
Each option has its own advantages and considerations. Here's a deeper look at each.
Home Equity Agreement (HEA)
Access cash now in exchange for a share of your home's future value.
Advantages
- No monthly payments required. A Final Settlement Amount based on your home's value at that time is due at the end of the Investment Period or upon sale or refinance. In a high-appreciation scenario, this amount may substantially exceed the investment proceeds received.
- Equity-based qualification
- Settlement deferred until you sell, refinance, or term ends
- If home value drops, you owe less
Considerations
- You share in future value changes
- Total cost may exceed a loan if home appreciates significantly
- Not available in all states
Best for: Homeowners who want to avoid monthly payments and have significant equity but may not qualify for traditional loans.
HELOC (Home Equity Line of Credit)
A revolving line of credit secured by your home equity.
Advantages
- Flexible: borrow what you need, when you need it
- Only pay interest on what you borrow
- May have lower initial rates
Considerations
- Variable interest rates can increase
- Monthly payments required
- Requires strong income and credit
- Risk of foreclosure if you can't pay
Best for: Homeowners with strong income and credit who want flexibility and can manage variable payments.
Home Equity Loan
A fixed-rate loan secured by your home equity, paid in a lump sum.
Advantages
- Fixed rate and payment: predictable
- Lump sum available at closing
- Clear payoff timeline
Considerations
- Monthly payments required
- Requires strong income and credit
- Full loan amount due regardless of home value changes
- Risk of foreclosure if you can't pay
Best for: Homeowners with good credit who want predictable payments and a clear payoff date.
Reverse Mortgage (HECM)
A loan for homeowners 62+ that doesn't require monthly payments.
Advantages
- Nothing due month to month
- Non-recourse: won't owe more than home value
- Can receive funds as lump sum, line of credit, or monthly payments
Considerations
- Must be 62 or older
- Loan balance grows over time (negative amortization)
- Significant upfront costs (MIP, fees)
- Must occupy home as primary residence
Best for: Seniors 62+ who plan to stay in their home and want to supplement retirement income.
Which Option is Right for You?
Consider a Home Equity Agreement if you...
- • Want to avoid monthly payments
- • May not qualify for traditional financing due to income or credit
- • Have significant home equity
- • Are comfortable sharing future value
- • Want flexibility on when you repay
Consider a HELOC or Home Equity Loan if you...
- • Have strong income and credit
- • Can comfortably afford monthly payments
- • Want to keep all future value gains
- • Need ongoing access to funds (HELOC)
- • Prefer a fixed payoff timeline (Home Equity Loan)
Consider a Reverse Mortgage if you...
- • Are 62 or older
- • Plan to stay in your home long-term
- • Want to supplement retirement income
- • Don't have heirs who expect to inherit the home's full equity
See if a Home Equity Agreement is right for you
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This comparison is for informational purposes only and should not be considered financial advice. Each homeowner's situation is unique, and the best option depends on individual circumstances including credit profile, income, age, equity position, and financial goals. We recommend consulting with a financial advisor or housing counselor to determine the best option for your situation. Mend is not affiliated with any HELOC, home equity loan, or reverse mortgage providers mentioned or implied in this comparison.