Reverse mortgage vs HELOC vs downsizing vs selling: a worked comparison
For the same cash, a reverse mortgage costs the most interest but needs no payments; a HELOC is cheaper but needs income to qualify and monthly interest; downsizing usually leaves the most if you're willing to move. Our engine follows all four routes year by year so you can see which leaves more at each age.
Figures as of November 1, 2026.For a 70-year-old Ontario couple with an $800,000 home who need $60,000 now and $800 a month, downsizing leaves the most at 85 with 3% home growth. A HELOC costs less than a reverse mortgage but needs about $499 a month in interest and income to qualify. Downsizing leaves more still if a smaller home suits you. Selling to rent leaves the least once rent runs for 20 years.
The four routes in one table
| Reverse mortgage | HELOC | Downsize | Sell and rent | |
|---|---|---|---|---|
| Stay in your home? | Yes | Yes | No | No |
| Monthly payments | None | At least the interest | None | Rent |
| Income test | No | Yes, stress test | Only if you borrow | Landlord checks |
| How much | Up to 55–59%, by age | Up to 65% of value | Price gap minus costs | All equity minus costs |
| Typical rate today | 6.49% (5-yr) | 5.20% | — | — |
| Can be cut by the lender? | No, once advanced | Yes, unused room | — | — |
Worked example
A 70-year-old couple in Ontario, house worth $800,000, $50,000 left on the mortgage. They want $60,000 now (renovations and a car) and $800 a month for 15 years. Reverse mortgage at 6.49% then 7.09%; HELOC at 5.20%; home growth 3%; investments 4%; downsizing to $500,000; or renting at $2,600 a month.
| Age | Reverse mortgage | HELOC | Downsize | Sell and rent |
|---|---|---|---|---|
| 75 | $670,920 | $683,930 | $661,017 | $548,220 |
| 80 | $666,689 | $715,874 | $719,689 | $409,789 |
| 85 | $624,842 | $743,320 | $786,041 | $214,526 |
| 90 | $581,245 | $818,555 | $913,876 | runs out at 90 |
| 95 | $471,279 | $899,270 | $1,062,645 | runs out at 90 |
| Monthly payment, year 1 | none | $499 | none | $2,600 |
| One-time costs | $2,270 | $800 | $55,775 | $47,500 |
If house prices stall
Same couple, but the home's value doesn't grow at all. Every route that keeps a home loses ground; the reverse mortgage loses most because its balance keeps compounding.
| Age | Reverse mortgage | HELOC | Downsize | Sell and rent |
|---|---|---|---|---|
| 80 | $405,313 | $454,497 | $556,329 | $409,789 |
| 85 | $200,787 | $319,265 | $521,006 | $214,526 |
| 90 | $0 | $205,911 | $530,973 | runs out at 90 |
| Monthly payment, year 1 | none | $499 | none | $2,600 |
| One-time costs | $2,270 | $800 | $55,775 | $47,500 |
An older, single borrower
A 78-year-old widow in a $480,000 Calgary condo who needs $1,200 a month for life. She qualifies for a larger share of value, and fewer years of compounding lie ahead.
| Age | Reverse mortgage | HELOC | Downsize | Sell and rent |
|---|---|---|---|---|
| 85 | $427,963 | $439,025 | $422,829 | $256,725 |
| 90 | $376,585 | $413,023 | runs out at 87 | $59,598 |
| 95 | runs out at 93 | $371,213 | runs out at 87 | runs out at 91 |
| Monthly payment, year 1 | none | $32 | none | $2,100 |
| One-time costs | $2,270 | $800 | $33,680 | $31,500 |
How to choose
- Do you want to stay? If not, compare downsizing and selling; a reverse mortgage costs you more than it gives.
- Can you carry a HELOC payment and pass the stress test? If yes, a HELOC is usually cheaper. Check the qualifying payment in the HELOC comparison.
- How long will you stay? Under three years, prepayment charges bite; consider CHIP Open or waiting.
- How much must be left? Use the engine's "leave at least" solver to find the most you can borrow and still leave that amount.
What does each route cost you, and when?
| Route | Up-front costs | Monthly payments | What grows |
|---|---|---|---|
| Reverse mortgage | $2,270 | none | the loan balance, with interest |
| HELOC | $800 | $499 a month in year one | the line, if interest isn't paid |
| Downsize | $55,775 | none | the invested cash (or it runs down) |
| Sell and rent | $47,500 | $2,600 a month in year one | rent, every year |
Each route delivers the same money: $50,000 to clear the mortgage, $60,000 now and $800 a month for 15 years. What differs is who pays, when, and what's left. The engine counts HELOC interest you pay from your pocket, grown at the investment return, so the comparison stays fair.
How should you read the comparison's result?
Start with the route that leaves the most at the age you care about, then check its demands. A HELOC that "wins" only because you pay its interest every month is a different kind of win from a reverse mortgage that needs nothing. The cards say what each route asks of you; the per-lender panel says which reverse-mortgage products could serve your plan at all, given your age, home value, province and whether you need monthly money.
Then change one thing at a time: home growth to 0%, rates a point higher, a smaller up-front amount. If the winner changes under small changes, the routes are close, and the choice should rest on how you want to live rather than on the arithmetic.
| Needs | $50,000 mortgage paid off, $60,000 now, $800 a month for 15 years |
|---|---|
| Reverse mortgage | EQ Flexlump 6.28%, monthly 7.04% |
| Income | $70,000for the HELOC test |
| Reverse mortgage: left at 85 | $624,842 |
| HELOC: left at 85 | $743,320 |
| Downsize: left at 85 | $786,041 |
| Sell and rent: left at 85 | $214,526 |
| Leaves the most at 85 | Downsize |
Open this example in the calculator →Computed by our engine with the lender terms and rules on the methodology page.Computed November 1, 2026.
What this means for you
No route wins for everyone. The comparison shows the price of each: compounding interest for the reverse mortgage, monthly interest and an income test for a HELOC, moving costs and transfer tax for downsizing, and rent that rises every year for selling.
Put in your own numbers on the home page; the per-lender panel shows which products could actually serve your plan.
Frequently asked questions
Is a reverse mortgage better than downsizing?
Downsizing usually leaves more equity because it frees cash without interest, but it costs selling commission, land transfer tax and moving, and means leaving your home. A reverse mortgage lets you stay at the cost of compounding interest.
Why doesn't everyone just take a HELOC?
A HELOC needs monthly interest payments, income to pass the stress test (at least 5.25%) and can be reduced or frozen by the bank. Many retirees can't qualify or can't carry the payments.
Primary sources
- Financial Consumer Agency of Canada — Reverse mortgages (effective October 15, 2025). Checked .
- HomeEquity Bank — CHIP Reverse Mortgage rates (special rates as of October 29, 2026) (effective October 29, 2026). Checked .
- HomeEquity Bank — CHIP posted rates (applicable upon reset). Checked .
- OSFI — Guideline B-20: Residential mortgage underwriting practices and procedures. Checked .
- OSFI — Minimum qualifying rate for uninsured mortgages (effective January 29, 2026). Checked .
- Financial Consumer Agency of Canada — Selling a home (costs, realtor commissions) (effective October 10, 2025). Checked .
- Government of Ontario — Calculating land transfer tax. Checked .