How to Get Money Out of Your House Without Selling

Home Equity Loan: Borrowing a Lump Sum Against Your Home

A home equity loan is the most straightforward of the borrowing choices. The lender pays a set amount all at once, a lump sum, and the borrower repays it in monthly installments over a set term. The CFPB notes that a home equity loan usually has a fixed interest rate, one that does not change (CFPB).

If a first mortgage is still owed, this loan sits on top of it. The CFPB explains that a home equity loan is then a second mortgage, paid in addition to the first (CFPB).

The house is collateral, meaning the property pledged to back the loan. If the loan is not repaid, the lender could foreclose, which means forcing a sale of the home to collect the debt. Lenders also generally limit how much of the home's value can be borrowed in total, leaving the owner a cushion of equity; this limit is often expressed as a loan-to-value ratio, and the lender sets it.

What the homeowner trades: a new monthly payment for years, interest paid over the life of the loan, any upfront fees, and the risk to the house if payments stop. The CFPB suggests comparing more than the monthly payment when looking at offers.

For someone who knows the exact amount needed and can carry a steady payment, this structure is straightforward to plan around.

HELOC: Draw Money From Your Home as You Need It

Where a home equity loan pays everything at once, a home equity line of credit works more like a credit card backed by the house. The CFPB calls it an "open-end" line of credit that lets the owner borrow repeatedly against home equity, up to a limit (CFPB). Paying the balance down frees up credit again.

A HELOC has two stages. During the draw period, the owner can take money as needed. The Federal Trade Commission explains that once the draw period ends, the repayment period begins: no more borrowing, and the balance must be repaid, either all at once or through payments over time (FTC). The lengths of these stages are set by each loan's terms.

HELOCs usually have variable interest rates, so the rate and the payment can change from month to month. The CFPB also notes that a lender might freeze or reduce the line if the home's value drops significantly or the borrower's finances change. As with a home equity loan, the house is collateral; falling behind can put it at risk. The CFPB says a HELOC is worth considering only by someone confident about keeping up with the payments.

What the homeowner trades: payments that can rise, the risk to the home, and the steady discipline a revolving line asks for. For a closer look at how this compares with a HECM, see reverse mortgage vs HELOC.

Cash-Out Refinance: Replacing Your Mortgage With a Larger One

A cash-out refinance takes a different path. The homeowner takes out a new, larger mortgage that pays off the old one entirely, and receives the difference in cash. Afterward there is one mortgage, not two.

The new loan comes with its own interest rate and its own term. Depending on rates at the time, the new rate may be higher or lower than the old one, and it now applies to the whole, larger balance. The home stays the collateral, and the debt secured by it grows.

What the homeowner trades: often a restarted or longer repayment schedule, possibly a higher rate on everything owed, closing costs, and usually a larger monthly payment. For an owner who has paid off the house or nearly so, this option brings back a large monthly obligation at a stage of life when income may be fixed, which is why it tends to come up less often for that situation.

Reverse Mortgage: Stay in Your Home Without Monthly Mortgage Payments

For an older owner whose worry is the monthly payment itself, a reverse mortgage is built differently. It is a loan against home equity, but borrowers don't make monthly mortgage payments. Instead, as the CFPB puts it, interest and fees are added to the loan balance each month and the balance grows (CFPB). The title stays in the owner's name. A fuller walk-through appears in what a reverse mortgage is.

The most common type is the Home Equity Conversion Mortgage, or HECM. HUD describes it as the only reverse mortgage insured by the federal government, available only through a Federal Housing Administration (FHA)-approved lender (HUD).

The age rule comes from federal law. To be eligible for insurance, 12 U.S.C. § 1715z-20(d) requires a mortgagor who "qualifies as an elderly homeowner," and the same section defines that as a homeowner "who is, or whose spouse is, at least 62 years of age or such higher age as the Secretary may prescribe." The CFPB describes the HECM as a loan only for homeowners 62 and older.

The loan carries ongoing duties. The CFPB explains that borrowers must pay property taxes and homeowners insurance, use the home as their principal residence (where they live most of the year), and keep the house in good condition (CFPB). Falling short on those duties can make the loan due sooner, and the CFPB warns that a borrower could face foreclosure after running out of money for taxes, insurance or other housing costs (CFPB).

A HECM must be paid off when the last surviving borrower or Eligible Non-Borrowing Spouse dies, sells the home, or no longer lives in it as a principal residence (CFPB). The CFPB adds that an absence of more than 12 consecutive months in a healthcare facility, with no co-borrower living in the home, counts as no longer living there.

Counseling comes first. Under the statute, the borrower must have received adequate counseling from an independent third party not tied to the lender or to sellers of other financial products, and HUD keeps a roster of HECM counselors (HUD). Federal rules also limit the origination fee, and the lender discloses it.

What the homeowner trades: a balance that grows and shrinks the equity left for heirs, and a house that must eventually be sold or refinanced to repay the loan. The statute also says the homeowner is not liable for more than what the home's sale recovers.

For an older homeowner whose main concern is the monthly payment, knowing how this loan is built differently can change the whole conversation.

Shared Equity Agreement: Exchanging a Share of Future Value for Cash Today

A shared equity agreement, sometimes called a home equity investment, is not a loan at all. An investor pays the homeowner cash now. In return, the investor receives a share of the home's value later, when the house is sold or the agreement's term ends.

There are typically no monthly payments. The cost shows up at the end: the homeowner gives up part of whatever the home gains in value, and sometimes more, depending on how the contract measures the investor's share. The owner still pays the property taxes and insurance and keeps up the house.

Each agreement runs for a set number of years. When that term ends, the owner generally must buy out the investor's share, sell the home, or refinance to raise the money.

What the homeowner trades: a slice of the home's future growth, and a firm obligation to settle up at the end of the term. This is a newer and less standardized category than home equity loans or HELOCs, and terms vary widely from one provider to the next. A homeowner's attorney can read such a contract before it is signed.

Seeing All Five Options Side by Side

Seeing the options against the same four questions often helps a family who has just met all of them at once.

Is a monthly payment required? A home equity loan, a HELOC and a cash-out refinance all require one. With a cash-out refinance, that payment covers the full new balance, and the repayment schedule often starts over or lengthens. A reverse mortgage requires no monthly mortgage payment, though taxes, insurance and upkeep continue. A shared equity agreement requires no monthly payment either.

What happens to equity over time? With the three traditional loans, equity falls by what is borrowed and rebuilds as the loan is paid down. With a reverse mortgage, the balance grows, so equity tends to shrink over time. With a shared equity agreement, part of future value goes to the investor.

What happens if obligations are not met? With the home equity loan, HELOC and cash-out refinance, missed payments can lead to foreclosure. With a reverse mortgage, unpaid taxes or insurance, failed upkeep, or no longer living in the home can make the loan due. A shared equity agreement must be settled by its terms.

Which situations are these options usually linked to? The traditional loans tend to come up when steady income can carry a payment. A reverse mortgage is associated with owners 62 or older who plan to stay in the home. A shared equity agreement comes up when cash is needed now and the owner is willing to share future value. These are patterns, not advice: a household's own goals, health, income and plans decide what fits.

Before Choosing: Other Steps Worth Considering First

Borrowing is not the only answer, and sometimes not the first one. The CFPB lists alternatives such as waiting, refinancing, downsizing and lowering expenses (CFPB).

A budget and benefits review. Looking at monthly costs and unclaimed help can shrink the gap. The CFPB notes that state and local programs can help with utilities, fuel and home repairs, and points to benefitscheckup.org.

Property tax relief. Many localities have programs to help with property taxes, according to the CFPB. Eligibility rules and deadlines vary by state and county, and the county or town tax office publishes current details.

Help from family. Some families arrange a family loan, or a relative helps with household costs. Putting the terms in writing helps everyone stay clear.

Selling or downsizing. This is the baseline. Selling ends the debt question entirely and may lower living costs, but it means leaving the home.