All that home equity, now what? A senior’s guide to unlocking housing wealth

If you’ve owned your property for decades, your house has likely been doing some financial heavy lifting in the background. According to the Federal Reserve, the housing wealth of Baby Boomers hit a record $19.84 trillion at the beginning of 2026. 

With rising expenses and longer retirements, many older adults are looking for creative ways to meet their financial needs, and home equity can be one option. Here’s what you need to know if you’re considering tapping your equity.

Seniors and finances

The cost of living is going up across the board, and rising housing, health care and long-term care costs can be especially stressful for those on fixed incomes:

• In 2023, 34% of households led by someone 65 or older spent more than 30% of their incomes on housing, according to the Joint Center for Housing Studies at Harvard University.  

• A 65-year-old retiring in 2026 should budget an average of $185,500 to cover health care costs across retirement, a 7.5% jump from 2025, according to Fidelity Investments.

• A 65-year-old needs to set aside $135,000 today to cover the average future lifetime costs of long-term care, according to independent data analytics firm Milliman. 

• About 57% of retirees reported having debt in 2022, down only slightly from a high of 60% in 2016, according to the Federal Reserve Survey of Consumer Finances.

• The median household retirement savings for those aged 55 to 64 is $185,000, according to Guardian Life’s analysis of the Federal Reserve’s Survey of Consumer Finances. This is significantly less than the expert-recommended 8X an individual’s income.

If you’re a senior who’s lived in your home for many years and paid your mortgage consistently, home equity is probably a big part of your wealth. But many older adults aren’t taking full advantage of the equity they have available despite being well qualified. Among homeowners with HELOCs, Baby Boomers have the lowest average HELOC balances and utilization, according to 2026 research from Experian.

“If the shoe fits right for the senior, it’s a great time to leverage something like their home equity because of the rising cost of inflation and just how everything continues to get more and more expensive, especially for those on a fixed income,” says Romina Zamanpour, director, production operations at loanDepot. “It’s a fair trade-off if the equity available in their home allows them to leverage it for things like medical bills, home repairs, upgrades, debt consolidation or a variety of things that would otherwise be unaffordable.” 

How to calculate your home equity

Home equity is the portion of your house you own. You can calculate your equity level using an online home value estimator and some basic math. 

Simply subtract what you still owe on your mortgage from your home’s current market value. For example, if your home is worth $500,000 and you owe $100,000 on your mortgage, you have about $400,000 in equity. You can also plug your numbers in Bankrate’s home equity calculator.

How to get cash from your home equity

Knowing how much equity you have is the first step to understanding your three main options for accessing it: a home equity loan, a home equity line of credit (HELOC), or a cash-out refinance. To qualify, you’ll need a minimum amount of equity in your home, good credit and a steady income. Lenders may consider Social Security, pensions, or retirement account distributions if you’re no longer working.

Each home equity product works differently, but the common thread is that all three are secured by your home. If you don’t pay back what you owe, you risk losing your home to foreclosure.  

Home equity loan

A home equity loan provides a lump sum payment based on a portion of your home’s equity. They typically have fixed interest rates and fixed monthly payments, usually over 5 to 30 years. You can usually access about 80% of your home equity, though some lenders allow you to tap your entire equity stake. 

A home equity loan is best for older homeowners who know exactly how much money they need, want it all at once and prefer predictable monthly payments. 

However, if you borrow too little, there’s no guarantee you’ll qualify for another loan, and if you borrow too much, you’ll still need to repay it with interest. The payments start right away, too, and you can’t deduct the interest unless you use the funds to improve your home. 

Home equity line of credit (HELOC)

A home equity line of credit (HELOC) is a revolving line of credit, similar to a credit card, that allows you to borrow against the equity in your home. You can access some or all of the funds over a draw period, often lasting 10 years. Once that ends, you’ll repay everything you borrowed with interest, typically over 20 years. Lenders often let you borrow up to 80% of your home’s value, though some go as high as 100%.

With a HELOC, you can borrow only what you need during the draw period. You can also generally repay some of the principal and borrow funds again, up to your credit limit. This flexible nature can make a HELOC a useful source of emergency funds.    

However, most HELOCs have variable rates, which means your monthly payments can rise and fall as market conditions change. This uncertainty can be tough for homeowners on fixed incomes. Some lenders offer fixed-rate HELOCs, but these often require that you withdraw the entire line when you open the account.

Cash-out refinance

A cash-out refinance replaces your current mortgage with a new, larger one that includes the remaining balance of the original mortgage and additional funds that you’ll receive as cash.

Typically, lenders allow you to tap 80% of the home’s value — or up to 90% for government-backed loans, like VA loans. Unlike a home equity loan or HELOC, a cash-out refi requires only one loan payment, making it easier to manage. However, the new loan comes with a new interest rate and a larger balance, which could mean you’re paying more each month. Note that 53% of Baby Boomers have a current mortgage rate below 4%, according to the National Reverse Mortgage Lenders Association. Today’s cash-out refinance rates are closer to 7%, so this option may not make sense for many.  

Sell and downsize

If you’ve lived in your home for a while, kept up with maintenance and experienced rising home values, you may be able to profit from selling your home. In Q1 2026, homeowners made a 44.1% profit off of the typical single-family home and condo sale, according to real estate data provider ATTOM Data Solutions.

However, depending on where you live, moving to a smaller, less expensive home may be easier said than done. 

“In some markets, they may not be able to enjoy the same lifestyle they are used to,” says Rick Chen, spokesperson for Aven, a financial technology company that provides home equity-backed credit cards. “Their local market may have become so competitive that they may have to move further out. They may not be near their family members or have the kind of amenities they are used to. [Selling and downsizing] may be an option for some, but candidly, it may not be realistic.”

Other ways to tap your equity

Any product that involves using your home equity carries risk. But some products are riskier than others, even if they appear to be affordable upfront.  

A home equity sharing agreement, also known as a home equity investment (HEI), is an arrangement in which you exchange part of your home’s equity or a portion of your home’s future appreciation for a lump sum.  

HEIs can sound appealing because they don’t require monthly payments and usually accept borrowers with lower credit scores, around 500. However, consumers should proceed with caution. HEIs are marketed as investments, not loans, and they don’t offer the same consumer protections as you’d find with a HELOC or home equity loan. You’ll also need to pay off the entire balance at the end of the 10-30 year term, which could cost tens of thousands of dollars. 

There are also reverse mortgages, which give homeowners aged 62 or older — sometimes 55 or older — tax-free payments based on their home’s equity. These payments can supplement a pension or Social Security in retirement, but your loan balance grows over time, and the loans are often paid off by selling the home. 

Whatever product you choose, weigh the overall costs before signing up. If you’re balancing a fixed income with rising costs, the stakes can be especially high.