Home Equity Conversion Mortgage (HECM), a Home Equity Line of Credit (HELOC), and a Home Equity Loan are all types of home loans.  Each allows homeowners to borrow against the equity in their homes. However, there are some key differences between these three types of loans.

A HECM is a type of reverse mortgage that allows homeowners aged 62 or older to convert some of their home equity into cash. The loan is insured by the Federal Housing Administration (FHA). HECM loans do not require monthly mortgage payments. Instead, the loan balance is repaid when the borrower dies, sells the home, or moves out.

A HELOC is a revolving line of credit that allows homeowners to borrow money against their home equity. The borrower can withdraw funds as needed and only pays interest on the amount borrowed. HELOCs typically come with variable interest rates and have a draw period during which the borrower can withdraw funds. After the draw period ends, the borrower must begin repaying the loan.

A Home Equity Loan is a fixed-term loan.  This type of loan allows homeowners to borrow a lump sum of money against their home equity. The borrower must make fixed payments over the life of the loan, which typically comes with fixed interest rates.

Here are some key differences between HECMs, HELOCs, and Home Equity Loans:

HECM HELOC Home Equity Loan
Reverse mortgage Revolving line of credit Fixed-term loan
No monthly payments Variable interest rates Fixed interest rates
Insured by FHA Draw period for withdrawals Lump sum upfront
Repaid when borrower dies, sells home, or moves out Repayment period after draw period Fixed payments over life of loan
Secured by home Secured by home Secured by home

It is important to note that each lender has its own requirements and terms for all three types of loans, so it’s best to check with them directly to see what their specific qualifications are.