How seniors can borrow home equity without extra monthly payments

As a retiree, tapping into your home's equity doesn't have to come with extra payment obligations. Teerayut Chaisarn/Getty Images

For many retirees, the rising cost of daily life is putting pressure on already stretched budgets. The latest Consumer Price Index data, released this week, shows that inflation continues to tick upward and is now sitting at 2.9%. As a result, the price tags for essentials like housing, utilities and healthcare are still climbing. At the same time, Social Security payments average just under $2,000 per month in 2025, which is typically not enough to comfortably cover all costs in retirement.

Yet millions of older Americans are sitting on a financial resource that's grown substantially in recent years: their home equity. Right now, homeowners have over $11.6 trillion in tappable equity available to them, with a significant share belonging to those aged 65 and up. The challenge, though, is finding ways to access that wealth without adding the burden of monthly payments. Taking on additional monthly debt is, after all, a crucial consideration for those living on fixed incomes.

Traditional home equity borrowing options come with monthly payments that may be difficult for seniors to fit into their budgets. That can make retirees hesitant to borrow in this manner. Fortunately, there are still some ways for retirees to access home equity without the burden of additional monthly bills.

Learn more about how to tap into your home's equity without extra monthly payments.

How seniors can tap into their home equity now without extra monthly payments

Unlike conventional loans, certain home equity solutions are specifically designed for older adults or those who want flexibility without taking on new obligations. Here are some of the main options to consider now:

Reverse mortgages

Reverse mortgages, which are generally available to homeowners aged 62 and older, allow borrowers to borrow against a portion of their home equity via a lump sum loan, monthly installments, a line of credit or a combination while continuing to live in the property. Instead of making monthly payments to a lender, the loan balance grows over time and is repaid when the homeowner sells the home, moves out permanently or dies. And, because there are no required monthly payments on the loan, it's generally easier for retirees on fixed incomes to manage this type of borrowing. 

However, it's important to note that the homeowner remains responsible for property taxes, insurance and upkeep, and defaulting on any of these obligations could have serious consequences, including foreclosure. Reverse mortgages also reduce the amount of inheritable equity, so it's important to weigh the long-term trade-offs before moving forward.

Compare your reverse mortgage loan options to find the right fit now.

Home equity sharing agreements

Another option that's been growing in popularity recently is home equity sharing. With this arrangement, a home equity sharing company provides funds to the homeowner in exchange for a share of the home's future appreciation. Unlike a loan, though, there are no monthly payments or interest charges. The agreement is typically settled when the homeowner sells the property or after a set term. This approach can give seniors access to tens of thousands of dollars upfront without adding debt obligations to the mix. 

The downside, however, is that homeowners have to give up a portion of their home's future value in return. Still, for retirees who need liquidity but want to avoid ongoing payments, it can be an attractive alternative.

Sale-leaseback arrangements

A sale-leaseback arrangement enables a homeowner to sell their house to an investor and then continue living in the home as a tenant, paying rent. While this does create a new expense via the monthly rent, it eliminates the burden of a mortgage and unlocks the full equity value of the home in one transaction. For some seniors, particularly those with limited savings outside of home equity, this can provide significant financial breathing room. 

The key consideration, though, is affordability. The rent charged to the former homeowner must be manageable relative to their retirement income for this arrangement to make sense. Seniors who take this route should also be comfortable with the idea of no longer owning their home, even though they can stay in it.

The bottom line

For seniors struggling with the "house rich, cash poor" dilemma, there are several ways to access home equity without monthly payments, including reverse mortgages and home equity sharing agreements. And, there are other less common options, too, all of which have their own unique advantages and disadvantages to consider. Before choosing any option, it's important to carefully compare the associated costs, terms and long-term implications. After all, the goal is to find a solution that provides needed cash flow while preserving as much future wealth as possible.