Compare a Reverse Mortgage and a Home Equity Loan on the Terms That Decide the House
Before the house is used to pay for care, check who must live there, what makes the loan come due, how the balance grows, and what counseling you must complete.
A reverse mortgage and a home equity loan both turn the house into money for care, but they are different contracts with different triggers. The rate line matters less than the list of events that makes the loan come due. Put the two products side by side on the same lines before you call any lender, and bring the written answers to your next family meeting.
Local option: New Plan Care gives families in the St. Louis area in-home help so a parent can stay home: companionship, help with bathing and dressing, meals, and overnight care. Call (314) 405-0887.
Start with who must live in the house
For a reverse mortgage, find out what the agreement says about occupancy: who must keep the home as a primary residence, what happens when a borrower moves to a care setting for a stated period, and whether a spouse who is not on the loan keeps the right to stay. Get the exact wording in writing. The CFPB's consumer guidance on reverse mortgages explains these triggers in plain language, so use it to check what a sales contact tells you.
A home equity loan works on a different clock. It runs on a repayment schedule that starts at closing, and the house is collateral for that schedule whether or not anyone lives there. The question for that product is whether the household can make each payment from income while care costs run.
Read the balance over the years, not the first month
Ask for a written projection of the balance at several points, including the point you expect a move to a care setting and a later point after that. A reverse mortgage adds interest and fees to the balance, so the amount owed can grow even when nothing is paid during the loan. Ask the lender to show what happens to the balance if the loan stays open longer than planned. For a home equity loan, ask for the full payment schedule and the total of payments, then set that total against what the household can really pay each month.
Ask who gives the required counseling
Most reverse mortgages require a counseling session before the loan can close. Ask for the name of the counselor and whether the counselor has any tie to the lender. Use the session to ask the questions you wrote down. A free starting point for local counseling and benefits questions is Local Help With Paying for Care, and Aging Ahead, the area agency on aging for the St. Louis region, can point you to independent options.
Check how the money counts for benefits
Loan proceeds can affect means-tested programs depending on how the money is paid out and kept. Ask how a lump sum, a monthly draw, or an unused credit line would be counted before you accept one. Medicaid.gov explains the general asset and income rules, and Missouri DSS, through its Family Support Division, decides eligibility for MO HealthNet. Medicare questions about drug or premium costs go to Missouri SHIP, which gives free counseling.
What it costs: The Missouri median for non-medical in-home care is $33 an hour, per the CareScout (Genworth) Cost of Care Survey 2025 state data tables, released March 2026. New Plan Care's standard rate is $34 an hour with a four-hour minimum, so a visit starts at $136 (newplancare.com/services).
Put the comparison on one page
- Who must live in the home, and how long a stated absence is allowed.
- What event makes the loan due, and whether a non-borrowing spouse can stay.
- How interest and fees are added to the balance, with the projected balance at each point you name.
- Which counseling is required, who gives it, and whether that person has a tie to the lender.
- How proceeds are paid out and how each payout would count for benefits.
- What heirs must do at the end, and whether they can keep the house.
- What happens if you want to sell, refinance, or repay early.
Stop at the lawyer and the tax preparer
Whether a loan fits the estate plan, how proceeds are taxed, and whether a family member can take over a loan are questions for a lawyer or a tax preparer, not the lender's sales desk. The Missouri Bar runs a lawyer referral service that can connect you with someone who handles real estate and elder law. The IRS publishes general guidance on the tax side, and your preparer applies it to your return.