With a home equity loan or line of credit, a homeowner must have sufficient income, when compared to debt, to qualify for the loan, and is required to make monthly mortgage payments. Each monthly payment reduces the amount of principal that the borrower owes on the mortgage and increases the equity value in the home.

A reverse mortgage is different in that it is available regardless of current income. Repayments do not have to be made, because the loan is not due as long as the borrower lives in the house as his or her principal residence. With a reverse mortgage, the home is mortgaged to the lender. Each payment received from the lender increases the amount of principal and interest that the borrower owes on the mortgage and reduces the equity value in the home. Like all homeowners, real estate taxes and other conventional payments like utilities, must still be made. However, with a reverse mortgage, a borrower cannot be foreclosed or forced to vacate his or her home because of a missed mortgage payment as with a home equity loan.