Are There Age Requirements for Getting a Home Equity Loan or Line of Credit?

No, but there are things that older people should consider before taking on debt

Fact checked by Vikki Velasquez
Reviewed by Lea D. Uradu

Although there are no maximum age requirements for getting a home equity loan or a home equity line of credit (HELOC), you must be at least 18 years old to apply for the loan. Home equity loans are structured similarly to traditional mortgages, with repayment schedules that can span 20 to 30 years.

Taking out a home equity loan or home equity line of credit in retirement may mean you may not outlive the maturity of the loan. Be sure to carefully consider your finances and your goals, including the advantages and disadvantages of taking out a home equity loan as an older homeowner.

Key Takeaways

• Home equity loans or lines of credit have no age requirements, as federal law prohibits lenders from discriminating against or denying credit based on age.
• A home equity loan can provide retirees with access to cash or a monthly income stream, but you must make the monthly payments.
• For retirees, the lending requirements are the same regardless of the applicant’s age, meaning you must demonstrate enough home equity and income to get approved.
• If you pass away with an outstanding balance, your heirs must decide whether to sell the home or pay the debt unless you have credit or life insurance.

Older Homeowners Have Lots of Home Equity to Tap

One of the perks of homeownership is the ability to tap into your home equity via a home equity loan or line of credit. Those in retirement who have already paid off their mortgage or are close to paying it in full can use their home equity for cash or income. Homeowners age 65 and older had $250,000 in home equity as of 2022.

Retirees typically have fewer options to generate additional income beyond Social Security and their retirement accounts. Since retirement accounts and 401(k)s can fluctuate with market conditions, you may not have enough funds to cover an emergency or a one-off big expense.

As a result, retirees can tap into the considerable amount of home equity available to meet their living needs. Homeowners age 62 and older were reportedly sitting on nearly $14 trillion in home equity wealth at the end of the 2024.

$13.95 Trillion

The amount that homeowners age 62 and older collectively own in home equity wealth.

How Old Is Too Old?

For those concerned about being too old to qualify for a home equity loan or a HELOC, you can put those worries aside. It is illegal in the United States to discriminate and deny credit based on race, religion, origin, sex, marital status, or age.

Age Discrimination

Due to the Equal Credit Opportunity Act (ECOA), a federal civil rights law introduced in 1974, lenders cannot use age as a reason to turn down your request for a home equity loan or a HELOC. In other words, it’s theoretically possible for even a 100-year-old to get approved for a 30-year mortgage.

Lending Requirements

However, older homeowners are not guaranteed approval by creditors. Like anyone else, they’ll need to prove that they are sensible with money, financially secure, and can afford the monthly payments.

If your retirement savings plan pays out a decent fixed monthly income, it can help supplement your other income, like Social Security. Income isn’t the only factor mortgage lenders consider, as the amount of home equity, your credit score, and your track record for making on-time payments and repaying debt are all taken into account.

The Risks of Home Equity Loans and HELOCs at an Older Age

Just because you can borrow money doesn’t mean that you should. Yes, age won’t impact whether a lender accepts your application. However, this doesn’t mean that being older lacks importance. Below are a few factors to consider before taking out a home equity loan in retirement.

Your Income

Consider carefully whether you want to take on debt during this phase of your life. When people retire, their earning power often deteriorates. Gone are the days of working full-time, when bonuses, pay raises, overtime, promotions, and side jobs were a possibility. In retirement, you have a fixed income and fewer options to increase your income.

Fixed or Variable Interest Rate

While a home equity loan may offer fixed interest rates, taking out a line of credit with a variable interest rate could be especially risky for somebody in this situation. If inflation spikes, then that little extra wiggle room you had for emergencies or extras might disappear.

Important

If you are unable to repay a home equity debt, the lender can sell the house you used as collateral to collect what it’s owed.

Timeframe

We’re not just talking about a few years here. These loans are long-term commitments that could well outlive you. The average American has a life expectancy in 2022 of 77.5 years, yet they can theoretically borrow money at that same age and agree to pay it back over 30 years.

If you pass away before settling the debt and your heirs are unable to fulfill your obligation, then your property is at risk of foreclosure.

Life or Credit Insurance

If you can afford the premium and aren’t deemed too risky, one way around this is to take out a life or credit insurance policy. With life insurance, the insurance company pays a predetermined death benefit when the policyholder passes away to cover any remaining expenses. Credit insurance, on the other hand, specifically pays off existing debts in the event of death or disability.

What Is the Difference Between a Home Equity Loan and a Home Equity Line of Credit (HELOC)?

Although similar, a home equity loan differs from a home equity line of credit (HELOC). A home equity loan provides funds via a lump-sum payment, and the borrower must make fixed monthly payments at a fixed interest rate.

Conversely, a HELOC provides a line of credit that the borrower can tap into as needed up to a preset credit limit. The borrower must make monthly payments that can vary since a HELOC carries a variable interest rate. However, a HELOC comes with a ten-year draw period that allows homeowners to repay the line of credit, reborrow, repay it gain, and reborrow up to the credit limit.

What Credit Score Is Needed for a HELOC?

The credit score needed to get approved for a HELOC can vary and depend on the value of your home, the available home equity, your income, other outstanding debts, and your credit history. Some lenders require a credit score of 680, while others 620.

However, the Federal Housing Administration (FHA), which insures loans to protect lenders against default, offers loans to borrowers with credit scores of 580 or higher but can go as low as 500 through an FHA-approved lender.

Can You Pay Off a Home Equity Loan Early?

Yes, although some lenders may discourage you from doing this by levying hefty prepayment penalties.

The Bottom Line

Age will not necessarily prevent you from getting approved for a home equity loan or a HELOC since there are no age limits for approval. A home equity loan or line of credit can provide retirees much-needed cash or income.

However, it’s important to consider the risks of increasing your debt in retirement since you must remain current with the monthly payments even if your income declines. If you default on the loan, the bank can seize the property through foreclosure. Consult a financial professional to help determine whether a home equity loan or line of credit in retirement is right for you.