Reverse Mortgage vs. Home Equity Investment (HEI): Which Is Better for Homeowners 55+?

If you have been researching ways to access your home equity without making monthly payments, you have probably come across two very different options: a reverse mortgage and a Home Equity Investment, or HEI.

Companies like Hometap, Unlock, and Point have spent heavily marketing HEI programs to California homeowners as a new, flexible alternative to traditional loans. On the surface, they sound appealing: access your equity now, no monthly payments, no interest.

But for homeowners 55 and older, the comparison is not as close as the marketing suggests. When you look at the full picture— the real cost, the risks, the consumer protections, and the long-term impact on your retirement—a reverse mortgage is almost always the stronger option for this specific age group.

This guide explains both products clearly and honestly, shows you where the key differences lie, and gives you the information you need to make the right decision for your situation.

What is a Home Equity Investment (HEI)?

A Home Equity Investment—also called a home equity sharing agreement or equity sharing contract—is a transaction where a private company gives you a lump sum of cash today in exchange for a percentage share of your home's future value when you eventually sell or settle the agreement.

Here is how it works in practice: you receive, say, $100,000 from an HEI company today. In exchange, you agree to give them a share of your home's value—typically 15% to 25% of the appreciated value—when you sell, refinance, or reach the end of the agreement term, usually within 10 to 30 years.

There are no monthly payments and no interest rate in the traditional sense. The company's return comes from the appreciation of your home over time. If your home goes up in value, they profit substantially. If it stays flat or declines, they share in the loss.

Companies offering HEI products include Hometap, Unlock Technologies, Point, Splitero, and others. They are private, largely unregulated, and their contract terms vary significantly from company to company.

The critical detail most people miss

An HEI is not a loan in the traditional sense—it is a contract to sell a portion of your home's future appreciation to a private investor. You are giving up something real and permanent: your full ownership of your home's future value. A reverse mortgage, by contrast, is a loan secured by a lien. You keep 100% of your home's appreciation above the loan balance.

What is a reverse mortgage?

A reverse mortgage is an FHA-insured loan available to homeowners 62 and older—or 55 and older in California through proprietary programs—that lets you access a portion of your home's equity without making monthly mortgage payments.

Unlike an HEI, a reverse mortgage is a loan secured by a lien on your property. You remain the full owner of your home. The lender does not acquire any share of your home's appreciation. When your home increases in value, you—or your heirs—keep every dollar of that gain above the loan balance.

The loan becomes due when the last surviving borrower sells the home, permanently moves out, or passes away. It is repaid from the home's sale proceeds. If the loan balance has grown larger than the home's value, the FHA mortgage insurance covers the difference—you and your heirs never owe more than the home is worth.

You can read a full explanation in our guide: HECM and proprietary reverse mortgages in California and Arizona.

Reverse mortgage vs. HEI: complete comparison

The appreciation problem: why HEIs can cost more than they appear

The most significant and underappreciated disadvantage of an HEI is what it costs you when your home appreciates—which in California has often been the rule, not the exception.

HEI companies typically receive a multiplied share of appreciation rather than a flat percentage of the amount you received. That means the more your home goes up in value, the more expensive the HEI can become—sometimes dramatically so.

Here is a real-numbers comparison using a California homeowner who accesses $100,000 in equity today on an $800,000 home:

Illustration only. Actual results depend on rates, fees, home appreciation, and contract terms. HEI terms vary by provider.

The numbers above illustrate a critical point: in a strong real estate market—like much of California over long holding periods—an HEI can end up costing significantly more than a reverse mortgage because the HEI company captures a share of appreciation that may otherwise remain yours, net of the growing loan balance.

With a reverse mortgage, the loan balance grows over time, but you keep every dollar of home appreciation above that balance. With an HEI, the company's share of your appreciation can grow as your home's value grows. In appreciating markets, that difference can amount to a large number over 10 to 15 years.

The settlement deadline: HEI's most serious risk for retirees

Every HEI agreement has a mandatory settlement deadline—typically 10 to 30 years from the date of the contract. When that deadline arrives, you must settle the agreement by selling the home, paying off the HEI from other funds, or refinancing—regardless of your circumstances at the time.

For a homeowner who is 65 when they sign an HEI, a 10-year deadline means they must settle by age 75. A 30-year deadline means age 95. This creates real risks for retirees that a reverse mortgage does not structure in the same way.

Forced sale at an inconvenient time

If the settlement deadline arrives during a down real estate market, you may be forced to sell your home at an unfavorable price—or pay the settlement from retirement savings that may not be sufficient. A HECM does not have a "10-year must settle" feature based only on a calendar: you generally remain in the home as long as you meet the loan terms and the home remains your primary residence. Always confirm current program rules with a licensed originator and your closing documents.

Health and living circumstances change

A 65-year-old who signs a 10-year HEI may be dealing with very different health and financial circumstances at 75. The HEI contract does not accommodate life changes. A reverse mortgage is designed for senior housing needs—but you must still follow all loan and occupancy rules.

Refinancing may not be available

If you need to refinance out of the HEI at the settlement deadline and home values have fallen, interest rates have risen, or your credit or income profile has changed, you may not qualify for a new loan. A reverse mortgage does not require you to "refinance out on a date certain" in the same way an HEI contract can.

Federal regulation and consumer protection: a major difference

Reverse mortgages: heavily regulated, with strong consumer protections

The HECM reverse mortgage is an FHA-insured product subject to federal regulation by HUD and the CFPB, state licensing requirements in California and Arizona, and mandatory independent counseling before a loan can proceed. The non-recourse structure—which limits what you and your heirs owe relative to the home value—is a core HECM feature to understand with your specialist and HUD counseling.

These requirements exist to make terms more standardized and to reduce predatory behavior. A reverse mortgage is a formal mortgage product, not a bespoke startup contract.

HEIs: largely unregulated private contracts

Home Equity Investment agreements are private contracts between a homeowner and a company. They are not federally insured like HECMs, and the consumer protections are largely what the contract and applicable state law provide. There is no HUD counseling requirement, and the terms can vary a lot. That does not automatically make HEI providers bad actors—but you should have qualified advisors review the actual contract and settlement mechanics.

Ask yourself this question

Would you feel more comfortable with a federally insured mortgage product that has standardized disclosure and counseling requirements, compared with a private contract where terms are company-specific? Your answer is not a prediction—just a barometer of what kind of process you want.

Payout flexibility: reverse mortgage wins clearly for many retirees

An HEI generally provides a lump sum at closing. A reverse mortgage can be structured in multiple ways:

Lump sum: a single large disbursement at closing (commonly associated with some fixed-rate HECM options).

Monthly tenure or term payments: scheduled payments for a defined period or, in some cases, for as long as you meet the loan terms in the home—useful for predictable monthly cash flow.

Line of credit: draw as needed, subject to program rules; unused line amounts may grow per the loan terms, which can create flexible retirement liquidity.

Combination: mix strategies to match taxes, other income, and planned large expenses.

The line of credit feature has no true HEI equivalent. Read: How the reverse mortgage line of credit works.

When might an HEI actually make sense?

In the interest of a balanced comparison, an HEI might be worth a serious look if:

• You are under 55 and do not qualify for any reverse mortgage program, including California proprietary options.
• You have a property type that will not work for a reverse mortgage—such as some non-FHA condos—and no suitable proprietary alternative exists.
• You plan to sell in a few years and the HEI exit lines up with a real, pre-planned move (and a professional has reviewed the contract and net economics).
• You need a very large lump sum that exceeds what you can prudently access on a reverse mortgage, given your age and equity.

For homeowners 55 and older in California and Arizona, those scenarios are less common, because of broader eligibility, strong home values, and 55+ proprietary options in many cases.

The bottom line: why reverse mortgages often win for homeowners 55+

The Home Equity Investment is a real product and can be useful in select situations, especially for younger owners who are not yet eligible for reverse mortgage programs. For homeowners 55 and older in California and Arizona, a reverse mortgage is often the stronger option across the dimensions that matter most:

• Appreciation: you keep 100% of the appreciation above the growing loan balance—and you are not contractually giving an investor a percentage of the home's future value (the loan balance still grows: model the timeline with a specialist).
• No HEI-style settlement clock: a reverse mortgage is not written around a 10- or 30-year mandatory "settle with us or else" deadline the way most HEI contracts are structured.
• Payout flexibility: where eligible, lump sum, line of credit, and monthly payment options can be combined in ways a lump-sum HEI does not offer.
• HECM process: for FHA-insured HECMs, counseling and standardized disclosures are part of the process— a different model than a bespoke private contract.

An HEI company's pitch is that it is a "partner" in your home's future. In a market where homes have appreciated over long holding periods, that can mean forgoing a meaningful share of your future sale proceeds—dollars you can often access in a more traditional mortgage format if you are eligible and the numbers make sense.

If you would like a personalized comparison for your home value, age, and goals, you can request a private strategy call, use the free reverse mortgage calculator for a quick estimate, or read reverse mortgage pros and cons for California homeowners.

Want to compare your options with a licensed specialist?

Jay Zayer, CRMP has 15+ years helping California and Arizona homeowners 55+ understand equity options—including reverse mortgages, HELOCs, and how HEI-style agreements differ on paper. When you are ready, ask questions with no pressure. Call 760-271-8646 or use the link below to book a time.

About the author

Jay Zayer is a Certified Reverse Mortgage Professional (CRMP) and a licensed loan originator with 15+ years of experience helping homeowners 55+ across California and Arizona. CA DRE #01456165, #01450361 · NMLS #307713 · Arizona #1022722. Learn more on the About page.

Free calculator: reversemortgage.coach/calculator

This material is not from HUD or FHA and has not been approved by HUD or any government agency. All reverse mortgage loans are subject to credit and property approval. This content is for educational purposes only and does not constitute financial, tax, or legal advice, and it is not an endorsement of any one product or lender. Information about HEI products is based on publicly available information and general industry knowledge as of April 2026. HEI terms vary by company and by contract: consult the provider and qualified advisors for current, binding terms. Jay Zayer is a reverse mortgage professional; this article does not offer HEI products. Equal Housing Lender.