Written by Marc Cormier, Seniors Real Estate Specialist (SRES).

The numbers behind the decision

Homeowners 62 and older are sitting on a record $14.92 trillion in home equity as of early 2026, but for many, that equity is the only real asset they have. Meanwhile, 28% of homeowners 65 and older were spending more than 30% of their income on housing costs in 2024 — the highest rate of any age group, according to the Joint Center for Housing Studies. That combination is exactly why both reverse mortgages and downsizing exist as options: the equity is real, but it's locked inside the walls.

How the two actually compare

A reverse mortgage keeps you in the home you know, near the community and routines you've built, and it can fund in-home care that lets you age in place — but interest, mortgage insurance, and fees accrue against the loan the entire time, and the balance has to be resolved by you, a spouse, or your heirs eventually, whether that's through sale, refinance, or payoff.

Downsizing takes the equity out in one transaction. You sell the current home, and the proceeds either fund a smaller home or condo outright, get invested for income, or both. Monthly costs typically drop — smaller space, often newer construction with lower maintenance — and there's no loan balance left for anyone to untangle later. The tradeoff is the move itself: packing, relocating, and leaving a long-time home, which is a real cost even when the financial math favors it.

Neither is universally better. A reverse mortgage tends to make more sense when staying in the specific home matters more than maximizing what's passed on, or when health and mobility make a move genuinely impractical. Downsizing tends to make more sense when the home has become more maintenance and cost than the household needs, or when leaving the estate intact for heirs is a priority — worth knowing if you also want to see what a reverse mortgage does to an inherited home before deciding.

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