Many retirees are sitting in a pile of cash right now. But that cash cow may also be where you raised your kids, celebrated holidays, and built a lifetime of memories. The good news is you don’t have to sell your home to tap into those funds.

Between Q4 2011, when the market really started recovering after the crash, and Q4 2025, home prices have jumped more than 105%, according to data reported by the Federal Reserve Bank of St. Louis – FRED. If you bought before the housing bubble, in the late ‘90s or early 2000s, your home could be worth three or four times what you paid for it.

You can borrow against your home equity to pay for emergency expenses, vacations, or even to make up for gaps in retirement income. A baby boomer earning $56,000 is expected to retire with an annual spending shortfall of roughly $9,000 in retirement, according to the most recent Vanguard Retirement Outlook.

Tapping into your home equity without risking foreclosure can be a smart way to give yourself breathing room in retirement, especially if you keep the loan-to-value ratio low so that if you have to sell, you can pay off the loan and walk away with a profit.  Michael Micheletti, chief communications officer at Unlock Technologies in Tempe, Arizona, shared five ways to safely tap into your home equity.

Home Equity Loan

When most people think of tapping into their home equity, they think of a home equity loan. Home equity loans use your house as collateral. Typically, borrowers need a credit score of 620+, but scores of 740 or higher will secure the best rates, according to The Mortgage Reports.

The benefits of a home equity loan? “You receive an upfront cash payment, which you repay monthly at a fixed interest rate,” Micheletti said.

This makes budgeting easy. And if you have already paid off your home, the home equity loan payments could be the same as – or lower than — your prior mortgage, making them manageable.

The drawback to be aware of? “You use your home as collateral, so if you miss payments, you run the risk of foreclosure,” Micheletti said.

Home Equity Line of Credit

Think of a home equity line of credit (HELOC) as a credit card secured by your home’s equity.

“You take out the amount you need, when you need it, up to the limit extended to you,” Micheletti said.

That makes a HELOC a practical solution as an emergency buffer for things like a new roof or a failed water heater or even for “fun but important money,” like a trip to meet a new grandchild in a different state.

But be aware that interest rates are usually variable, which means payments may vary over the life of the loan.

Related: Can caring for aging parents help my tax bill?

Cash-Out Refinance

Like a HELOC or home equity loan, you are tapping into your home’s equity for other expenses. With a re-fi, however, you’re replacing your existing mortgage with a new one.

“The new one is for an amount higher than what you owe on the existing mortgage,” Micheletti said.

The difference between the two mortgages is cash you get to keep or spend and pay back through your monthly payments.

One thing to watch out for, according to Micheletti, is your new mortgage rate. “Unless you bought your home very recently, the rate you’ll get in a cash-out refinance may be much higher than what you have on your existing mortgage,” he said.

You will also pay fees and closing costs, the same as with a first mortgage.

Reverse Mortgage 

If you’re 62 or older, you may consider a reverse mortgage. The most popular kind of reverse mortgage is a Home Equity Conversion Mortgage (HECM), according to the Consumer Financial Protection Bureau.

A reverse mortgage allows you to tap into your home’s equity to receive cash payments. But the mortgage holder then owns increasing equity in your home. The title remains in your name. The loan only has to be repaid if you sell the house or pass away.

Your heirs have a choice of signing the home over to the reverse mortgage lender, paying off the loan and keeping the property, or selling the house to pay off the loan and keeping any profits remaining after the reverse mortgage is paid off.

If it sounds complicated – it is. And there’s a high risk of scams, according to the CFPB.

“The agreements can be complex and come with risks, so it’s important to understand all requirements and details,” Micheletti said.

Home Equity Agreement

A home equity agreement may work well for retirees with a lower credit score, since requirements are less stringent. However, a higher credit score may yield more options of companies to work with. A higher debt-to-income ratio is also okay if you’re looking at home equity agreements.

“Qualification is generally more straightforward and simple than other options,” Micheletti said.

For retirees struggling with high interest debt that’s affecting their credit score and opportunities, a home equity agreement could be one solution.

“An HEA gives you cash upfront in exchange for a percentage of your home’s future value,” Micheletti explained.

You don’t have to make monthly payments. Instead, you’ll owe the investor a percentage of your home’s selling price. If you don’t sell or refinance, the money will typically come due in 10 to 30 years, depending on the arrangement.

The caveats? You may have to pay closing costs, payments may be considered taxable in some states, and if your home drops in value, you still have to pay off the HEA. If the agreement term ends before you want to sell your house, you may have to do a cash-out refinance to cover the money owed.

Final Thoughts

Americans held $34.5 trillion in home equity, with half of that in the hands of Baby Boomers, as of fall 2025. While it may feel scary to put your home at stake by borrowing against it, if you’re using the money to pay off higher interest debt, enjoy a better standard of living in retirement, improve your home prior to a sale, or just make ends meet, there are safe and smart ways to do it.

Evaluate your options and speak to a financial advisor before you decide. If you’re comparing home equity options, compare quotes from different lenders so you can be confident about your choice.

Related: Many homeowners are putting their retirement in jeopardy