Which type of mortgage allows the lender to compensate the borrower based on house equity?

The reverse mortgage is designed specifically to allow homeowners who are typically older and have significant equity in their homes to convert that equity into cash without having to sell their property. This type of mortgage enables the borrower to receive funds based on the equity they have built up over time, offering financial support for living expenses or other needs, while allowing them to remain in their home. Importantly, the repayment of this mortgage is deferred until the homeowner moves out of the house, sells the property, or passes away, which distinguishes it from traditional mortgages where monthly payments are required.

In contrast, the other mortgage types mentioned do not operate on the same principle. A blanket mortgage encompasses multiple properties in one loan, a package mortgage includes both real estate and personal property in the financing, and a budget loan focuses on including taxes and insurance in the monthly payment, rather than leveraging home equity directly.