If you’re in the market for home improvement loans you are probably considering one or more of the traditional options – a cash-out refinance, Home Equity Line of Credit (“HELOC”), Home Equity Loan, personal loans, or credit cards – and it is likely that you have overlooked a unique option called PACE financing.
PACE stands for Property Assessed Clean Energy, and it is an innovative financing option that allows you to access your home equity to pay for 100% of the cost for eligible home projects to make your home safer, healthier, and more energy-efficient. As of 2019, more than 200,000 homeowners made $5 billion in energy efficiency and other improvements to their homes through PACE financing.1
PACE providers have adopted their own name for the program to distinguish themselves in the market. The most popular name program variations you may come across during your research may include: Home Energy Renovation Opportunity (HERO program), RenewPACE, CaliforniaFirst, The Alliance NRG Program, E3, Ygrene PACE, and PACE Funding to mention a few.
The PACE program exists through state legislation and is authorized by local governments. PACE funding is made through public-private partnerships with one or more PACE providers, also known as PACE program administrators. PACE financing is a popular option for Florida and California homeowners, but it is also available in other states.
It is important to note that PACE financing is a voluntary tax assessment and not a PACE loan. The reason being is because the amount financed is repaid through a voluntary tax assessment attached to your property that will appear as a line item on the property’s tax bill until the financing is repaid.
PACE financing offers competitive low fixed interest rates, repayment terms of up to 30 years for some projects, zero cash-upfront, and many other unique features to provide the flexibility and access to the funds homeowners need to make their safety and energy related home improvement projects a reality.
PACE financing basic eligibility criteria
First things first, the property must be existing-residential-construction (up to 4 units) and located in a participating community, click here to check if your address is eligible for PACE financing. Mobile homes and condominiums are also eligible as long as they meet the provider’s criteria.
Generally, a bad credit or excellent credit score does not have any impact on your eligibility. When you apply for PACE financing your credit score will not be taken into consideration to determine your eligibility. However, as part of the process the PACE provider will pull a soft credit check for each of the homeowners to look at elements necessary, such as mortgage payment history, to determine eligibility for financing.
The maximum financing amount is based on factors such as the property’s available equity and the homeowner’s annual income. Generally, PACE financing is available for a minimum financing amount of $5,000 and a maximum of $250,000.
PACE financing is available for hundreds of products and projects
- Air-source heat pump
- Attic insulation
- Ceiling insulation
- Cool roof – performance or prescriptive
- Duct replacement
- Earthquake retrofit
- Impact windows and doors
- Radiant barrier
- Roof replacement
- Storm shutters
- Solar panels
- Solar water heater
- Water softener
- Wind-resistant windows and doors
- Wind-resistant shingles