5 Things You Should Know about Qualifying for PACE Financing

The property assessed clean energy or PACE program is intended to help people pay for many home improvements that reduce their building’s environmental impact. It is overseen locally, so there are some variations in rules, but there are many common elements, no matter where you live. Here are five things you should know about qualifying for PACE financing.

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You Can Go with No Money Down

Qualifying for PACE does not depend on your ability to make a down payment. No upfront money is required. Eligibility instead depends on your home equity because the PACE loan is secured by the property being improved.

Nor does the loan depend on your credit score, although loan administrators may check your credit report. Program administrators require your home to be in good financial standing, such as having made all property tax and mortgage payments on time. If you meet these qualification standards, up to 100% of the project could be financed.

It Is More than Solar Panels and New Insulation

The PACE program funds four types of projects. Perhaps the best-known is renewable energy, such as when the PACE loan is used to pay for the installation of solar panels. More than a third of PACE loans were used for projects like this. The second type of qualifying project under PACE is renovations to improve energy efficiency; this includes installing new insulation but also addresses many other steps you could take. For example, the PACE program can even finance HVACs if it is significantly more efficient than the equipment already installed. Nearly sixty percent of PACE loans are given for energy efficiency upgrades.

The third type of qualifying project is water conservation. Landscaping that uses a fraction of the water as your current lawn would fall under this category.

The fourth qualifying project category is natural disaster preparedness, whether you’re upgrading your home to withstand a hurricane or putting in a storm shelter. Retrofitting for surviving a seismic event falls under this category, as well. Energy efficient upgrades that are fire-resistant like double-paned windows and a better roof could be eligible if you live somewhere prone to brush fires.

It Isn’t Just Homes

Commercial PACE loans are available in many but not all states. As of 2017, commercial PACE financing was available in more states than residential PACE loans. The commercial PACE financing includes retail properties, offices, agricultural buildings, industrial buildings and non-profit organizations’ buildings.

The Loan Terms Are Flexible

PACE financing lets you pick a payback period longer than the payback period for the loan. For example, it may take years to see the returns of energy efficient windows or solar panels on your home. This is why PACE financing lets you pay back the loan for solar panels over twenty years. Upgrades to the home’s electrical system or putting in a green roof have a lower ROI, so the loan term may be up to thirty years in these cases. That is aside from the fact that the interest you pay on the PACE loan may be tax deductible. Also, some home improvement projects funded by PACE may make you eligible for federal tax credits.

Conclusion

If you’ve been considering renovating or upgrading your home, take a look at the PACE program. Not all projects qualify, but the generous terms should make it something to consider.