PACE Financing

Property Assessed Clean Energy (PACE) financing is a program that allows homeowners to fund solar installations (and other energy improvements) through a voluntary assessment on their property tax bill. The loan is repaid over 10–25 years as an additional line item on your annual property taxes.

PACE financing offers several unique advantages: there is typically no credit score requirement (approval is based on property equity and tax payment history), the loan stays with the property if you sell the home, and no down payment is required. However, PACE has significant drawbacks that homeowners should carefully consider. The interest rates are often higher than traditional solar loans (6–9%+), the PACE assessment creates a tax lien on your property that takes priority over your mortgage, and some mortgage lenders have restrictions on properties with PACE liens. Refinancing or selling a home with an active PACE assessment can be complicated. PACE programs are available in certain states and municipalities — California, Florida, and Missouri have the most active residential PACE programs. Before choosing PACE financing, compare the total cost with solar loans, which often have lower interest rates and don’t affect your property tax bill.