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What is a PACE loan?

A PACE (Property Assessed Clean Energy) loan gives you a way to borrow money for home improvements by increasing your property tax payment.

"PACE" stands for Property Assessed Clean Energy. Sometimes, these programs go by other names. You may hear about PACE programs from door-to-door salespeople, or from contractors in your community. The U.S. government does not pay for or insure PACE loans. PACE lending programs are approved by some states and are run by your local government, or a private company hired by your local government.

You pay PACE loans by an additional assessment that is collected with your property taxes. While you may not have to put cash down to pay for these upgrades, you will be required to pay the fees later with your property tax bill. Like a traditional property tax lien, you may lose your home if you don’t make the payments. As with any form of financing, you should consider the costs and benefits of PACE loans before signing the contract.