Can I pay for energy efficient renovations with my HELOC?
You can use the funds from a HELOC for a number of expenses, including energy efficient upgrades to your home. Not only could energy efficient renovations save you money on utilities and potentially boost the value of your home, but some home improvements could also be tax-deductible when itemized.2
Similar to a home equity loan, a home equity line of credit (HELOC) allows you to access the value you’ve built up in your home. A HELOC typically opens a line of credit based on the value of your home. You can draw on this line up to an approved amount. A HELOC with Rate will give you an upfront amount you can use on energy efficient upgrades or other necessities. As you start to pay back your Rate HELOC, you will have access to more funds.
Learn how a HELOC can benefit you and pay for your home upgrades by talking with an experienced lender today!
Why use a HELOC for energy efficient renovations?
The Rate HELOCs is a great choice as it does not have restrictions on how you use your funds. Using the funds from a HELOC toward energy efficient renovations could also come with money-saving benefits1.
Savings on utilities
Buying new home appliances or heating and cooling systems that use less energy can reduce environmental impact and potentially decrease your utility bills. Make sure you take your time in researching home upgrade options when looking to use a HELOC to help reduce your utility bills.
Tax incentives and rebates
Depending on where you live, some energy efficient upgrades might be eligible for tax credits and rebates. Federal and state tax relief could be up to $3,200. The amount you receive will depend on your desired upgrades. Make sure you check to see if any appliances qualify for rebates or incentives while you look into utility savings.
To receive these tax deductions, be sure to itemize your taxes instead of taking the standard deductions.
Boosts property value
As of 2025, energy efficient homes sell for 2% - 8% more than similar non-energy efficient homes in the same area. Energy efficient homes are more attractive to buyers for their potential savings and eco-friendly benefits.
Lower interest rates than credit cards
The interest rate for a HELOC tends to be lower than most credit cards, personal loans and other financial products. While a couple of percentage points might not seem major when you sign, the amount of interest you pay monthly will add up over time.
Popular energy efficient renovations
There are many energy efficient renovations you could consider using HELOC funds for. Each one comes with its own benefits. Some top eco-friendly home upgrades are:
- Solar panels: With solar panels, you produce your home’s own energy, which can lead to a reduction in electricity bills. The cost of solar panels has seen a significant drop in the past decade as well as a rise in resale value.
- Insulation: Home insulation deteriorates over time, making most homes in America under-insulated. Upgrading insulation can seal air leaks that allow energy waste.
- HVAC systems: Upgrading to an HVAC system with a better SEER rating or switching from a gas furnace to a heat pump can lead to a difference in monthly bills.
- Smart thermostats: A smart thermostat is easy to use and can increase energy efficiency by learning your home’s preferred temperature and optimizing the heating and cooling of your house.
- Window upgrades: Installing new windows can help minimize heat escaping during winter and entering during summer.Upgrading your windows could also increase curb appeal to potential buyers.
Other uses for a HELOC
Using a home equity line of credit for home improvements is a popular option, but it’s not the only one. A few other popular uses for a HELOC are:
- Debt consolidation: If you have multiple debts to pay off, using a HELOC to consolidate debts could reduce the number of payments you make each month. Some HELOCs could even have lower interest rates than other forms of credit.
- Education: Whether it is for continuing your education or paying for child’s college tuition, HELOC’s are a great option that could come with lower interest rates than some student loans.
- Invest in business:HELOCs are a great option when looking to add seed money or provide funds to a business. Using a HELOC means your venture doesn’t need to meet the qualifications for a business loan.
- Buying property: It is common for homeowners to use a HELOC for the down payment when purchasing a second house, vacation home or rental property.
How can I start the HELOC application process?
You can start your HELOC application by connecting with a trusted lender. But before you do that, there are few things you can do to ease the application process.
The first thing you will want to do is check your home’s equity. Most lenders require at least 15% home equity before considering your HELOC application. Another thing you will want to check is your credit score to see if you would qualify for a HELOC.
When you apply, lenders will ask to see proof of income, recent mortgage statements and your debt-to-income ratio. Gathering these before you start your application can save you time when you apply.
After you have checked and prepared these, you will be ready to start your HELOC application!
1Savings, if any, vary based on the consumer’s credit profile, interest rate availability, and other factors. Contact Rate for current rates. Restrictions apply.
Applicant subject to credit and underwriting approval. Not all applicants will be approved for financing. Receipt of application does not represent an approval for financing or interest rate guarantee. Refinancing your mortgage may increase costs over the term of your loan. Restrictions may apply.
2Rate does not provide tax advice. The consumer should always consult a tax advisor for information regarding the deductibility of interest and other charges in their particular situation.
All information provided in this publication is for informational and educational purposes only, and in no way is any of the content contained herein to be construed as financial, investment, or legal advice or instruction. Rate does not guarantee the quality, accuracy, completeness or timelines of the information in this publication. While efforts are made to verify the information provided, the information should not be assumed to be error-free. Some information in the publication may have been provided by third parties and has not necessarily been verified by Rate. Rate its affiliates and subsidiaries do not assume any liability for the information contained herein, be it direct, indirect, consequential, special, or exemplary, or other damages whatsoever and howsoever caused, arising out of or in connection with the use of this publication or in reliance on the information, including any personal or pecuniary loss, whether the action is in contract, tort (including negligence) or other tortious action.
