If you're considering energy-efficient upgrades for your home, you may have come across PACE (Property Assessed Clean Energy) financing. While PACE programs can help you save on energy costs, they also come with a significant tradeoff: a lien on your property title. Understanding how PACE liens work is important to making an informed decision about your home's financing. With a PACE lien, you can finance energy-efficient upgrades, but you'll also be taking on additional debt secured by your home
Based on federal consumer protection law and HUD/CFPB public guidance · Last reviewed July 2026
The Direct Answer
A PACE lien is a type of lien that allows homeowners to finance energy-efficient upgrades, such as solar panels or new windows, through a special assessment on their property tax bill. The lien is typically repaid over a period of 10-20 years, and the interest rate can vary depending on the program and lender.
The PACE lien is a senior lien, meaning it takes priority over other liens on the property, including mortgages. This means that if you sell your home or refinance your mortgage, the PACE lien must be paid off first. For example, if you have a $10,000 PACE lien and you sell your home for $200,000, the $10,000 PACE lien will be paid off before any other liens or mortgages are paid
Do not sign any PACE financing agreement without carefully reviewing the terms and understanding how the lien will affect your property title. Be aware that PACE liens can make it more difficult to sell or refinance your home, and may also impact your ability to take out a home equity loan or line of credit
How PACE Liens Work
Eligibility and Application
To qualify for a PACE program, you'll typically need to own a single-family home, be current on your mortgage and property taxes, and meet income and credit requirements. The application process typically involves a home energy audit to identify potential energy-efficient upgrades, followed by a financing application and approval process.
Check with your local government or a PACE program administrator to see if you're eligible
Review the terms and conditions of the PACE financing agreement carefully
PACE Lien Repayment
Repayment Terms
PACE liens are typically repaid through an annual assessment on your property tax bill, which can range from 5-20 years. The interest rate on PACE financing can vary, but is often higher than traditional mortgage rates. For example, a $10,000 PACE loan with a 7% interest rate and a 10-year repayment term would result in an annual payment of approximately $1,200.
Check your property tax bill to see the exact repayment terms
Consider the impact of the PACE lien on your overall debt burden
Impact on Property Title
Senior Lien Status
As a senior lien, a PACE lien takes priority over other liens on the property, including mortgages. This means that if you sell your home or refinance your mortgage, the PACE lien must be paid off first. This can impact your ability to sell or refinance your home, and may also affect your ability to take out a home equity loan or line of credit.
Avoid taking on too much debt with a PACE lien
Be aware of the potential impact on your property title
Get Help with PACE Liens
If you're considering a PACE program or have questions about an existing PACE lien, contact your local government or a housing counselor for guidance. You can also check with your state's consumer protection agency for more information on PACE programs and consumer rights
Refinancing a mortgage with a PACE lien can be challenging, as the PACE lien must be paid off first. You may need to pay off the PACE lien or negotiate with the lender to subordinate the lien to the new mortgage. Check with your lender and a housing counselor to explore your options
How do I pay off a PACE lien?
You can pay off a PACE lien by paying the annual assessment on your property tax bill, or by paying off the entire balance at once. Check with your local government or PACE program administrator to determine the payoff amount and process
Can I sell my home with a PACE lien?
Yes, you can sell your home with a PACE lien, but the lien must be paid off at closing. You may need to negotiate with the buyer to assume the PACE lien, or pay off the lien yourself. Check with your real estate agent and a housing counselor to explore your options
Are PACE programs available in my state?
PACE programs are available in many states, but the specific programs and terms vary. Check with your state's energy office or consumer protection agency to see if PACE programs are available in your area and to learn more about the terms and conditions