How to Get the Government to Help Pay for Your Home Energy Upgrades
The Government Will Help Pay for Your Upgrades — If You Know Where to Look. This guide breaks down what qualifies, what each type of assistance looks like in practice, and how the most popular programs compare side by side — so you can figure out what applies to your situation and take action before some of these programs expire.
Replacing your HVAC system, adding insulation, or installing solar panels isn't cheap. But here's what a lot of homeowners don't realize: you don't have to foot the entire bill yourself. A mix of federal tax credits, rebate programs, low-interest loans, and outright grants exists specifically to help you pay for energy-efficient home improvements — and in some cases, the assistance is substantial.
The Inflation Reduction Act (IRA) of 2022 unlocked billions of dollars in new incentives for homeowners, stacking on top of long-running programs like the Department of Energy's Weatherization Assistance Program and USDA housing repair grants. Between federal credits worth up to $3,200 per year, rebates that can cover appliances and systems outright, and loan programs with below-market rates, many homeowners are leaving thousands of dollars on the table simply because they don't know these programs exist.
Quick overview of what's available:
DOE Home Energy Rebates of up to $14,000 for eligible households
The Weatherization Assistance Program (WAP) — free upgrades for low-income households
USDA Section 504 grants for rural elderly homeowners
FHA energy-efficient mortgages and HUD Title I loans
PACE financing for those who prefer no-upfront-cost options
What Counts as an "Energy-Efficient Improvement"?
Not every renovation qualifies. Programs and tax credits are designed to reward upgrades that measurably reduce a home's energy consumption — not just cosmetic or general repairs. Here's what generally makes the cut:
Heating and cooling systems: Heat pumps (air-source and geothermal), central air conditioners, gas or oil furnaces and boilers that meet efficiency thresholds, and heat pump water heaters. These are among the most commonly claimed items because the cost — and the energy savings — tend to be significant.
Building envelope improvements: This is the category that surprises a lot of people. Insulation, air sealing, weatherstripping, exterior doors, and windows that meet ENERGY STAR certification all qualify under federal tax credits. These upgrades directly reduce heat loss and can make a home meaningfully more comfortable while cutting utility bills.
Renewable energy systems: Rooftop solar panels, small wind turbines, geothermal heat pump systems, and battery storage technology qualify under the separate Residential Clean Energy Credit — which offers 30% back on costs with no dollar cap through 2025.
Electrical panel upgrades: If you're installing a heat pump or other high-draw electric equipment, the cost of upgrading your electrical panel or adding a new circuit can be included in your credit calculation.
Home energy audits: An audit performed by a qualified professional — which identifies the most cost-effective improvements for your specific home — qualifies for a credit of up to $150. It's a smart first step before committing to larger projects.
What typically doesn't qualify: General repairs (fixing a leaky roof, painting), landscaping, swimming pools, standard appliance replacements that don't meet specific efficiency ratings, and second homes in most cases.
A practical tip: before committing to any upgrade, check whether the specific product meets the program's efficiency requirements. ENERGY STAR certification is a reliable starting point, but some programs have stricter thresholds.
Types of Assistance: Loans, Grants, Rebates, and Tax Credits
Understanding the difference between these four types of help will save you from confusion when you're comparing programs. They work very differently.
Tax Credits
A tax credit directly reduces the amount of federal income tax you owe — dollar for dollar, which makes it more valuable than a deduction.
Important update for 2026: Both major federal energy tax credits expired on December 31, 2025. The 25C Energy Efficient Home Improvement Credit (which covered heat pumps, insulation, windows, and more) and the Residential Clean Energy Credit (which covered solar, wind, and geothermal) are no longer available for new projects. The One Big Beautiful Bill, signed in July 2025, moved up the expiration date from the original 2032–2034 timeline.
If you completed qualifying work in 2025: You can still claim these credits when you file your 2025 tax return. The 25C credit covered 30% of costs up to $1,200 per year for most improvements, with a separate $2,000 cap for heat pumps — and the Residential Clean Energy Credit offered 30% of total solar or geothermal costs with no dollar cap. File IRS Form 5695 to claim them.
For new 2026 projects: Federal tax credits are off the table for now. Focus instead on rebates, grants, and loans — which remain active.
Typical amounts (for 2025 tax returns only): $150–$3,200 for the 25C credit; 30% of total cost for the Residential Clean Energy Credit.
Rebates
Rebates are payments — sometimes upfront discounts at the point of purchase, sometimes checks issued after installation. The DOE's Home Energy Rebates program (funded by the IRA) includes two tracks: the HOMES program, which pays based on projected whole-house energy savings, and the HEAR (Home Electrification and Appliances Rebates) program, which targets specific appliances and systems for lower-income households.
HEAR rebates can reach up to $14,000 total per household and are particularly generous for heat pump water heaters ($1,750), heat pump HVAC systems ($8,000), and electrical panel upgrades ($4,000). Availability varies by state, as states received federal funding and administer their own versions of the program.
Typical amounts: $1,750–$8,000 per project; up to $14,000 total through HEAR.
Grants
Grants are money you don't have to pay back, and they're usually reserved for people who meet income requirements or belong to specific groups (elderly, rural, tribal communities). The DOE's Weatherization Assistance Program is the largest residential grant program in the country — it provides free whole-house energy efficiency improvements to income-qualifying households. The USDA Section 504 program offers grants of up to $10,000 for elderly rural homeowners to remove health and safety hazards, including energy-related ones.
Typical amounts: USDA grants up to $10,000; WAP services vary by household but average several thousand dollars in improvements.
Loans
Low-interest or deferred loans let you spread the cost of improvements over time, often at rates better than what you'd get from a conventional lender. Options include FHA's Energy Efficient Mortgage program (which lets you roll upgrade costs into your mortgage), HUD Title I property improvement loans (no equity required, up to $25,000), and PACE (Property Assessed Clean Energy) financing, which attaches repayment to your property taxes rather than your credit score.
PACE is worth understanding — it has no upfront cost and long repayment terms, but it also means your home has a lien on it, which can complicate a future sale.
Typical amounts: HUD Title I up to $25,000; EEM rolls costs into your mortgage; PACE varies by project.
Program Comparison: Side by Side
Use this table to get a fast read on the major programs and how they stack up. This is not an exhaustive list — many states have their own programs that can be stacked on top of federal ones.
Program | Type | Who Qualifies | Typical Amount | How to Apply | Key Downside |
|---|---|---|---|---|---|
IRS Energy Efficient Home Improvement Credit (25C) ⚠️ Expired | Tax Credit | Homeowners who completed qualifying work by Dec 31, 2025 | 30% of costs; up to $1,200 for most items + up to $2,000 for heat pumps | File IRS Form 5695 with your 2025 tax return | Expired — only claimable for work done in 2025 or earlier; nonrefundable |
Residential Clean Energy Credit (25D) ⚠️ Expired | Tax Credit | Homeowners who installed solar, wind, geothermal, or battery storage by Dec 31, 2025 | 30% of total project cost; no dollar cap | File IRS Form 5695 with your 2025 tax return | Expired — only claimable for installations completed by Dec 31, 2025; nonrefundable |
DOE Weatherization Assistance Program (WAP) | Grant / Free Services | Households at or below 200% of federal poverty level; renters and owners eligible | No dollar limit stated; average several thousand dollars in improvements per home | Contact your state WAP office via energy.gov | Income-restricted; waiting lists can be long in high-demand areas; services vary by state |
USDA Section 504 Home Repair Grants | Grant | Rural homeowners age 62+; very low income (below 50% of area median income); must be unable to obtain credit elsewhere | Grants up to $10,000; loans up to $40,000 | Apply through your local USDA Rural Development office | Rural areas only; strict income and age requirements; grant portion limited to removing safety hazards |
HUD Title I Property Improvement Loan | Loan | Any homeowner; no equity required; renters with landlord approval | Up to $25,000 for single-family homes; up to 20-year term | Apply through an FHA-approved lender | Interest rates vary by lender and aren't always competitive; not specific to energy upgrades |
FHA Energy Efficient Mortgage (EEM) | Loan | Buyers or refinancers using FHA-insured loans | Up to the lesser of 5% of home value, 115% of median home price, or 150% of conforming limit | Work with an FHA-approved lender during the mortgage process | Must be combined with a home purchase or refinance; requires a home energy assessment |
PACE Financing | Loan (property-assessed) | Homeowners with equity; credit score typically less important than property value | Varies widely by project; no stated maximum in most programs | Through state-approved PACE providers (Ygrene, Renovate America, etc.) | Lien on property can complicate home sales; rates can be higher than traditional loans; not available in all states |
Before You Apply: A Few Things Worth Knowing
The federal tax credits are gone — but other help remains. The 25C and 25D credits expired December 31, 2025. If you did qualifying work last year, claim them on your 2025 return using IRS Form 5695. For new projects going forward, shift your focus to rebates (especially the DOE HEAR program), grants like WAP and USDA Section 504, and low-interest loan options.
Stack your benefits. Tax credits and rebates can often be combined, but with limits. A federal rebate and a tax credit can't together exceed the total project cost. HOMES and HEAR rebates cannot be combined with each other for the same project. Check the specific stacking rules before assuming you'll get the full value of both.
Act before credits expire. The 25C and 25D tax credits are currently set to expire on December 31, 2025 under the One Big Beautiful Bill Act. If you've been sitting on a heat pump installation or solar project, the end of 2025 is a meaningful deadline.
Start with a home energy audit. An audit (which itself qualifies for a $150 credit) will tell you where your home loses the most energy and which upgrades will have the highest return. It also creates documentation that some programs require.
State programs can add significantly more. Many states have their own rebates, tax credits, and loan programs that layer on top of federal ones. Check your state energy office and your utility company — utility rebates for things like smart thermostats and efficient water heaters are often overlooked and easy to claim.
For a full list of programs by state, visit the DSIRE database at dsireusa.org — it's the most comprehensive public resource for federal and state energy incentives.
This article is for informational purposes only. Tax credit eligibility and program availability can change. Consult a qualified tax professional before making financial decisions based on this information.
Sources
IRS — Energy Efficient Home Improvement Credit (25C) https://www.irs.gov/credits-deductions/energy-efficient-home-improvement-credit
IRS — Residential Clean Energy Credit (25D) https://www.irs.gov/credits-deductions/residential-clean-energy-credit
IRS — Instructions for Form 5695 (2025) https://www.irs.gov/instructions/i5695
IRS — About Form 5695, Residential Energy Credits https://www.irs.gov/forms-pubs/about-form-5695
U.S. Department of Energy — Weatherization Assistance Program https://www.energy.gov/scep/wap/weatherization-assistance-program
U.S. Department of Energy — How to Apply for Weatherization Assistance https://www.energy.gov/scep/wap/how-apply-weatherization-assistance
USDA Rural Development — Section 504 Single Family Housing Repair Loans & Grants https://www.rd.usda.gov/programs-services/single-family-housing-programs/single-family-housing-repair-loans-grants
HUD — Title I Property Improvement Loan Program https://www.hud.gov/program_offices/housing/sfh/title/title-i-property-improvement-loan-program-information
ENERGY STAR — Federal Tax Credits for Energy Efficiency https://www.energystar.gov/about/federal-tax-credits
USAGov — Home Weatherization and Energy Efficiency Assistance https://www.usa.gov/weatherization-energy-programs
DSIRE — Database of State Incentives for Renewables & Efficiency https://www.dsireusa.org
Congressional Research Service — Federal Programs That Fund Home Repairs https://www.congress.gov/crs_external_products/R/HTML/R48544.html
✍ By Patrick Conon, Legal & Real Estate Writer