HOW TO SCALE HOME ENERGY FINANCING PRODUCTS

The document analyzes the U.S. home energy financing landscape, distinguishing between traditional lenders (e.g., FHA, Fannie Mae) and nontraditional options (e.g., PACE, on-bill financing). It argues that consumer choice is driven more by the timing of improvements and ease of origination than by interest rates or terms. Key barriers include manual underwriting for traditional products and a lack of standardization and securitization for nontraditional products. The brief recommends automating underwriting for traditional lenders and creating standardized, poolable programs for nontraditional financing to enable scaling.

• Home energy improvements are the primary unmet demand for homeowners in the U.S., hindered by process complexity, a lack of integrated energy service professionals, and difficulties in securing financing.
• Consumer selection of financing products is not primarily driven by interest rates or terms, but rather by the timing of the project, awareness of the products, and the ease of the origination process.
• The timing of home improvements significantly influences the financing tool used; for example, major energy efficiency upgrades often occur when critical equipment like heaters or air conditioning units fail.
• Nontraditional financing products, such as on-bill and residential PACE, face scaling barriers due to a lack of standardization and the inability to access robust secondary markets for securitization.
• Traditional lending products suffer from low adoption because they lack dedicated sales forces, involve complex manual underwriting, and suffer from low consumer awareness.
• The Fannie Mae HomeStyle Energy Loan (HSEL) represents an improvement over previous traditional products because it is compatible with automated underwriting systems like Desktop Underwriter and does not require special lender approval.
• A significant portion of Americans currently use savings (58%) or credit cards (18%) for home improvements, suggesting a large market opportunity for financing models that support financial health.

APA

Campbell, M. (2017). HOW TO SCALE HOME ENERGY FINANCING PRODUCTS. RMI. https://rmi.org/app/uploads/2017/03/Insight-brief_HomeEnergyFinancingV3.pdf

Chicago

Campbell, Martha. HOW TO SCALE HOME ENERGY FINANCING PRODUCTS. RMI, 2017. https://rmi.org/app/uploads/2017/03/Insight-brief_HomeEnergyFinancingV3.pdf.

Wikipedia

{{cite report |last1=Campbell |first1=Martha |title=HOW TO SCALE HOME ENERGY FINANCING PRODUCTS |publisher=RMI |date=March 2017 |url=https://rmi.org/app/uploads/2017/03/Insight-brief_HomeEnergyFinancingV3.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{campbell2017how, author = {Campbell, Martha}, title = {{HOW TO SCALE HOME ENERGY FINANCING PRODUCTS}}, institution = {RMI}, year = {2017}, month = mar, url = {https://rmi.org/app/uploads/2017/03/Insight-brief_HomeEnergyFinancingV3.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }