Financing and Incentives

Financing and incentives can allow heat pump installations to become a reality and more economical – lower upfront costs, shorter payback periods, and even the potential for an installation to be cash flow positive from the day your system is turned on.

Why finance a heat pump?

Paying out of pocket for a heat pump can be cost prohibitive for many households. Despite the investment often paying for itself in 3-5 years, the upfront costs prevent many from gaining access to a heat pump’s advantages. One answer to this is financing – by spreading out the cost of the upfront investment over the lifetime of the heat pump, the upfront cost issue is mitigated. In addition, because the interest and principal loan payments can be structured to be less than the cost savings, most financed heat pumps can be cash flow positive from the installation date.

These two graphs show these two situations. For the same house, one scenario is paying for a heat pump out of pocket and the other is financed. The high negative cost in year 0 on the first graph prevents many households from accessing the cost savings derived from heat pumps. On the left, households with attractive projected cost savings can finance the installation and save, on net, each year the heat pump operates. (Note: the positive upfront cost on the right graph represents the tax credit which may available to most households for 2022.)

Grants, Tax Credits and Other Incentives

True North FCU Heat Pump LoanLoanUp to $12,500 at 4% – 6%Eligibility required AK Heat Smart home assessment and successful credit check. Available in Juneau.
Residential Energy-Efficient Property CreditTax Credits22% of costApplies towards the total project costs of ground source source heat pumps and other household energy technologies.
USDA Home Repair GrantsGrantsUp to $7500Available for income-qualifying households with a 62 or older resident.
Weatherization Assistance Program – Rural CapGrantsUp to $10,000Free low-income home improvements. Check with Rural Cap for current availability in Juneau.
Weatherization Assistance Program – Alaska CDCGrantsUp to $10,000Free home improvements. Available in Gustavus, Haines, Hyder, Ketchikan, Pelican, Sitka, Skagway and Wrangell.
Weatherization Assistance Program – Tlingit-Haida RHAGrantsUp to $10,000Free home improvements. Available in Angoon, Kake, Yakutat, Petersburg, Saxman, Craig, Klawock, Hydaburg, Kasaan, Coffman Cove, Dora Bay, Edna Bay, Hollis, Naukati, Point Baker, Port Protection, Thorne Bay and Whale Pass.
THRHA Heathly Homes Repair ProgramGrantsN/AFree Home Improvements. Available to tribal members in Angoon, Craig, Douglas, Juneau, Kake, Kasaan, Klawock, Petersburg, Saxman, Skagway, Wrangell, and Yakutat.

Low Cost Financing Options

AHFC Energy Efficiency Interest Rate ReductionInterest Rate ReductionUp to -0.75%Mortgage must be held by approved lender. Requires energy assessments before and after a home is renovated. Applies to the first $200k of mortgage balance.
USDA Home Repair LoansLow Cost LoanUp to $20,000 at 1% for up to 20 yearsAvailable for low income-qualifying households, and can be used in
combination with the grant program if a qualifying household.
USDA Small Business Grants and LoansLow Cost Loans or GrnatsTerms are negotiatedApplications for grants of $20,000 or less and loan/grant of $20,000 or less combo

Traditional Lenders

Alaska USA 563-4567
Denali 586-2370
First 586-8001
First National Bank 586-5400
Northrim 586-1010
True North 523-4700
Wells 586-2460