Why California Homeowners Should Know About the HERO Home Program

By Lindsay Stefan

Posted on January 25th, 2023

Energy symbols, illustration

💡 What is the HERO home program in California? 💡
California's Home Energy Renovation Opportunity (HERO) program provides financing for energy-efficient upgrades in approved communities.

With the HERO home program, upgrades are 100% financed upfront and paid back through property taxes.

As temperatures heat up and climate change causes extreme weather events around the world, homeowners can do their part to mitigate the effects.

In California, you may be eligible to participate in the Home Energy Renovation Opportunity (HERO) program. You can access financing for eco-friendly upgrades such as solar panels, then repay the cost through your property taxes.

Read on to learn how the program works — and the implications for home sellers.

How Does the HERO Home Program Work?

HERO Home Program, At a Glance
🏡 Property Tax Assessment
HERO payments are made through a line item on your property tax bill.
🗓️ Terms Up to 20 Years
HERO offers flexible repayment terms of 5-20 years.
🏦 Based on Equity
HERO is an assessment on your property, with no impact on personal credit score.
💰 No Upfront Costs
The HERO program finances the total cost of your project, including all fees and labor costs.
✅ Potential Tax Benefits

Interest on HERO payments may be tax deductible.

If you're interested in participating in the HERO home program, the first step is getting approved.

Eligible homeowners qualify to receive financing that covers 100% of the purchase and installation of eligible energy-saving products. There are 60+ upgrades to choose from, such as installing solar panels or upgrades that help your home resist California's frequent droughts.

After your upgrades are purchased and installed, you'll pay back the cost through a separate line item that is added to your property tax bill. This repayment item creates a lien on the property which remains until the amount financed has been paid in full.

How Does the HERO Home Program Affect Home Sales?

If you're planning to sell your home in the future, you should factor that into your consideration of the HERO home program — particularly if you'll move before fully paying back the financing.

HERO loans hold priority over any other loan on the home. If a homeowner runs into a problem and can't pay their bills, the mortgage lender has to wait for HERO payments to be made first. So, many lenders aren't eager to write HERO mortgages.

On the up side, eco-friendly and sustainable home features generally give your home a competitive edge, particularly if your upgrades result in cost savings on utilities.

We recommend speaking with a qualified local real estate agent to get insight into how the HERO program may impact your next home sale.

To help, we've partnered with Clever Real Estate — a free, no obligation service that makes it easy to connect with top-rated real estate agents. You'll be personally matched with experts from Keller Williams, RE/MAX, and other national brokerages, with the option to meet as many agents as you'd like until you find the perfect fit.

Best of all, Clever offers pre-negotiated low listing fees of just 1.5%. If you meet an agent you click with, you'll get the same full service at a fraction of the cost. The average home seller saves $7,000!

👋 Start your real estate voyage with Clever today!

Common Questions About the HERO Home Program

One common question is whether your HERO home program assessment is a required disclosure. The simple answer is yes — if you’re participating in the program, your HERO assessment must be disclosed on the preliminary title report when you sell a home. Be sure to note it in the seller disclosures packet.

You're free to sell your home before your HERO financing has been paid back in full — even if your buyer doesn't qualify for the program.

During escrow, all or part of any remaining HERO balance may be transferred to the new owner, but there could be restrictions that require you to pay the balance off in full at closing, using your proceeds from the sale.

A lender also may include a subordination clause, specifying that their loan repayment take priority over any other loan, including a HERO loan assessment.

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Posted in Home Improvement, Selling a House