Top HELOC Providers When the Home Has a PACE Assessment

The Quick Read: A PACE assessment is a property tax lien that ranks ahead of a new equity line, so most lenders in the wholesale network want it paid in full and released before the line closes, which makes the useful provider question “how does the payoff get funded?” rather than “who will lend behind it?” The right provider depends on occupancy, credit, equity left after payoff, and how the title reads once the assessment is gone.

• A full payoff and a recorded release are the common requirement. A partial payoff does not remove the priority claim.
• The payoff can come from cash or from the new line’s initial draw, which shrinks the cash you walk away with.
• On an investment property, the network ceiling is 70% CLTV with a 700 minimum credit score. Primary residences and second homes have higher tiers.
• Rental income does not fix a PACE problem. An equity line is sized by equity, credit, and occupancy, not by rent.
• A broker can screen several wholesale lenders for PACE policy before an application is run.

What a PACE Assessment Is and Why It Is Not Ordinary Debt

PACE stands for Property Assessed Clean Energy. The owner finances improvements and repays them through a special assessment on the property tax bill. Mayer Brown describes the repayment as secured by a property tax lien that takes priority over existing and future mortgages.

That priority is the whole problem for a new equity line. A HELOC lender needs to know where its lien will rank. A government tax lien cannot be moved behind a new lender, and the assessment stays with the property if ownership changes.

PACE is also not limited to solar. It can fund other energy and water efficiency work and disaster-readiness upgrades. A recorded solar mortgage, a UCC fixture filing, and a solar lease or power purchase agreement are different instruments, each with its own review step. Only PACE carries tax-lien priority.

Key Terms Defined

PACE assessment: a special assessment on the property tax bill that repays energy or resilience improvements and is secured by a lien on the property.

Lien priority: the order in which claims get paid if the property is sold or foreclosed, with tax liens generally first.

CLTV (combined loan-to-value): the total of all loans secured by the property, divided by the property value.

Payoff statement: a written balance from the PACE administrator that states the amount needed to satisfy the assessment.

Recorded release: the document filed in the county land records showing the assessment has been satisfied.

How HELOC Providers Treat a Home With a PACE Assessment

Most providers in the wholesale network treat PACE as a payoff-first item. The line closes only after the assessment is paid in full and the administrator’s release is on record. Lendmire’s explanation of borrowing on a HELOC for a home with a PACE assessment walks through the same sequence.

The reason is not unique to equity lines. FHFA’s statement on super-priority liens explains that Fannie Mae and Freddie Mac policies prohibit purchasing a mortgage where the property has a first-lien PACE loan attached. DSCR and equity-line programs are not agency products and follow each investor’s own guidelines. The lien-priority logic is the same, though, and it is why a lender looks at the tax bill before anything else.

Three variations exist, and a broker checks each one:

• Some PACE programs are structured as secondary liens behind the original mortgage, which FHFA notes do not threaten agency loan priority.
• A few states have enacted laws that subordinate PACE liens to residential mortgage liens, so the priority question reads differently there.
• A servicer subordination is rare. One administrator states plainly that subordination is not an available option, and that is a single administrator’s policy rather than a universal rule.

Some consumer sites claim that a few specialized lenders will lend behind a PACE assessment. Treat that as an exception to confirm in writing from a specific lender, not as a plan.

The Payoff and Release Process, Step by Step

1. Find the assessment. PACE appears as its own line on the county tax bill. Many buyers and owners learn about it only at a refinance or sale, so check the tax record and the title commitment.

2. Request a payoff statement from the administrator. Ask whether any fee or minimum payment applies and whether the program charges a prepayment penalty. Local ordinances and administrators differ on this point.

3. Pay in full. A partial payoff does not remove the priority claim, so a lender will not treat it as clearing the issue.

4. Choose the funding source. The payoff can come from other funds or from the new line’s initial draw. Both network draw structures require at least 75% of the line to be drawn at closing, which is how the payoff fits inside the closing draw.

5. Obtain the recorded release. The administrator’s release is recorded in county land records. A PACE assessment cannot be cleared with the UCC-3 filing that clears a solar fixture filing.

6. Size the line after payoff. The limit is the property value times the program’s CLTV cap, minus the first mortgage. Title must then show the assessment released and the new line in its intended position.

What Limits the Line After the Payoff

The payoff does not change the CLTV cap, but it consumes equity before the line is sized. The caps depend on occupancy, and they differ a lot:

Those figures are typical ranges from select wholesale lenders, subject to lender guidelines and full file review, and they are not a commitment to lend.

Other file items matter just as much. Lines run from $25,000 up to the program maximum, and a debt-to-income ratio up to 50% is allowed for stronger credit profiles. Lines at or below $500,000 ordinarily use an automated valuation, and a full appraisal is required above that size. Title must be held by an individual borrower or a revocable living trust. A property already deeded to an LLC cannot take one of these lines and would need a vesting change, or a DSCR cash-out refinance instead. Availability is limited to Lendmire’s 16 full-service states, which is narrower than the 41-market DSCR footprint.

A Worked Example: Three Ways to Handle the Assessment

Take an investment property with a first mortgage at 40% of value and a PACE balance equal to 8% of value. The 70% CLTV cap leaves room for a line of up to 30% of value, assuming credit of 700 or better and a line of at least $25,000.

The second row works because at least 75% of the line is drawn at closing, and 75% of a 30% line is about 22.5% of value, which covers the 8% payoff with room to spare. Illustrative only. A rent figure does not enter this math. Clearing a 1.00 DSCR on a rental has no effect on how a personal equity line is sized.

Where the Rules Break

State law. The subordination statutes mentioned earlier are state-specific. Where they apply, the priority conversation is different, and a broker should confirm it with the lender before assuming either outcome.

Solar leases and power purchase agreements. These are generally not tax liens. A lease or PPA usually adds a review step, while a recorded solar mortgage or a tax-assessment lien can block the line or cut the equity available.

DSCR HELOC products. A rent-based line is a different product with different parameters. It still treats PACE as an exclusion, so rental coverage does not solve this problem.

Two different programs, two different numbers. Equity-line pages and DSCR HELOC pages can show different credit floors and CLTV caps. Always match the figure to the product, the occupancy, and the lender’s own guidelines.

What This Means for a Rental Investor

A PACE payoff is an acquisition cost. Count it before you offer on a home that carries one, since a buyer’s lender or a refinance lender may ask for payoff on a sale or refinance. During due diligence, pull the tax bill, ask for the payoff statement, and negotiate a price credit or a seller payoff rather than assuming the assessment can be carried.

The exit risk is real. The assessment runs with the property, and Monroe County’s PACE FAQ notes that owners must give a buyer written notice before sale. An unresolved assessment can hurt resale, because a buyer’s lender may want it paid off.

Carrying cost matters too. Higher annual property taxes from an assessment cut into rental cash flow, and a heavier carrying burden raises the chance of falling behind on the first mortgage. For an investor, higher tax expense lowers cash flow.

How to Screen Providers Before You Apply

A broker that shops several wholesale lenders can ask these questions up front, before a hard credit pull and appraisal are spent on a lender that will decline the file:

• Does the lender require full payoff and recorded release before closing, or is any other treatment considered?
• Can the initial draw fund the payoff, and how is the 75% minimum draw handled?
• Does the program count the property as investment, second home, or primary, and what is the ceiling for that occupancy?
• Is the property type eligible? Manufactured homes, co-ops, condotels, log homes, and commercial, mixed-use, or agricultural zoning are not offered on these lines.
• Does the borrower’s vesting fit? Individual or revocable trust only.

The best program for a given file depends on the property, the credit profile, the leverage needed, and the documents on hand. No single provider is right for every borrower, and a broker’s value is in matching the scenario rather than ranking companies.

Decision Matrix: Pay Off, Draw, Wait, or Switch

A DSCR cash-out refinance qualifies primarily on property-level rental income covering the payment, subject to lender guidelines, and the PACE payoff still comes out of the proceeds. The complete DSCR loans guide explains that comparison. For a deeper walk through the equity-line mechanics, see Lendmire’s piece How to Qualify for an Investment Property HELOC When the Home Has a PACE Assessment.

Next Step

If you are considering a home equity line and want to see how the numbers work, Lendmire can help you compare HELOC options based on the property, the equity available, credit profile, combined leverage, and your goals. Lendmire arranges financing through select lenders in its wholesale network, and every program is subject to lender guidelines and a full file review.

About Lendmire

Lendmire — NMLS# 2371349 — is a mortgage broker that arranges home equity lines of credit in its 16 full-service states through wholesale lenders, on primary residences, second homes and investment properties. Every line is subject to the lender’s guidelines and full underwriting. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.

References

1. Mayer Brown

2. FHFA: statement on certain super-priority liens

3. Monroe County, Florida: PACE FAQ