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Financing for Geothermal Heating and Cooling

Loans and loan guarantees for geothermal heating and cooling can make projects more feasible by spreading costs over time and allowing developers to access private financing and expertise.


Loan programs can facilitate the installation of geothermal heating and cooling technologies by helping system owners overcome financial barriers.

Loan repayment terms for direct-use applications range from five to 15 years, with interest rates of 3% to 7%, although some rates are linked to the prime rate. Maximum loan amounts vary, ranging from $40,000 in Montana to $600,000 in Maryland, with no explicit limit in Oregon. In some cases, a project must meet feasibility criteria, such as a simple payback of 15 years.

Interest rates for residential GSHP generally range from 1% to 6%. Maximum loan amounts are typically about $20,000, with three to 10 year repayment terms. Residential program details vary from state to state, but features adopted in some states include an energy audit, limited eligibility for moderate- or low-income participants, ENERGY STAR® appliances, or a minimum payback time.

Loan Guarantees

Government loan guarantees encourage commercial use of ground source heat pumps (GSHP) and direct-use applications because the government agrees to assume the private debt obligation of the borrower should they default. By transferring early financial risk to the government, financial barriers are diminished and developers can access the public sector, increase private capital investment, and further the commercialization of GSHP and direct-use applications.

Learn about other policy options.