Missed the Greener Homes Loan? Use Your Equity with a HESA

As of October 2, 2025, the Canada Greener Homes Loan is no longer accepting applications for its $40,000 interest-free loans that have helped over 120,000 Canadian households make their homes more energy-efficient. This closure follows that of the companion Canada Greener Homes Grant in early 2024, which has provided grants up to $5,000 to 400,000 households. The end of these programs leaves a significant gap for those looking to invest in a greener future when the desire to do so is stronger than ever.

According to the 2025 Canada Mortgage and Housing Corporation (CMHC) Mortgage Consumer Survey, nearly 1 in 3 homeowners surveyed plan to invest in improving their home’s energy efficiency in the next five years.¹ They’re motivated by the promise of lower energy bills, improved home comfort and reduced environmental impact. For example, upgrades like new insulation and modern heat pumps can slash energy bills by up to 40%, potentially saving a household over $2,000 every year.² Energy-efficient renovations can also increase the desirability of a home and improve its resale value now that over 60% of homebuyers consider energy efficiency an important factor in their purchase decision.³

The challenge? While the ambition is there, the upfront cost is a major hurdle. Large upgrades like heat pumps, solar panels and energy-efficient windows and doors can run into the tens of thousands of dollars. Some have estimated the cost of a full-scale green overhaul (heat pump, solar, battery, windows, doors and insulation) to average almost $80,000 before any rebates.⁴ With financing options like the Canada Greener Homes Loan gone, many are left wondering how to bridge the financial gap, particularly when 1 in 5 homeowners expect to use government incentives and rebates to help finance their upcoming renovations.⁵

While traditional financing and some narrower government programs still exist, they are not necessarily the right solution for everyone. For homeowners that want to invest in their home without the burden of new monthly payments, a Home Equity Sharing Agreement (HESA) from Clay Financial offers a flexible financing solution by allowing them to access their existing home equity.

The Existing Landscape of Green Home Financing

Homeowners in Canada looking to fund a major green renovation have two primary avenues to explore. The first involves leveraging personal assets and traditional borrowing methods, where you finance the project yourself. The second focuses on tapping into a range of government and private-sector incentives designed to make energy-efficient upgrades more affordable. Understanding the pros and cons of each is key to determining the right mix for your upgrades.

Traditional Financing Methods

Existing savings: Perfect for small projects but not always a realistic option for most major retrofits.
Secured debt (e.g., HELOC, mortgage refinance, second mortgage): These are traditional financing options and typically hinge on a rigorous approval process requiring stable income, a high credit score and the capacity to take on new monthly payments.
Personal credit (e.g., personal loan or line of credit): Another traditional financing option that typically carries higher interest rates and low credit limits than secured debt, still with monthly payments. Though qualifying may be easier, the higher rates and lower limits can make it an impractical choice for funding a full renovation.
Gift or loan from family or friends: CMHC found that 1 in 7 homeowners surveyed expect to finance an upcoming renovation at least partially with a gift or loan from family or friends.⁶ While this option can provide flexible funding, it is likely not available to everyone and does carry some personal risk. A formal, written agreement is essential to protect relationships.

Government Incentives & Utility Rebates

Beyond the traditional financing options, there are a range of government and private-sector programs that exist to help lower the cost of green upgrades. These incentives are designed to encourage energy efficiency but often have narrow eligibility requirements and may not cover the full project cost even when they are available.

Here are some examples of what’s available at different levels:

Federal Government

Oil to Heat Pump Affordability Program: $10,000 grant for Canadian households to switch from oil heating to an energy-efficient heat pump if their household income is at or below the median household after-tax income for their province and household size. In Ontario, the program is co-delivered through the Independent Electricity System Operator and a combined $25,000 of federal and provincial funding is available.
Canada Greener Homes Affordability Program: Upcoming program will offer no-cost energy-efficient retrofits (e.g., insulation, heat pumps) to low-to-median-income Canadian households.

Provincial Government

Ontario’s Home Renovation Savings Program: Rebates of up to 30% for energy-efficient renovations and improvements, including new windows, doors, insulation, air sealing, smart thermostats, heat pumps, rooftop solar, battery storage systems and energy-efficient home appliances.⁷ For cold-climate air-source heat pumps, the maximum rebate amount is dependent on whether the homeowner is replacing a natural gas furnace ($2,000) or a heat source that uses electricity, oil, propane or wood ($7,500).⁸
Ontario’s Energy Affordability Program: Free home upgrades of energy-efficient appliances, LED lightbulbs and heat pumps for low-income households in Ontario.

Municipalities

Home Energy Loan Program: Toronto offers local homeowners low-interest loans up to $125,000 with fixed rates from 3.25%-4.72% over 5-20 years for eligible upgrades.⁹

Utilities

Enbridge Gas’ Home Winterproofing Program: Free home upgrades of insulation and draft proofing for low-income households in Ontario that are Enbridge Gas customers. The homeowner is automatically considered for Ontario’s Energy Affordability Program when applying to Enbridge’s HWP too.¹⁰

Manufacturers

Some equipment manufacturers offer their own rebates and promotions that change throughout the year. Be sure to speak with your installer about any current manufacturer incentives available for your new green equipment that could provide extra savings.

While these programs can provide significant financial assistance, it’s crucial to understand their limitations. Most have strict eligibility requirements and many are designed to reduce the total project cost, not eliminate it. Additionally, loan-based options like Toronto’s HELP will still introduce a new monthly payment for homeowners.

The Gap in the Market for Some Homeowners

This landscape leaves many homeowners in a difficult position. They want to make green upgrades but don’t qualify for traditional loans, can’t take on another monthly payment, or simply don’t have the cash on hand.

Let’s consider a few common scenarios:

The Self-Employed Professional: Meet Maria, a successful freelance graphic designer in Oakville. Her annual income is strong but fluctuates considerably from month to month, making it difficult to pass the strict income tests for a bank-issued HELOC. She was counting on the Canada Greener Homes Loan to replace her aging furnace with a high-efficiency heat pump before winter. Now, she’s back to square one.
The Fixed-Income Retirees: Meet David and Susan, retirees in Toronto. They own their home outright and have significant equity but live on a fixed pension with little capacity for new monthly expenses. They’re eager to install a new heat pump to lower their high monthly energy bills and reduce their environmental impact, but they can’t afford to add new monthly loan payments of any variety, even from a subsidized program like Toronto’s HELP to their tight budget.
The Future Focused Family: Meet Alejandro and Bianca, a couple in their mid-40s from Oshawa. With two school-aged children, they are diligent financial planners, actively saving for future goals like university tuition and knowing they’ll need to replace their family car in a few years. They want to undertake a major energy retrofit (heat pump, windows, insulation) to lower their bills now. While their good credit and stable incomes mean they could qualify for a HELOC, doing so would consume their borrowing capacity and increase their debt-to-income ratio. This could jeopardize their ability to get a favorable loan for their child’s education or a new vehicle when the time comes. They feel forced to choose between making their home more efficient today and keeping their financial options open for their family’s needs tomorrow.

These homeowners represent thousands of Canadians who have the home equity and the motivation to make high-efficiency improvements to their homes but feel locked out of traditional financing paths.

The Solution: A Home Equity Sharing Agreement

This is where Clay Financial offers a different path forward. Clay’s Home Equity Sharing Agreement (HESA) is not a loan. It’s a new type of financial contract that lets homeowners tap into their home equity without selling their home or taking on additional debt. Clay acts like a passive investor in your home, sharing in the ups and downs over the long term.

There are no monthly payments and, because a HESA is not debt, there’s no interest rate. Your payment at the end of the HESA is a function of how much your home has appreciated. The HESA has a flexible 25-year term, allowing you to sell your home anytime or stay in your home for decades to come.

Here’s how it works:

Clay provides you with a tax-free, lump-sum cash payment from your home’s equity.
In return, Clay receives a share of your home’s future value based on how much it has appreciated from the start to the end of the HESA.
The HESA ends when you sell your home or after 25 years, whichever happens first. You also have the option to buy out Clay’s share anytime after the first 5 years, ending the HESA without selling your home.

For homeowners looking to fund green renovations, a HESA addresses the key challenges head-on. Let’s revisit those homeowner personas from the last section:

For Maria: Since a HESA isn’t a loan, her variable income isn’t a barrier to qualification. She can get the funds she needs for her heat pump without the stress of traditional loan underwriting.
For David and Susan: Having no monthly payments is a welcome relief. They can make their home more comfortable and affordable without impacting their fixed monthly budget.
For Alejandro and Bianca: A HESA allows them to fund the green upgrades without taking on new debt, which keeps their credit clean and borrowing power intact for expected future needs.

A HESA is a great solution for homeowners who don’t want to take on new debt, have variable income or wish to preserve their borrowing power for upcoming needs.

A Game-Changer: The Home Improvement Adjustment

One of the most powerful features of a Clay HESA is our commitment to ensuring you reap the rewards of your investment. We call it the Home Improvement Adjustment. Essentially, we allow homeowners to keep 100% of any appreciation that results from new investments that go beyond the expected maintenance of their home.

Let’s use solar panels as an example. Imagine you get a HESA $50,000 to fund a number of green improvements, including $25,000 for a new 7.5 kW rooftop solar system.¹¹ Fast forward eight years. You’ve enjoyed significantly lower electricity bills, saving over $1,600 annually.¹² That’s almost $13,000 you’ve already pocketed. Your solar panels likely have decades of useful life left but you’ve decided that it’s the right time to sell your home.

When you sell, we get one fair market value appraisal. The appraiser provides two key figures:

The home’s current fair market value.
The “adjustment value” that the solar panel system specifically adds to the property versus comparable properties. Let’s say the appraiser determines the panels add $20,000 to your home’s value.¹³

Here’s where our commitment shines. To ensure you benefit from your investment, we subtract the $20,000 value of the solar panels before calculating our share of the home’s appreciation. You keep the entire value that your investment created.

Let’s look at your total return on that $25,000 investment:

$13,000 in energy savings over seven years.
$20,000 in added home value that you keep entirely.

That’s a total value of $33,000. Thanks to the Home Improvement Adjustment, you not only recouped the initial cost but have gained an extra $8,000 in value between savings and increased resale value.¹⁴

Clay’s HESA Empowers More Homeowners to Go Green

The application window may have closed for the Canada Greener Homes Loan but a HESA from Clay Financial opens a new door for homeowners who want to build a greener future without taking on new debt.

The demand for energy-efficient homes is only growing. By providing a flexible, debt-free financing alternative, a HESA fills a critical gap left by traditional loans and expired government programs. It’s an innovative tool that allows contractors and energy advisors to help a wider audience of clients, and empowers more homeowners to create comfortable, sustainable, and valuable homes.

Ready to explore a new way to fund your green home project? Get an estimate on our website to see how much of your home equity you could potentially access.

Based on analysis by CMHC in its 2025 CMHC Mortgage Consumer Survey. ↩︎
Based on analysis by Rates.ca. ↩︎
See footnote 1. ↩︎
See footnote 2. ↩︎
See footnote 1. ↩︎
See footnote 1. ↩︎
See details of Ontario’s energy-efficiency programs as of January 2025. ↩︎
See the Home Renovation Savings Program’s website for more information. ↩︎
See the City of Toronto’s Home Energy Loan Program (HELP) for more information. ↩︎
See Enbridge Gas’ Home Winterproofing Program for more information. ↩︎
Based on the typical fully-installed cost observed by one solar installer in Ontario (as of October 2025) for a 7.5 kW system to meet the needs of an average home. ↩︎
Based on the average savings observed by one solar installer across Canada (as of 2024) of 90% on a $150 monthly electricity bill. ↩︎
We are not aware of a systematic assessment of how much solar panels add to the value of home in Canada, but the well-documented experience in the United States is that solar panels do add value to homes on resale. In 2025, analysis of Zillow sales data by SolarReviews demonstrated that solar added about $25,000 to sale prices when controlling for other variables. An earlier comprehensive study by the Lawrence Berkeley National Laboratory found that, over the period of 2002 to 2013, homebuyers paid an average premium of $4 per watt. For the 7.5 kW system used in this example, that would suggest a $30,000 premium. For the purpose of this example, we have selected a $20,000 addition to the appraised value to be conservative and treat the solar panels as a depreciating asset. Please also see the disclaimer in the following footnote. ↩︎
These figures are for illustrative purposes. Since actual savings and resale value depend on your specific home and equipment, you must consult a qualified professional for a personalized estimate. ↩︎

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