How to Finance an HVAC System

A heating, ventilation and air conditioning (HVAC) system heats and cools a home by drawing air from the outside. The National Association of Home Builders says that, on average, units last 15 to 25 years. According to the Home Improvement Guide, they cost about $3,000 to $5,000 if your ducts function well, or $6,000 to $10,000 if you need new ones. Getting credit or a loan helps you meet the significant financial committment that HVAC installation brings. You can find financing through dealers and retailers, your home's value, government loan programs and your power company.

Manufacturers, such as Lennox, Carrier and Trane, arrange with credit card companies to let you charge the purchase price. You can apply online with the manufacturer or dealer or in person at the dealer's office or store. Big-box home improvement retailers, such as Sears, Lowes and Home Depot, offer their own credit cards. With many of these cards, you are not limited to just the HVAC, but may make other purchases and get cash advances. These cards generally don't rely on your home to guarantee repayment. As a result, interest rates can run as high as 28 percent on some cards.

You can borrow against the difference between your home's value and what you owe on it with a home equity loan or home equity line of credit. A home equity loan is a one-time draw, while a home equity line of credit works like a credit card. Your loan is limited to 75 percent to 80 percent of the equity. If you have $10,000 in the home, you can use up to $7,500 to $8,000 to buy the system. You pay less interest with loans against your home than dealer or store-connected credit cards. Borrowing against your home makes your HVAC purchase tax deductible, but you can lose your home and the HVAC if you fall behind.

Consider financing your HVAC system with a home improvement loan backed by the Federal Housing Administration. According to Energy Star, your HVAC replacement is a home improvement that qualifies you for FHA financing. The federal government has rolled out a pilot PowerSaver program targeting those who choose energy-efficient HVAC units, typically those with the Energy Star label. Both the traditional Federal Housing Administration and the pilot programs let you borrow up to $7,500 without putting up your home as collateral, but you must have home equity to participate in the PowerSaver program.

Some energy providers, such as PSNC Energy in North Carolina, connect with participating dealers to let you pay for your HVAC through your monthly electric bill. According to Energy Star, power companies and energy loan programs will help you with low interest rates if you opt for energy-efficient systems and products. Austin Energy, community owned and run by the City of Austin, has interest rates from 0 percent to 6.5 percent depending on the loan amount.