Roof Financing in California: Your Options

A new roof is one of the biggest checks most homeowners ever write. If you do not have the cash on hand, you are not alone, and you have options. Some are simple. Some put a lien on your home.

This guide compares roof financing in California the plain way: paying cash, borrowing against your home, a personal loan, financing offered by the roofer, and PACE. You will see what each one costs you in risk, which California and federal protections apply, and the red flags that should make you stop before you sign.

Start with the right price

Financing does not change what the roof should cost. Get the roof price settled first, then decide how to pay for it. Get two or three written bids and compare them line by line. See how to compare roofing bids and how much a new roof costs in California.

In California, a home improvement contract that includes a finance charge must show it under its own heading, separate from the contract price. That lets you see what the roof costs and what the borrowing costs.

Source: California Business and Professions Code §7159(d)(5) and (d)(6)

Roof financing in California: the main options

Paying cash

Cash is the simplest. There is no interest and no lien. The risk is draining the savings you would need for an emergency. Even with cash, never pay ahead of the work. California caps the down payment on a home improvement contract at $1,000 or 10 percent of the price, whichever is less, and says it is against the law for a contractor to collect payment for work not yet done or materials not yet delivered.

Source: California Business and Professions Code §7159(d)(8) and (d)(9)

Our guide on how much a roofer can ask for a deposit explains the rule.

HELOC or home equity loan

A home equity line of credit (HELOC) or home equity loan borrows against the value of your home. Rates are often lower than unsecured loans because your house is the collateral. That is also the risk: if you cannot pay, you can lose the home.

Federal law gives you a cooling off period. If the HELOC is secured by your principal dwelling, you generally have three business days after you open the account or receive the account opening disclosures, whichever is later, to cancel in writing for any reason. The lender must then return the fees you paid.

Source: Consumer Financial Protection Bureau; Truth in Lending Act, Regulation Z, 12 CFR §1026.15

Personal loan

A personal loan from a bank or credit union is usually unsecured. Your home is not on the line, but rates are often higher and terms shorter. Compare the annual percentage rate (APR), any origination fee and the total you will repay, not just the monthly payment.

Financing through the roofer

Many roofing contractors offer financing at the kitchen table. Usually a separate lender makes the loan, and the roofer is the middleman. That can be convenient. It can also be where people get hurt.

• Ask who the lender is. Get the lender's name and read the loan agreement itself, not just the roofer's summary.
• Read promotional terms closely. "Same as cash" and low intro rates can come with deferred interest or a rate that jumps later.
• Watch for a higher price. Ask for the cash price and the financed price in writing.
• Do not sign a completion certificate early. Lenders often pay the contractor when you sign off. Sign only when the job is finished and inspected.

Your cancellation rights still apply. A roofing contract signed at your home usually comes with a 3 day right to cancel, or 5 days for seniors. See how to cancel a roofing contract in California.

What is PACE, and what protections apply in California?

PACE (Property Assessed Clean Energy) financing pays for qualifying energy, water or wildfire improvements and is repaid through an added assessment on your property tax bill. A standard roof replacement may not qualify, though some programs have financed cool roofs. The California Department of Financial Protection and Innovation (DFPI) warns that PACE is not a free government program and that a lien stays on your home until the PACE contract is paid off, which can make it harder to sell or refinance.

Source: California Department of Financial Protection and Innovation, PACE consumer page

California added consumer protections after past problems. Among them:

• The PACE program administrator must determine your reasonable ability to pay before approving the financing.
• The administrator must confirm the key terms with you orally, in plain language, before you sign.
• You have a three business day right to cancel the assessment contract, and a contractor may not begin work until that period expires, except as provided by law.
• A PACE contractor may not charge you a higher price because you used PACE instead of cash.
• The amount financed is generally limited to 15 percent of the property's value up to the first $700,000, and less than 10 percent of the value above that.

Source: DFPI, Summary of Operative Dates for PACE Laws and PACE consumer page; California Streets and Highways Code §5898.16 and §5913

The DFPI also says to check the license of both the contractor and the PACE program administrator before signing.

Red flags in roof financing

• "It is a free government program." The DFPI specifically warns about this pitch.
• Pressure to sign on a tablet without seeing the full contract. Ask for a paper copy.
• A salesperson who will not tell you the APR, the total cost or the lender's name.
• A deposit over $1,000 or 10 percent of the price.
• A request to sign off on work that is not done.
• Extra upgrades that may not qualify for the financing, such as cabinets or counters on a PACE deal.
• A roofer who cannot show they are licensed and insured. See unlicensed contractor red flags.

Check the roofer before the loan

A good loan does not fix a bad contractor. Before you sign, look up the California contractor license on the CSLB website, confirm a C-39 roofing classification, and check the bond and workers' comp. See how to check a contractor's license in California and the guide to the license.

Frequently asked questions

What credit score do I need to finance a roof?

It depends on the lender and the loan type. Compare offers from your bank or credit union with the roofer's offer.

Is roof financing through the contractor a bad idea?

Not by itself. Read the loan terms, know the lender and compare the cash price.

Can I cancel PACE financing?

Yes, within three business days, under the timing rules on the right to cancel form you receive.

Does homeowners insurance pay for a new roof?

Only for covered damage, not normal wear. See our guide to a roof insurance claim.

Where ConFacts fits

Roof financing in California is a long commitment, so make sure the roofer behind it has a clean record. A ConFacts report builds a sourced background check on California C-39 roofing contractors from public records, including CSLB license status, workers' comp, bond and disciplinary history, and scores them from 0 to 100. Your first report is free, then $7, or 3 for $15. We take no money from contractors. We show you the record, you make the decision.