Mass Save 0% HEAT Loan vs. a Home Equity Loan: Which Is the Better Way to Pay for a Heat Pump in Central MA? (2026)

By Romario Lela, Lela Homelife · Last updated: November 3, 2026

The short answer: For a heat pump, insulation or a heat pump water heater, the Mass Save HEAT Loan almost always wins. It's 0% interest, up to $25,000, with terms up to 7 years. Home equity loans and HELOCs averaged about 8.1–8.3% in late October 2026, and they use your house as collateral. Use home equity only if your project is bigger than $25,000, includes work the HEAT Loan won't cover, or you need a lower monthly payment over a longer term.

Want to see your real numbers? Call 774-228-5351. We're open weekdays and Sundays 8 AM–3 PM. Or get a free estimate online.

Why this question matters right now

Heating oil hit about $6 a gallon in Massachusetts this fall, and a lot of Worcester County homeowners are pricing heat pumps for the first time. The next question is always the same: "How do I pay for it?"

Two things make the timing matter:

• The heat pump rebate drops on January 1, 2027. Mass Save's whole-home rebate is up to $8,500 for 2026 installs and up to $7,500 for installs on or after Jan. 1, 2027.
• Mass Save's future budget is still being debated at the State House (CommonWealth Beacon). Nobody knows yet what the 2028–2030 offers will look like.

What the HEAT Loan is

The HEAT Loan is 0% financing for energy upgrades, paid through local banks and credit unions that partner with Mass Save (Mass Save).

It can pay for:

• Heat pumps (whole-home or partial)
• Heat pump water heaters
• Insulation and air sealing
• Fixing problems that block insulation, like knob-and-tube wiring
• ENERGY STAR windows, if done with your recommended insulation
• Home batteries enrolled in ConnectedSolutions

Good to know:

• $25,000 is a lifetime limit, not per project.
• Terms run up to 7 years. Your lender and, in some cases, your household income set the exact term (Cape Light Compact, Energy Credit Union).
• You must be the homeowner with a Mass Save utility account (Eversource, National Grid, Unitil and others).
• A no-cost Home Energy Assessment is required for whole-home heat pumps, insulation and windows.
• The bank still checks your credit.

What a home equity loan or HELOC is

A home equity loan gives you a lump sum against the value of your house. A HELOC is a credit line you draw from as you need it. Either way, your house is the collateral.

As of late October 2026, national averages were about 8.27% for a 10-year home equity loan and 8.14% for a HELOC (Fortune). Fortune also notes closing costs of 2–5% of the loan amount, and HELOC rates usually float.

The math on a typical Central MA heat pump

Here's a simple example. It's an estimate, not a quote, because every house is different.

• Typical oil-to-heat-pump conversion: about $22,500 before incentives (our estimate for an average Central MA house)
• Mass Save rebate (2026 install): up to $8,500
• Amount left to pay: about $14,000

With the 0% HEAT Loan over 7 years:

• About $167 a month
• Total paid: $14,000
• Interest: $0

With a 10-year home equity loan at 8.27%:

• About $172 a month
• Total paid: about $20,600
• Interest: about $6,600, plus $280–$700 in closing costs

The monthly payments look close. But the home equity loan costs you roughly $7,000 more over its life and keeps you paying three years longer.

One thing to plan for: the rebate is paid after the job is done, so you may finance more up front and get the rebate back later. We walk you through that timing at the estimate.

Want this math for your house? We'll price your heat pump, show the rebate, and lay out your HEAT Loan payment. Call 774-228-5351, open Sundays.

Who the HEAT Loan is for (and not for)

It's a great fit if you:

• Own your home and have a Mass Save utility account
• Are replacing oil, propane or electric baseboard heat
• Need insulation, too (insulation is 75–100% off through Mass Save)
• Want a fixed payment with no interest

It's not the right fit if you:

• Rent. The loan applicant must be the homeowner.
• Get power from a town light department (for example, Shrewsbury). You may not qualify for Mass Save's loan. Ask your light department about its own energy loan.
• Need more than $25,000, or are also doing work the loan won't cover, like a kitchen or a new roof. Home equity can cover the rest.
• Can easily pay cash and want to skip the paperwork.

Mistakes to avoid

1. Signing a HELOC first "to keep it simple." That can cost you thousands in interest you didn't need to pay.
2. Skipping the Home Energy Assessment. Without it, you can lose access to the loan and some rebates.
3. Starting work before your loan is authorized. Mass Save issues an authorization form first. Wait for it.
4. Using a contractor who isn't approved for the program. For heat pumps, the installer has to be part of Mass Save's Heat Pump Installer Network. [PLACEHOLDER: confirm Lela Homelife's HPIN status, or name the partner installer.]
5. Waiting until late December. Lenders and installers get busy at year-end, and the rebate drops on Jan. 1.

What we'd do in your shoes

If your project is under $25,000 and it qualifies, use the HEAT Loan for all of it. If it's bigger, use the HEAT Loan for the qualifying part and pay for the rest with cash or home equity. Book your Home Energy Assessment now so you're not stuck waiting in December.

FAQ

Is the Mass Save HEAT Loan really 0%?

Yes. Mass Save says it offers 0% financing up to $25,000 for qualifying upgrades. The bank still has to approve your credit.

How long do I have to pay it back?

Up to 7 years. The exact term depends on the lender and, in some cases, your income.

Can I use the HEAT Loan for solar panels?

No. Solar isn't on Mass Save's list of eligible measures. For solar, a PPA is usually the path. Read our solar and new roof guide.

Can I use the HEAT Loan and still get the rebate?

Yes. Most homeowners use both. The rebate comes after the install.

Is a home equity loan ever better?

Sometimes. It can be better if your project is over $25,000, includes non-energy work, or you want a longer term for a lower payment and accept paying interest.

Does the loan show up on my credit?

It's a regular bank loan, so expect a credit check and normal reporting. Ask your lender for details.

Next step

You don't have to figure out the paperwork alone. We'll give you a free estimate, show your Mass Save rebate, and lay out your 0% HEAT Loan payment side by side with your current heating cost.

Call 774-228-5351. We're open weekdays and Sundays 8 AM–3 PM, serving Webster, Worcester and all of Worcester County, plus RI and CT. Or get your free estimate online. You can also book your no-cost Mass Save Home Energy Assessment.