Texas Expands Access to TX-PACE Financing, Aligns Underwriting to Spur High-Performance Energy/Water Building Upgrades 

Texas borrowers can now leverage Texas Property Assessed Clean Energy (TX-PACE) financing for a larger portion of their capital stacks, with additional stabilization time before principal payments are due. These changes offer greater flexibility while maintaining strong underwriting practices. 

The program updates aim to accelerate use of TX-PACE, which is a vital tool amid tighter capital markets and rising construction costs. 

In February, Keeping PACE in Texas modified its underwriting guidelines by increasing the allowable loan-to-value (LTV) ratio from 25% to 35% and by making interest-only repayment periods more flexible. These updates were designed to align Texas with C-PACE standards across the U.S. and to better reflect today’s market conditions. 

These enhancements have triggered renewed interest from property owners and capital providers, offering an alternative to traditional financing solutions during a time when many projects face financial stress. The goal is to expand access to TX-PACE without compromising financial rigor. 

The changes also improved Texas’ competitiveness with other states that had previously drawn more attention from C-PACE originators. By modernizing the framework, Texas is now more aligned with widely accepted practices across the country. 

TX-PACE enables property owners to fund energy efficiency, on-site energy, and water conservation projects with private capital. Financing is available at multiple project stages—before, during, or after construction—and is considered one of the most cost-effective forms of capital in a deal. 

With the higher LTV cap, TX-PACE can now serve as a more substantial component of project capital stacks. This opens the door for its use in high performance buildings and recapitalizations—particularly useful for projects affected by construction delays, cost overruns, or uncertain interest rate environments. 

New terms allow borrowers to defer principal repayment for up to five years following the loan closing. This includes up to three years for construction and two additional years for stabilization. In refinancing scenarios, the stabilization period may extend to two years. 

Among the recent technical adjustments, the exclusion of interest costs from the savings-to-investment ratio calculation has improved the program’s appeal to owners. These updates help Texas compete more effectively in a national market while still upholding underwriting standards. 

With greater interest from lenders and developers, the updated program is poised to unlock more energy and water efficiency projects across Texas. The enhancements make TX-PACE more accessible and relevant without sacrificing the financial discipline that underpins its credibility.