IRA HOMES rebate program: Easy-to-understand guide

The historic investment in the HOMES rebate program can help you make your home cleaner, healthier, and better for your family, pets, and the planet.

The historic investment in the HOMES rebate program can help you make your home cleaner, healthier, and better for your family, pets, and the planet.

By now, you have probably heard the buzz about the Inflation Reduction Act (IRA). But you’re likely wondering how you can actually benefit from it.

Good news: This guide provides simple answers to important questions about the IRA HOMES rebate program—an important new program that could help you weatherize, electrify, and modernize your home. 

There is a catch, though. There’s still a lot unknown about the program. 

And that’s because federal and state governments are currently working on getting the program set up. (See what we recommended to the Department of Energy here.)

As home efficiency experts, at Sealed, we work hard to keep you updated on changes in federal rebates and incentives for energy efficiency upgrades (so you don’t have to!).

We’ll regularly update this guide as more information on the HOMES rebates becomes available.

But here’s something you need to know: Depending on where you live, you could get home energy upgrades—eligible rebates included—for no upfront cost. Tap here to see if you qualify.

Okay, let’s get to it: What is the HOMES program and what does it mean for you?

What do you need to know about the Inflation Reduction Act as a homeowner?

Signed into law in August 2022, the Inflation Reduction Act provides billions of dollars—$369 billion to be exact—aimed at reducing greenhouse gas emissions, confronting the climate crisis, and lowering the impact of rising energy costs (and inflation). 

Of that, the law set aside $8.8 billion in federal rebates to help households slash energy waste and install electrification upgrades like heat pumps. This is a big win!

These historic investments in residential energy efficiency and electrification can help you make your home cleaner, healthier, and better for your family, your pets, and the planet.

The Inflation Reduction Act can help you make your home cleaner, healthier, and better for your family and the planet.

These federal rebates are split between two new programs: 

  1. The Home Energy Performance-Based, Whole-House Rebates (HOMES) program, and 
  2. The High-Efficiency Electric Home Rebate Act (HEEHRA) program

In addition to rebates, homeowners can receive Inflation Reduction Act tax credits for eligible weatherization and heat pump projects. 

The 25C tax credits are available now. (Check out our tax credits guide for more information).

What is the HOMES rebate program?

The Inflation Reduction Act created the brand-new $4.3 billion HOMES rebate program. Once implemented, this program will provide rebates for eligible home weatherization and electrification improvements—including upgrades like heat pumps, air sealing, and insulation.

That means you’ll not only be able to reduce your home’s energy waste, but also improve your comfort—all while saving some money on your home improvement projects. (That’s a win-win-win!)

Your State Energy Office will oversee the HOMES rebate program in your state. Each State Energy Office is currently working on how the HOMES program is going to be rolled out in their state. 

One key decision your State Energy Office is currently making is whether to offer the measured or modeled pathway (or both) for the HOMES program. Let’s take a deeper look at what that means.

What size rebate could you receive with the HOMES program?

If your state offers the measured pathway of the HOMES program, rebate rates will be based on the performance of your project. (Read more about the measured pathway below!)

The measured savings pathway means larger rebates could be provided for projects that save more energy. (And that means more money for you!)

This is the pathway our team here at Sealed is rooting for, because it could mean larger incentives and higher energy savings for homeowners. 

Your rebate could be anywhere from $2,000 to $8,000 (or more) under the measured pathway, depending on the kind of energy upgrades you make to your home.

If your state offers the modeled pathway, you could receive either a:

  • $2,000 rebate for upgrades that are estimated to reduce energy use by 20% to 35% or 
  • $4,000 rebate for upgrades that are estimated to reduce energy use by more than 35%.

Under the modeled pathway approach, these are the only two rebate amounts you are eligible for—you would not be eligible for higher incentives, even if your project cuts more energy waste. (Read more about the modeled pathway below!)

But if your state offers the measured pathway, rebates will be based on the actual performance of your energy efficiency and electrification improvements—which could mean you have access to higher rebate amounts. 

For both pathways, rebates are capped at 50% of the total project cost and rebates are doubled for low- and moderate-income households. 

The law defines low- and moderate-income households as being less than 80% of the median income of the area. 

When will HOMES rebates be available?

Much like our team here at Sealed, you’re probably eager to take advantage of the HOMES rebate program. Who doesn’t love to save money on home upgrades?

Unfortunately, HOMES rebates are not currently available just yet—and will not be available for the next 6 to 18 months (as of the date of this article). The program is very new.

So what’s taking so long?

Funding for the program will flow from the US Department of Energy to State Energy Offices, and then make its way to contractors and homeowners. Funding will be distributed to each state based on a formula—you can see how much money your state is set to receive here

Any funding for states that don’t use the money will be reallocated to states that do use the money

Right now, the US Department of Energy is working on guidance for the State Energy Offices on administering the HOMES rebate program. As part of this process, Sealed provided recommendations to the US Department of Energy.

Once the US Department of Energy releases their guidance—which is expected summer of 2023—states can set up their programs, and that could then take another several months.

So here’s the question: Should you wait a year (or more) to move forward with your project? Or should you move forward with your project right now?

That’s what you’ll cover in the next section.

Should you wait for the HOMES rebate program?

For most people, it’s not a good idea to put off your home’s energy upgrades.

Here are four hidden costs of waiting that will undermine potential savings:

  1. The cost of energy. Energy prices are rising, and the best way to fight rising costs is to reduce your use.
  2. The cost of “greenflation.” As more people begin to take advantage of the IRA’s incentives, America’s energy-efficiency workforce will be challenged to keep up. The harder it is to find available skilled tradespeople, the more money you’ll likely have to spend on the project. Supply and demand.
  3. The cost of regulations. The right models that qualify for certain rebates may be hard to get. National energy efficiency standards (think MPG requirements for air conditioners and heat pumps) have increased, making 70% of the HVAC industry’s products ineligible to purchase.
  4. The climate costs. Delaying your energy-efficiency upgrades two, three, or even five years, can have a big impact on your health at home and your family’s climate contributions. 

Waiting for the HOMES rebate program comes with hidden costs that will undermine your potential savings.

Making moves now to make your home feel better—and protect your house against rising energy and upgrade costs—is still a good idea

And if your house qualifies to work with Sealed, we can help you navigate home energy upgrades without the hassle. Qualify now.

For a full look at the hidden costs of waiting, read Sealed CEO Lauren Salz’s breakdown in 4 hidden costs or check out the 5 reasons you shouldn’t wait in our Inflation Reduction Act homeowner guide.

Can the HOMES rebates be combined with the HEEHRA rebate program?

It’s important to know that the HOMES rebate program cannot be combined with other federal grant or rebate programs, such as the HEEHRA program, for the same individual upgrade measure. For example, you cannot get both the HOMES rebate and the HEEHRA rebate for the same attic insulation installation.

It may be allowable (pending DOE guidance) to use HEERHA and HOMES incentives in the same household as long as the incentives are used for different measures. For example, HEEHRA rebates could be used to upgrade an electrical panel, while HOMES incentives could be used for an energy-waste-reducing heat pump installation. 

However, the Inflation Reduction Act doesn’t prohibit combining the HOMES rebate program with the 25C tax credit—or with state or utility rebate programs. (That we know of yet, anyway!) The US Department of Energy will issue guidance this summer to clarify if this will be allowed or not.

Your state may develop its own rules on how the HOMES rebate can be combined with other non-federal rebates—so check back later with your State Energy Office!

How do you qualify for the HOMES rebate program?

Unlike the HEEHRA rebate program, HOMES program rebates aren’t restricted by income. 

That being said, the qualifications for the program will be defined by your state—so check back for additional guidance to be released! 

(If you’re a home performance contractor looking to understand the HOMES program and how it can benefit you and your clients, talk to us at Sealed. We can help! Or tap here to learn how to become a preferred partner and secure prequalified heat pump leads and insulation customers.)

What home upgrades could be eligible for the HOMES rebate?

The Inflation Reduction Act does not specify what upgrades are eligible for a HOMES program rebate, but we do know this: The upgrade must cut energy waste. 

Your state may decide what upgrades are eligible for a HOMES rebate—so stay tuned!

Upgrades that help save energy include:

In particular, converting from a gas or oil heat to an electric heat pump is one of the best, most efficient ways to switch to clean energy and cut your energy waste. And heat pumps make your home feel incredible and boost your indoor air quality, too.

outdoor heat pump condenser unit against white house exterior

Not sure what the best upgrade is for your home? We can help! Call Sealed.

Get a custom home energy makeover—for $0 upfront—if your house qualifies

Energy rebates, tax credits, financial incentives, oh my! It’s a lot to digest.

When you’re ready to make energy-efficient home upgrades, there’s a lot to consider (and to project manage). 

But with Sealed, the process is hassle-free. 

The whole process was easy and quick; and throughout the process I felt at ease…. I was truly impressed with the program and the level of service I received from Sealed.

Cynthia B., Sealed customer

If your house is eligible, you can get an energy-efficient heat pump HVAC, high-performance insulation, and professional air sealing and weatherization at no upfront cost. 

(Yes, you read that right!)

And Sealed stays accountable to the results. If you don’t save energy, we take the hit. (No, it’s not too good to be true. Learn about the Sealed payment plan here.)

See if your house qualifies for the easy way to make your home energy-efficient.

My [energy] savings are better then projected!… It made a big difference!

—John B., Sealed customer

Common questions about the HOMES rebate program

A lot of questions are floating around about this program as it’s being developed. We’ve done our best to answer some FAQs below.

What is the measured pathway for the HOMES rebate program?

Under the measured pathway, you’ll receive a rebate based on the measured performance of your upgrade. Why is this a good thing? 

Well, we’re glad you asked. 

The measured pathway means greater accountability for homeowners. It could also help make sure your home improvements actually perform well and save you energy. 

And the measured pathway could also mean more money for homeowners—and more simplicity.  

If you want your state to consider implementing this program pathway so that you have access to more incentives, talk to your State Energy Office today.

Here’s a fictional example of what the measured savings pathway could look like: 

The Jones family works with Sealed to get home energy upgrades that include:

  • Attic insulation
  • Air sealing 
  • Converting from a gas furnace to an electric heat pump 

When these upgrades work together in tandem, they save a lot of energy. 

The Jones family now uses 65% less energy than they did before. 

Their home is also more comfortable: No more drafty rooms, the stuffy room above the garage is finally fixed, and their indoor air quality has improved, too.

Their state offers the measured pathway of the HOMES program—so they’re in luck!

The contractor who installed the upgrades works with Sealed to apply for a rebate on behalf of the family. Good news: Because their upgrades are expected to save so much energy, the family is eligible for a $6,000 rebate. 

An energy auditor assists a homeowner in understanding her home energy upgrade options in the garage near a boiler

Sealed provides an instant discount, so the Jones family doesn’t have to wait for the government.

The Jones family now has more money in their pocket and peace of mind: Sealed is accountable for the performance of their process—plus the process was fast and easy. Epic win!

Then, it’s on Sealed to wait to get paid back by the government based on the actual energy the project saves over time. This is similar to how Sealed already works to provide homeowners accountability with home energy upgrades, and it’s a program our homeowners love. 

In this case, Sealed only gets paid back in incentives by the government if the project saves lots of energy.

How will homeowners receive their HOMES rebate under the measured pathway?

Although the HOMES rebate program process is still being worked out, think of the rebate as a “coupon” from the federal government toward your project.

If you love digging into details like we do, here’s how the money will likely flow from your State Energy Office to you: 

  1. A program aggregator (essentially an organization that helps you get high-quality home energy upgrades—like Sealed) will estimate how much energy waste your upgrade will slash. 
  2. Then, the aggregator will pay the rebate to the contractor upfront based on the projected energy savings. 
  3. The contractor will then provide you with the rebate. (This should be a hassle-free process for you, especially if you work with Sealed!)
  4. After the project is completed, the aggregator is on the hook to measure the actual energy savings over time—but this doesn’t affect your rebate or how fast you get it, so don’t worry. 
  5. Aggregators take on the risk to ensure that your upgrade cuts energy waste, so you can rest easy that your improvements are doing what they’re designed to do!  
  6. Your State Energy Office will then pay back the aggregator through the program implementer based on the actual, measured energy savings.

This sounds complicated, but essentially, the HOMES rebate is likely to show up on the front-end of your project with the measured pathway. 

And all the while, contractors, aggregators, and your State Energy Office will be working on the back-end to flow funds your way—without you having to think about it again!

What is the modeled pathway for the HOMES rebate program?

Under the modeled pathway, contractors will use modeling software to predict how much energy usage your home energy upgrade will save. However, models are often wrong and tend to miscalculate energy savings. This means your upgrade may not save as much energy as the model predicts—which is bad for your wallet and the planet.

Plus, under this pathway, your rebate will be based on a flat rate: $2,000 for projects that reduce energy use by up to 35% or $4,000 for projects that reduce energy use over 35%. 

Here’s a fictional example of what the modeled pathway could look like: 

Let’s go back to the Jones family. Same family as the example above, same project, and same house. They work with Sealed to install:

  • Attic insulation
  • Air sealing 
  • A heat pump (they’re switching from a gas furnace)

Their contractor uses modeling software—a cumbersome and expensive process—to estimate how much energy the family’s upgrades saved.

It turns out that, with this same upgrade approach, the family wastes 65% less energy than they did before. They still get all the other benefits from these upgrades, too: Their home is more comfortable, drafty, stuffy rooms are fixed, and they have better indoor air quality.

In this scenario, their state only offers the modeled pathway of the HOMES program.

The contractor applies for the HOMES program on behalf of the family and determines that they are eligible for a $4,000 rebate. 

The rebate takes a few weeks (or months—depending on your state’s program and your contractor’s availability) to get to the family. 

What is the difference between measured savings vs. modeled savings for the HOMES program? 

The primary difference between the measured and modeled pathways is that one is based on the actual performance of your upgrade and the other is based on a model that predicts how much energy your upgrade is expected to save (one that could be inaccurate).

In other words:

  • With the measured pathway, an aggregator like Sealed will put their money where their mouth is when it comes to how much energy your upgrade project is expected to save. 
  • With the modeled pathway, if your project saves less than what was estimated, nobody loses money except you and your family. 

You will probably receive a higher rebate under the measured pathway, especially for projects that save a lot of energy. But under the modeled pathway, your rebate is based on a flat rate.

Plus, accessing rebates through the measured pathway could be made simpler for you and your contractor with companies like Sealed—meaning you could get your rebate more easily… and faster! 

Where can I learn more about the measured savings pathway for the HOMES rebate program?

There isn’t a lot of clear information about the HOMES rebate program out right now, because each state is working toward setting up the program for homeowners in their jurisdiction.

However, at Sealed, our team stays on the front lines of energy news—including updates about the HOMES rebate program—so you don’t have to. 

You can check back here later for updates, or learn more about the measured savings pathway (and why it’s so important!) in this deep-dive series by Sealed President Andy Frank

Our team stays on the front lines of energy news—including updates about the HOMES rebate program—so you don’t have to. 

What home energy upgrade rebate programs are available now?

Even though HOMES rebates are not currently available, you may be eligible for other rebates in your state. 

Check out our tax credit and rebate guides below:

Illustration of Sealed's home energy inspector energy usage calculator

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May 17, 2023