The mechanics
How the Warm Homes Loan actually works
The government does not lend you the money and does not pay your interest directly. It does something slightly less obvious, and understanding it tells you what to expect from a lender.
The one-paragraph version
The Department for Energy Security and Net Zero (DESNZ) pays a participating lender a non-repayable capital grant of up to 20% of your loan amount, in arrears, once your installation has been verified. That grant reduces the principal the lender has at risk, which lets the lender charge you a lower nominal interest rate — up to 5 percentage points below its normal rate for an equivalent unsubsidised product. The discount must be passed on to you as a reduced interest rate. The rate can never go below 0%.
What the scheme is, formally
The Warm Homes Loan Scheme is a government-supported but lender-led initiative run by the Department for Energy Security and Net Zero (DESNZ), forming part of the wider Warm Homes Plan. It launched on 27 October 2026. Its purpose is to make affordable finance available for low-carbon home upgrades, for households who can afford to repay a loan but are put off by the upfront cost or by the cost of ordinary borrowing.
Crucially, the government does not underwrite individual loans and does not intervene in lenders' credit decisions. Lenders design their own products, set their own prices within the scheme's parameters, and run their own affordability and creditworthiness checks under existing FCA rules.
The money behind it
Up to £300 million of government grant capital is committed to this first phase, intended to support in the region of £2 billion of private lending for home energy improvements by 2030.
That money is held in a central pot managed by the department and is accessible to all participating lenders on a first-come, first-served basis. The scheme rules also describe the wind-down: the department will give lenders six months' notice once forecasting shows six months' worth of funding remaining, then a final one month's notice that grant funding will stop — honouring grants for eligible loans made during that final month.
How many homes does £300 million actually stretch to?
Our illustrative estimate: 150,000+ typical solar installations across the whole of the UK.
The working, so you can check it: the £300 million is interest subsidy, not loan capital — the government pays lenders a grant of up to 20% of each loan. At the full 20%, £300 million supports about £1.5 billion of lending; the scheme's own stated intention is to support around £2 billion of private lending by 2030. Divide either by a £10,000 install and you get the figure above.
Illustrative estimate only — not an official government figure, and not a cap on the number of installations. It assumes a £10,000 average install and that every loan draws the maximum grant, neither of which will be exactly true. The underlying £300 million and £2 billion figures are verified; the division is ours. Spread across the UK's housing stock, it is not a lot — and it is allocated first come, first served.
What you can borrow, measure by measure
The cap applies per measure, not per household, and a project can combine measures. These are the scheme's figures:
| Eligible measure | Loan cap | Notes |
|---|---|---|
| Solar PV | £15,000 | New roof-mounted panels, including additions to an existing array |
| Electrical storage battery | £15,000 | Standalone or paired with solar PV |
| Air-to-water heat pump | £20,000 | Before any Boiler Upgrade Scheme grant is deducted |
| Ground source heat pump | £35,000 | Includes water source and shared ground loops |
| Biomass boiler | £20,000 | Rural properties only, for BUS grant recipients |
| Heat network connection | £7,500 | Exempt from the MCS installer requirement |
| Micro-renewable system | £20,000 | Domestic wind turbine and micro-hydro only |
| Air-to-air heat pump | £10,000 | Not currently eligible — cannot yet meet the MCS certification requirement |
Ancillary work has to fit inside the relevant cap, not on top of it. The department reserves the right to amend these caps over time. Figures last checked 31 October 2026.
Interest, and whether you will get 0%
Some participating lenders are offering Warm Homes loans at 0% interest. That is a lender product decision, not a universal entitlement. What the scheme guarantees is a mechanism: a grant of up to 20% of the loan, intended to deliver a reduction of up to 5 percentage points from the lender's starting rate, with a hard floor at 0% — the scheme explicitly must not produce a negative rate.
Two practical consequences. First, if a lender's normal rate is already low, the headroom for a discount is smaller. Second, the grant is capped, so on very long terms the achievable reduction can be less than the full 5 percentage points.
Term: three years minimum
Government rate support is only available on loans with a term of 3 years or more. Some lenders offer terms up to 30 years. A longer term cuts the monthly payment and raises the total interest paid — compare the total cost of credit, not just the monthly figure.
Secured or unsecured
The scheme supports personal unsecured lending (ordinary personal loans, and point-of-sale finance arranged through an installer or retailer) and personal secured lending (additional borrowing secured against the property as a first or second charge).
If you borrow against your home
Secured borrowing is still secured borrowing, whatever the interest rate. Your home may be repossessed if you do not keep up repayments on a loan secured against it. Think carefully about whether unsecured borrowing over a shorter term is the better answer for you. We are installers — we cannot advise you on this, and you should take independent financial advice if you are unsure.
Lending to businesses or SPV-type structures is not permitted. Property-linked finance, subscription and leasing products are not eligible in this first phase.
How to apply — three routes
-
Direct to a lender
Pick from the lenders on the GOV.UK list and apply to them. You will need a valid quote from an MCS-certified installer.
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Through your installer at the point of sale
Embedded or point-of-sale finance arranged alongside the work. This is the route most households find simplest.
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Through your mortgage provider
As additional secured borrowing, first or second charge. Read the warning above before going this way.
You do not apply to the government
There is no government application form and no government portal for borrowers. Anyone telling you to pay a fee to "apply for the Warm Homes Loan" is not describing the real scheme. The lenders are listed publicly on GOV.UK, and they are FCA-authorised.
What the lender will ask you for
The scheme tells lenders exactly what a quote must contain. Yours has to be:
- Dated within the last six months
- Addressed to you, the applicant
- Issued on company headed paper
- From an MCS-certified installer, showing the installer's MCS number
- Showing the full installation address
- Itemised, with a cost breakdown of all improvements
- Stating the system size in kW for the eligible measure
Lenders must also check that the measure is eligible, that your tenure and property type qualify, that the installer's certification is current — verified via an API with MCS — and that the amount applied for falls within the cap for that technology. You will also be asked to confirm you are not having the same measure funded by another public grant.
Then installation, verification and payment
After installation, the installer lodges the completed work in the MCS Installation Database, which generates an MCS certificate. That certificate is the basis on which your lender verifies the job and claims its grant. The department pays grant claims monthly in arrears, only after MCS verification.
When you actually receive the money — upfront, as a deposit, direct to the installer, or after verification — is the lender's decision, and the timing risk sits with the lender, not with you.
Combining it with other funding
You cannot use a Warm Homes loan and other government funding for the same improvement. The exceptions are the Boiler Upgrade Scheme and the Home Energy Scotland grant for heat pumps, where a loan can cover the installation cost above the grant. Completed work may be audited.
If you are on a low income, check whether you qualify for free improvements through the Warm Homes: Local Grant in England or a devolved equivalent before taking on a loan.
If something goes wrong
Lending under the scheme is fully subject to consumer credit law and FCA conduct rules, including the Consumer Duty. Responsibility splits three ways:
- Your lender
- Loan products, affordability and credit decisions, loan servicing and repayment — and, under the Consumer Credit Act where it applies, potentially installation quality and mis-selling too.
- Your installer
- Installation quality and workmanship, with MCS providing the standards framework and the dispute escalation route. That is us, and we own it.
- The department
- Only the scheme rules and how scheme eligibility is applied. It will not intervene in individual lending decisions or installation disputes.
Get an MCS-certified quote Check your eligibility Read the full FAQ
Free, no-obligation
Get the quote your lender needs
We build every quote to the scheme's documentation requirements, so your lender application is not held up by paperwork.
- MCS-certified installation — a requirement of the Warm Homes Loan Scheme
- Itemised quote with system size in kW, in the format lenders ask for
- Solar, solar + battery, battery-only retrofit or an EV charger added to either
- No hard credit check from us, and no cost for a quote
Prefer to talk it through? Email hello@warmhomeloans.org.