When it’s time to replace your air conditioning unit, it can be a stressful time for your household. But do not fret— replacing your home’s air conditioning unit is not only great for your home’s functionality, but it can also improve your carbon footprint.  You’ve done the research and have chosen an air conditioning contractor after comparing three to four estimates.

Now that you know who you want, it’s time to figure out how to best pay for the project.

An air conditioning installment is an investment that can improve a home’s efficiency and save you money on your utility bill. The projects can range anywhere from $6,000 to $12,000 in a 1,000 square-foot home. Use our Modernize Cost Calculator for more accurate estimates for your home. Below, find a  roundup of the costs you need to anticipate:

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Downlow on the Down Payment

HVAC jobs vary from a full-on replacement to a repair. Often time an air conditioning contractor will need to conduct ductwork or modifications to a home prior to installing a new unit. In those cases, there might be a request for a down payment. Homeowners typically pay about 20 percent of the final quote.

In some cases, contractors will offer discounts for paying in cash, but be wary— if a contractor requests a large cash sum upfront, it could be a scam and risks the homeowner being left unprotected.

Dollars and Cents

The best way to secure the lowest price for your air conditioning project is to compare multiple contractor quotes. That’s why Modernize encourages homeowners to get multiple estimates before making a final decision.

When it comes to air conditioning units, financing is also an option. Contractors might have a preferred manufacturer that they work with to provide you with a payment plan. Just remember to be mindful of interest rates.  

If you want to pay through a payment plan, your contractor might offer their own so you don’t have to go through a bank. And if you do need to go through a bank, be sure you first learn about all of the financial incentives available to you both directly and indirectly in the form of loans or tax credits.

For instance, if you install a new air conditioning unit as part of an energy efficiency upgrade, at least part of the cost may be deductible.

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Understand Your Equity Options

Homeowners can often use their homes, whether mortgaged or not, as securities for loans to fund home improvement projects.

Two common ways to leverage your home for credit from a bank or other financial institutions include lines of credit and loans. If either of these are applicable in your situation, run it by your air conditioning contractor. An experienced installer will have both expert and valuable anecdotal advice regarding these methods.

Home Equity Line of Credit (HELOC)

A home equity line of credit, otherwise known as a HELOC, allows homeowners to borrow money against their home’s equity. HELOCs are generally flexible but limited by a home’s value, and they also carry the risk of foreclosure.

Home Equity Loan

If a HELOC doesn’t seem like the right fit, the other option is a home equity loan – which lets a homeowner borrow money against the value of a home over the amount of any or all mortgages levied against the property. It’s sort of like a second mortgage, positioning the home itself as the security for the loan.

Whatever options you find suits you best, it’s a safe bet to talk it over with your contractor. Their experience with other homeowners in the area and specifically as it pertains to air conditioning installation projects will be valuable when it comes to determining the best path forward for your own financing.

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