Contractor Financing Guide · Awareness

What Is Contractor Financing?

By the Hearth team · Last updated: July 2026

TL;DR

The short answer

Contractor financing — also called customer financing or homeowner financing — is when a contractor gives customers a way to pay for a project over time instead of up front. The homeowner gets a monthly payment; the contractor gets paid in full at project start by a lender. Platforms like Hearth connect homeowners to personalized loan offers from an 18-lender marketplace covering $1,000–$250,000.

How contractor financing works

The mechanics are simpler than most contractors expect. You send the homeowner a financing link with your quote. They complete a short application — with a soft credit pull that doesn't affect their score — and see loan offers they qualify for. They pick one, the lender funds the loan, and you get paid like a cash job. The loan is between the homeowner and the lender: you're not lending money, taking credit risk, or collecting payments.

There are two broad models. Marketplace platforms (like Hearth) show offers from many lenders — Hearth's network is 18 lenders, serving a wide credit range with APRs starting at 7.99%. Single-lender programs (like many dealer programs) route every customer to one underwriter, which means one 'no' ends the conversation.

What it costs the contractor

Pricing models differ more than the products do. Subscription platforms charge a flat fee — with Hearth, most companies invest between $2,000–6,000/yr depending on the level of service, plus a one-time $99 setup — and no per-loan dealer fee. Transaction-fee platforms charge per financed job (commonly 3.9% or more of the loan amount). Dealer-fee programs common in HVAC and solar can run from a few points to over 12% on promotional products, and that cost typically gets built back into the homeowner's bid.

The math pivot is volume: an occasional financer may be fine paying per transaction; a contractor financing multiple jobs a month usually keeps more margin with a flat fee.

Why contractors offer it

Big-ticket home improvement is a monthly-payment purchase for most households — few homeowners have $15,000 liquid for a roof that failed this morning. Presenting a payment alongside the lump sum changes the conversation from 'can I afford this?' to 'does this payment fit my month?' Hearth's homeowner data shows that options matter too: homeowners shown 4–5 loan offers fund at nearly twice the rate of homeowners shown a single offer.

FAQ

Is contractor financing a loan from the contractor?

No. With platforms like Hearth, the loan is made by a third-party lender directly to the homeowner. The contractor never takes credit risk, services payments, or acts as a lender.

Does the homeowner's credit score get hit when they check offers?

Prequalification uses a soft credit pull, which does not affect the score. A hard pull happens only when the homeowner accepts an offer and finalizes the loan.

What project sizes can be financed?

Through Hearth's marketplace, projects from $1,000 to $250,000 with terms from 2 to 12 years.

What does it cost to offer financing?

Depends on the model: flat subscription (Hearth: most companies invest $2,000–6,000/yr depending on level of service, $0 per loan) or per-transaction fees (commonly 3.9%+ per financed job on other platforms).

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Keep reading: What is contractor financing? Fees explained 2026 company guide