Resources > Financing your new solar panels

Financing your new solar panels

Factsheet

May 2, 2024

The long-term benefits of solar are well-known, but the upfront cost can feel like a hurdle. Thankfully, there are many ways to finance your new solar installation — from government-backed programs to home equity loans and everything in between. On this page, we will tell you about each of these financing options. For a broader introduction, please visit our Solar financing basics page.

We encourage you to choose what’s best for you. For some homeowners, a lower monthly payment is ideal. Others may prefer paying less in total interest.

If the following financing options don’t work for you, you may consider third-party ownership like leases and power purchase agreements (PPAs). In these scenarios, a company owns and maintains the solar system, and you pay them monthly to use the electricity it produces.

SUN does not endorse or profit from any of the loan financing options listed below.

Credit union solar loans

Credit unions offering solar loans can be a good option for individuals looking for loans with no large origination fees. The filing fee for a credit union solar loan is generally no more than $300. These solar loans often include temporary 0% loans until your tax credits come in the following year (known as bridge loans).

These credit unions work with people all over the country. Their staff has strong experience with solar loans. Note that these credit unions only work with registered installers. They can provide you with a list of registered installers in your area. If you’ve chosen an installer not on the list, the installer will need to become a registered installer with the credit union.

Clean Energy Credit Union (CECU): Any SUN member can join this credit union. Anyone can join SUN when applying for a loan or account from CECU. This is because SUN is a Field of Membership partner with CECU. This credit union’s Clean Energy for All program offers discounted interest rates on clean energy loans to minority and low-income borrowers. The program offers a 0.50% discount off its standard loan rates. It offers an additional discount for those facing credit challenges. Plus, help the planet by putting money into a CECU savings account. Use their carbon calculator estimator to see the impact.
Community 1st Credit Union: Any SUN member can join this credit union, and anyone can join SUN when applying for a loan or account with them. This is because SUN is an Association Partner with this credit union. C1CU offers the ezSolarLoan lending platform, making the loan process easy and accessible.

Home Equity Loans

Home equity loans are secured loans. The collateral is the equity you own in your house. You can then either borrow one lump sum or take out a home equity line of credit (HELOC). These loans usually have favorable fixed interest rates (around 5% is normal) and are available from most banks.

These loans require strong home equity and a good credit score. When used for home improvements such as installing solar, the interest on these loans is also tax-deductible. Consult your tax advisor to confirm details on whether this is applicable for you.

Bank Loans

A growing number of banks offer solar and renewable energy loans. Contact your local bank for options in your state or visit SUN’s Solar Help Desk to ask for recommendations. Climate First Bank is a national bank provider of solar loans.

Government-backed programs

These loans include solar with a purchase or refinance of a mortgage. They offer lower interest rates and spread payment out over the term of your mortgage.

Fannie Mae HomeStyle Energy Mortgage: Any lender that uses Fannie Mae is eligible to lend under this program. Your solar system cannot be more than 15% of the cost of the total home appraisal. Generally, Fannie Mae requires a 620 credit score.
FHA Solar and wind energy loan: Solar can now be added to a regular FHA home mortgage loan. Your solar system must be new and purchased outright (not leased). The amount financed for a system must not exceed 20% of the property’s appraised value. The FHA loan is available for home purchases in all Solar United Neighbors states except West Virginia, and for home refinancing in all states except Texas and West Virginia. These loans are available through Premier Mortgage Associates and possibly other banks. Ask your local bank if they offer this product. The FHA requires a credit score of 580 for 3.5% down, or 500 for 10% down.
FHA PowerSaver Loans: The Powersaver Second Mortgage has a lending limit of $25,000. The Powersaver Energy Rehab is a loan for initial home purchase or refinancing. It can be used for energy efficiency improvements including solar. Search for lenders using this HUD resource. Make sure the box is checked for “203(k) Rehabilitation Mortgage Insurance Program.” The FHA requires a credit score of 580 for 3.5% down, or 500 for 10% down.

Property Assessed Clean Energy (PACE)

The Property Assessed Clean Energy (PACE) program is designed to expand access to energy upgrades. It creates access to low-cost, long-term financing for energy efficiency improvements and renewable energy systems.

Your local PACE administrator secures financing for your solar project on your behalf. You repay that financing over a period of multiple years through a special assessment on your property tax bill or utility bill. This form of financing is enabled at the state or local level. Learn more about PACE.

Installer-based financing

The following finance companies work specifically with solar installer partners. They may be options offered by your installer. These companies often offer low rates but have higher finance charges or origination fees. The application process is usually easy for consumers, as it is completed with your installer. Most of these options require credit scores of 640-650.

Community development financial institution loans

Capital Good Fund is a nonprofit lender offering a DoubleGreen Solar loan product available currently in Texas. Loans can be up to $60,000, with a 7.99% APR or a 20% buydown fee and an APR of 5.81%.

Options for small businesses and nonprofits

These organizations specialize in solar financing options for nonprofit organizations, including loans, power purchase agreements, and solar leases.

Collective Sun
Re-volv
Sunrock DG
Sunstone Credit: small business solar loans
SBA 504 Loan: The 504 loan program provides long-term, fixed rate financing for major fixed assets that promote business growth and job creation.The maximum loan amount for a 504 loan is $5.5 million. This is open to for-profit companies with net incomes of less than $5 million and net worths less than $15 million.

State-specific financing options and incentives

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