Are you thinking about installing solar panels on your home and wondering how to get a loan for it? If you are considering going solar, the good news is the price of these systems has dropped in recent years. And there are many solar panel financing options than ever.

Can I Get a Loan for Solar Panels?

solar panel loans

Yes, you can get a loan to finance solar panels through options like personal loans, solar-specific loans, home equity loans, or government programs. Solar loans often feature competitive interest rates and flexible terms.

Many lenders offer financing tailored to homeowners installing solar systems, making it easier to spread the upfront costs over manageable monthly payments while benefiting from energy savings.

Keep reading to learn about the available options to finance solar panels for homeowners, including solar panel loans.

Overview of Solar Panel Loan Financing

Most Americans finance their solar panel systems. The reason is the price. Most systems cost between $25,000 and $50,000, depending on the size, ranging from 2 to 20 kilowatts. Paying for the system in cash is the cheapest long-term option, but most Americans choose to finance them.

Several financing innovations have grown the solar market in the US substantially in the last decade. There are two major categories based on ownership of the solar panel system: third-party ownership and homeowner ownership with a solar loan.

Some companies will install the solar system for you and also provide financing. These firms are called full-service solar developers. Other companies only install the solar system and the financing is provided by a bank, credit union, or utility.

Can I Get a Home Equity Loan for Solar?

Yes, you can use a home equity loan to finance solar panel installation. HELOCs and equity loans allow homeowners to borrow against the equity built in their property, making them an effective way to fund solar projects. These home equity loans typically offer fixed interest rates and predictable monthly payments, making it easier to budget for the cost of going solar. By leveraging the equity in your home, you can secure a lower interest rate compared to unsecured personal loans or solar-specific financing options.

Using a second mortgage for solar can also provide additional benefits, such as potential tax advantages. If the solar panels are considered a home improvement, the interest paid on the loan may be tax-deductible, depending on current IRS regulations. Additionally, investing in solar can increase your property’s value and lower energy bills, offering long-term financial savings.

However, there are risks to consider. Since a home equity loan uses your property as collateral, failure to repay the loan could result in foreclosure. Additionally, the application process typically involves a credit check, income verification, and an appraisal, which can take time. Before pursuing this option, carefully evaluate your financial situation and compare other financing alternatives. Consulting with a financial advisor or lender can help determine if a home equity loan is the best choice for your solar investment.

Do Lenders and Banks Offer Loans for Solar Panels?

Numerous institutions provide solar loans, ranging from local and national banks to specialized financing firms, manufacturers, and credit unions. To select the most suitable solar loan, it’s advisable to compare offerings from several financing providers.

Top 5 Reasons to Get a Solar Loan in 2025

As the global push toward clean energy intensifies, more homeowners are turning to solar power to reduce their carbon footprint and save on energy costs. While the upfront costs of installing solar panels can be high, solar loans have emerged as a popular financing solution. In 2025, the combination of environmental awareness, technological advancements, and financial incentives makes it the perfect time to invest in solar power through a solar loan. Here are the top five reasons to consider a solar loan in 2025.

1. Significant Energy Cost Savings

One of the most compelling reasons to invest in solar power is the potential for long-term energy cost savings. Solar panels can drastically reduce or even eliminate your monthly electricity bills by producing renewable energy from sunlight. While the upfront costs of installation might seem daunting, a solar loan allows you to spread these expenses over time, making the transition more affordable.

By securing a solar loan, homeowners can begin saving on energy costs immediately. In 2025, with rising utility rates in many regions, the financial benefits of generating your own electricity are more pronounced than ever. The loan payments are often less than or equal to the amount saved on energy bills, effectively making the switch to solar cost-neutral or even profitable over time.

2. Federal and State Incentives

The government continues to incentivize renewable energy adoption through tax credits, rebates, and other financial benefits. The federal Investment Tax Credit (ITC) remains a significant driver, allowing homeowners to deduct a percentage of their solar installation costs from their federal taxes. In 2025, the ITC is set to cover 30% of the cost of solar systems, making it one of the best times to go solar.

State-specific programs further enhance affordability. Many states offer property tax exemptions, performance-based incentives, or rebates for solar installations. By using a solar loan, homeowners can take advantage of these incentives while spreading out the cost of installation. The combined savings from reduced installation costs and long-term energy reductions make solar loans an attractive financial option.

3. Increased PropertyValue

Installing solar panels can significantly increase your property’s resale value. Studies have shown that homes with solar energy systems sell faster and at higher prices than comparable homes without solar. Buyers are increasingly seeking energy-efficient homes to save on utility bills and contribute to environmental sustainability.

A solar loan allows homeowners to invest in this home improvement without depleting savings. The ability to finance solar panels through a loan means you can reap the benefits of increased property value while enjoying immediate energy savings. Additionally, the demand for solar-powered homes is expected to grow in 2025 as more buyers prioritize sustainability.

4. Environmental Impact

Switching to solar power is one of the most impactful ways to reduce your carbon footprint. Traditional electricity generation relies heavily on fossil fuels, which contribute to greenhouse gas emissions and environmental degradation. Solar energy, by contrast, is clean, renewable, and abundant.

By obtaining a solar loan, you can take a significant step toward sustainability without the burden of upfront costs. The environmental benefits of switching to solar power align with the global push for clean energy solutions in 2025. Investing in solar not only benefits the planet but also positions you as a responsible energy consumer.

5. Flexible Loan Options

In 2025, a wide range of solar loan options are available to suit different financial needs. Homeowners can choose from unsecured personal loans, home equity loans, and solar-specific financing programs. These options offer flexibility in repayment terms, interest rates, and loan amounts, making solar energy accessible to more people.

For instance:

  • Unsecured Solar Loans: No collateral is required, and they feature fixed interest rates and predictable payments.
  • Home Equity Loans or HELOCs: These loans often have lower interest rates and tax-deductible interest if the funds are used for home improvements like solar installation.
  • Solar-Specific Loans: Offered by specialized lenders, these loans are designed for solar projects and may include benefits like deferred payments until the system is operational.

The availability of tailored financing options ensures that homeowners can find a solution that aligns with their budget and goals. Additionally, lenders often streamline the application process, making it easier than ever to secure funding for solar installations.

In 2025, transitioning to solar energy through a solar loan is a smart financial and environmental decision. With significant energy cost savings, federal and state incentives, increased home value, and reduced environmental impact, the benefits of solar power are undeniable. The flexibility of solar loan options further removes barriers to entry, enabling more homeowners to embrace renewable energy.

By securing a solar loan, you can take advantage of immediate energy savings and long-term financial benefits while contributing to a cleaner, greener future. Whether you’re motivated by cost savings, sustainability, or property value enhancement, 2025 is the perfect year to make the switch to solar energy.

Solar Panel System Third-Party Ownership

Third-party ownership of your system allows you to avoid high upfront costs and spread the payments over many years. It also puts most of the responsibility for maintenance and system operation on the third-party owner. Today, at least 40% of American homeowners with solar systems use third-party ownership.

There are two types of third-party financing arrangements to consider:

Solar Leases

The homeowner signs a contract to pay scheduled payments to the solar leasing company over a 15 or 20 year period. That company installs and owns the solar system on your property. You consume whatever amount of electricity the leased system produces.

If it produces more electricity than you consume in a month, you may get a credit for that extra power from your utility company. You pay the regular electricity rate of any power you use beyond what your solar system produces.

Power Purchase Agreements (PPAs)

With a solar PPA, the homeowner contracts with a solar project developer that installs, owns, and runs the solar system on your property. It agrees to provide all of the power produced by the system to you at a fixed rate, which is usually similar to what you pay your utility company.

This arrangement allows you to use solar power at a defined per-kilowatt-hour rate while not paying for the upfront costs of the system. You also do not need to be concerned with maintenance and system operations costs. You know how much the electricity will cost for the entire PPA term, so you are not subject to increased electricity rates in the future.

Solar Panel System Direct Ownership

Some homeowners choose to own their systems themselves. Unless they pay cash for the system, this is usually done through a solar loan.

A solar loan allows the homeowner to finance their system from a solar developer or lender. With this option, you own your solar panel system. There are a variety of solar loan options with various monthly payments, interest rates, loan terms, and credit requirements.

Some solar loans require collateral to secure the loan. In some cases, the lender may require you to take out a home equity loan to finance the solar panel system. The advantage of this second mortgage option is the interest rate will be lower (3-8% usually), but your house is on the line if you do not pay the loan.

Other solar loans do not require collateral and are known as unsecured loans. You will not lose anything if you do not pay the loan (other than damaged credit), but the interest rates are higher (6-30% depending on your credit).

Many solar loans allow the homeowner to start saving you money from day one by designing the repayment terms, so the monthly loan payments are lower than the reduction in your electricity bill. On the other hand, paying the loan sooner and over a shorter period may reduce your positive cash flow upfront. But it will shorten the time you need to get to the post-loan period when your monthly electricity savings will be much higher.

If you are interested in maximum returns from your solar panels, seek a loan with the shortest term possible, such as five or eight years. This will give you a higher monthly payment that is equal to or greater than your electric bill.

But once the loan is paid off, you get essentially free electricity from your system. Solar panels have a 25-year warranty, so you can enjoy up to 20 years of free electricity. Plus, we know that electricity prices rise over time, so your free electricity will be worth even more over the years.

Third-Party Financing or Direct Ownership

The major decision to make with a solar panel system is whether to lease it through a third-party or own it directly with a solar loan. Below are some points to consider about each option.

Third-Party Ownership

  • Allows the homeowner to avoid high, upfront solar panel system costs and spread the payments over many years.
  • Puts most of the responsibility for maintenance and system operation on the owner of the system.
  • With a lease, homeowners pay a fixed price for the equipment but do not know for certain how much they will save on their utility bills.
  • With Solar Power Purchase Agreement (PPA), the solar finance company owns the system on your property and is given a fixed per-kilowatt-hour rate. The homeowner knows how much the solar electricity savings will be for the entire loan term, and is protected from utility price increases.
  • Third-party ownership precludes the homeowner from taking advantage of state and federal incentives for installing solar panel systems, such as the solar tax credit.
  • Third-party ownership may limit your ability to alter property if the change affects solar access.

Direct Ownership

  • Direct ownership with a solar loan allows many monthly payment types, interest rates, length terms, and credit requirements.
  • A solar loan allows you to qualify for the solar tax credit, which is a federal program that allows you to claim 26% of your installation costs when you file your federal taxes.
  • Some solar loans require collateral for the loan, while others do not.
  • A solar loan can be designed so your monthly payments are less than your reduced electric bill. But paying a higher loan payment will pay off the loan sooner. Getting the loan paid off is the key to enjoying maximum monthly savings with a solar panel system.
  • If you want maximum savings, take out a short-term solar loan and pay it off as fast as possible. Once the system is paid off, you will enjoy essentially free electricity for up to 20 years.
  • If you directly own the system and you do not have insurance on it, and warranty is expired, you bear the risk of system problems and damages.

Bottom Line with Solar Panel Home Loans

Owning a solar panel system on your home can save you a lot on your electric bill and help the environment. It also is estimated that a solar panel system can add 4% to your property value. Many homeowners are using HELOC credit loans if they choose not to work with solar finance companies. Compare HELOC lenders and rates before signing any paperwork.

Unless you pay for it cash upfront, leasing or buying the system are your options. Both offer affordable monthly payments but different advantages and disadvantages. Talk to your installer about the best option for you.

FAQ for Solar Loans

Can You Refinance a Solar Loan?

Yes, you can refinance a solar loan to secure a lower interest rate, reduce monthly payments, or combine it with a mortgage. Options include personal loan refinancing, a cash-out refinance, or rolling the solar loan into a new HELOC. Refinancing terms depend on your credit, equity, and lender policies. Ensure the new loan terms align with your financial goals before proceeding.

What Happens If I Stop Paying My Solar Loan?

If you stop paying your solar loan, it could result in default, negatively impacting your credit score. Additionally, depending on the loan type, lenders may place a lien on your property or repossess the solar equipment. Some agreements may also pass unpaid balances to your utility bills. Always communicate with your lender to explore payment alternatives if needed.

Can I Deduct the Interest on My Solar Panel Loan?

Interest on a solar panel loan may be tax-deductible if the loan is secured by your home and the solar panels are considered a home improvement. This applies to certain loans like home equity loans or HELOCs. Unsecured solar loans typically don’t qualify. Consult a tax professional for specific guidance based on your situation.

References

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