Solar Loans: Working With Solar Financing Companies

Many homeowners are interested in going solar, but the upfront cost can be a major obstacle. Without enough savings to cover the expense, most customers rely on residential solar financing to make their systems affordable. Even with the federal solar tax credit, many still need solar panel loans to move forward. Fortunately, solar financing companies offer a range of options, often with competitive interest rates and no upfront costs, making it easier for customers to say yes.

For solar installers, understanding the different residential solar financing companies and their loan structures is key to closing deals. The right financing plan can make solar more accessible, helping customers start saving on energy costs immediately—even after factoring in loan payments. With interest rates playing a big role in affordability, staying informed on the latest solar loans can help you turn more leads into long-term customers.

What Is Solar Panel Financing?

Residential solar finance companies allow homeowners to install a solar power system with no upfront costs, making it easier for your customers to go solar without depleting their savings. Unlike a solar lease or power purchase agreement (PPA), solar loans give customers full ownership of their system, allowing them to maximize long-term energy savings and incentives.

Many solar financing companies offer specialized loans for renewable energy projects, while some general home improvement loan programs also apply. Understanding these options can help you offer the best financing solutions to your customers.

Residential Solar Financing Companies

Different solar finance companies provide varying loan structures, interest rates, and repayment terms. Some specialize in home improvement loans, while others focus exclusively on solar panel loans. Here are some of the leading residential solar financing companies helping homeowners make the switch:

Sungage Financial offers residential solar loans with terms of up to 25 years, known for low monthly payments and strong customer service.
Dividend Finance provides competitive solar loan options with flexible terms to fit different homeowner needs.
Mosaic offers solar loans with no upfront costs and both fixed and adjustable-rate options for affordability.
Loanpal streamlines solar financing with simple applications, low monthly payments, and competitive interest rates.
Sunlight Financial specializes in solar loans with fixed interest rates and flexible repayment plans.
EnerBank USA provides home improvement loans, including residential solar financing, with competitive interest rates and multiple payment options.

Loans For Solar Systems Through Credit Unions

Partnering with local credit unions or banks can provide your customers with flexible and affordable solar panel financing. Many credit unions offer specialized residential solar financing programs with lower interest rates than traditional loans, making solar installations more accessible. These institutions often provide unsecured solar panel loans, home equity-based financing, and energy-efficient loan programs tailored to renewable energy projects.

By working with credit unions, you can develop exclusive solar loan options that cater to different financial situations, such as no-money-down solar loans or longer repayment terms. This expands your customer base and makes solar energy financing more attainable for homeowners who may not qualify for traditional residential solar financing companies.

Home Equity Lines of Credit

A Home Equity Line of Credit (HELOC) is a smart financing option for homeowners looking to install solar panels. Since HELOCs are secured by home equity, they typically offer lower interest rates than unsecured solar loans, reducing overall borrowing costs. Also, the interest paid on a HELOC may be tax-deductible, further enhancing financial savings.

However, homeowners should carefully consider the risks before using their home as collateral. A HELOC requires responsible repayment, as failure to make payments could put their property at risk. Some lenders may also require a home appraisal before approving HELOC-based solar financing, which could add extra costs and processing time. Educating customers about these factors ensures they choose the best residential solar financing option for their solar energy system.

Government-backed Loans for Solar Systems

Some homeowners may qualify for government-backed solar panel financing programs, which offer lower interest rates and flexible terms. These options help make residential solar financing more accessible, reducing upfront costs and encouraging more homeowners to invest in solar energy.

FHA Title I Property Improvement Loan

The FHA Title I Property Improvement Loan is a government-backed loan designed to help homeowners finance energy-efficient upgrades, including solar panel installations. This program allows borrowers to secure funding for home improvements without requiring home equity, making it a great option for those looking for solar loans without putting their property at risk. The Title I loan offers flexible repayment terms and loan amounts, making it easier for homeowners to access affordable solar panel financing while improving their property's energy efficiency.

PACE Financing for Solar

Property Assessed Clean Energy (PACE) financing is an innovative way for homeowners and businesses to pay for solar energy systems with no upfront cost. Unlike traditional solar panel loans, PACE financing is tied to the property rather than the individual borrower. Homeowners repay the loan through their property taxes, often benefiting from lower interest rates and extended repayment terms. However, PACE solar financing is only available in certain states and municipalities, so it's essential to check local availability before offering it as an option to your customers.

State-Sponsored Solar Loan Programs

Several states offer solar financing companies and homeowners access to low-interest solar loans through state-backed renewable energy programs. These programs provide financial incentives such as reduced interest rates, extended repayment periods, and even solar rebates to make solar panel installations more affordable. Some solar finance companies partner with state agencies to offer exclusive loan programs, further expanding financing options for homeowners looking to switch to solar energy.

Solar Loan Rates & Terms

The rates and terms of solar panel loans vary based on the lender, loan type, and the borrower's financial profile. As a solar installer, understanding these details can help you guide customers toward the best residential solar financing options.

Solar loans with lower interest rates and fees result in greater long-term savings for homeowners. Fixed-rate solar financing options provide predictable payments, offering stability compared to variable-rate loans, which can fluctuate over time.

Many homeowners prefer solar loans without prepayment penalties, allowing them to pay off the loan early without extra costs. Longer solar loan terms reduce monthly payments, making solar panel financing more affordable upfront. However, extended terms mean more interest paid over time. Ideally, customers should choose solar finance companies offering options that keep them cash-flow neutral or positive, meaning their loan payments are lower than their monthly electricity bill savings.

Secured Vs. Unsecured Residential Solar Financing

There are two primary types of solar loans: secured and unsecured. Understanding these differences helps you recommend the best solar panel financing option for your customers.

Secured Solar Loans: Lower Interest, Bigger Commitment

A secured solar loan requires collateral—typically the borrower's home—reducing the lender's risk. These solar panel loans often have lower interest rates, and in some cases, the interest is tax-deductible. However, securing a loan may involve a home appraisal, extending the approval process. If the borrower defaults, the lender could seize the asset used as collateral.

Unsecured Solar Loans: Quick Approval, Higher Rates

An unsecured solar loan functions like a personal loan or credit card, with no collateral required. While these solar panel financing options offer faster approval, they generally come with higher interest rates. Additionally, the interest on unsecured solar loans is not tax-deductible, making them a less attractive option for some homeowners.

Helping customers navigate these residential solar financing companies and loan structures ensures they find the right solar financing solution while making your sales process smoother.

What’s Covered Under A Solar Loan?

Most solar loans cover the full cost of a residential solar panel system, including key components like solar PV panels, inverters or microinverters, power optimizers, racking systems, and necessary wiring. In addition to the solar equipment, labor costs, and permitting fees are typically included in the loan, making it easier for homeowners to finance the entire project.

Can You Finance A Solar Battery Installation Too?

Solar batteries are becoming a popular option for residential solar panel systems, but the upfront cost can deter some customers. Thankfully, solar loans commonly include the cost of a solar storage battery, such as the Tesla Powerwall or the Enphase Encharge. Often, solar loans are also a good option for households that already have solar and want to add battery storage.

Also, some states and utility providers offer solar battery incentives or rebates, further lowering the cost of installation. The federal solar tax credit also applies to solar storage batteries when paired with a solar panel system, increasing affordability.

Where To Find Solar Panel Financing

If you partner with residential solar financing companies or a financial institution to offer solar loans, make sure the program is available in your service area. Some solar loan programs are state-specific, while others are offered by national banks, credit unions, or utility-backed programs.

Credit unions may have competitive solar panel loan rates, but eligibility criteria—such as residency requirements—may apply. Many solar finance companies provide both secured and unsecured solar loans, offering a range of interest rates and repayment terms.

When comparing solar panel financing options, look for loans with the best terms for your customers. Many homeowners prefer tax-deductible loan interest, flexible repayment terms, and a straightforward approval process to make their transition to solar as seamless as possible.

Establishing a Program With Residential Solar Financing Companies

Setting up a solar financing program as a solar installer can make residential solar financing more accessible and increase your sales. Partnering with solar finance companies allows customers to choose from various solar loan options, making it easier for them to invest in solar energy systems.

Here’s how to establish a successful financing program:

Research Solar Financing Options: Explore different solar panel loan options, including secured and unsecured solar loans, solar leases, and solar PPAs. Compare offerings from residential solar financing companies, banks, credit unions, and other financial institutions to find the best solutions for your customers.
Partner with Solar Loan Companies: Collaborate with solar finance companies or local financial institutions to provide attractive financing options. Discuss loan terms, interest rates, eligibility criteria, and possible incentives to create competitive financing packages.
Educate Yourself on Solar Loans: Stay informed about solar loan rates, terms, and application processes. Attend industry workshops or training programs offered by solar financing companies to better assist your customers with their financing decisions.
Create Transparent Solar Loan Packages: Develop clear and detailed solar loan packages for homeowners. Clearly outline interest rates, repayment schedules, down payment requirements, fees, and any credit score criteria to build trust with potential customers.
Ensure Compliance with Financial Regulations: Work with legal professionals to ensure compliance with local financial laws. If you offer solar leases or PPAs, verify that contracts are legally sound and protect both your business and the customer.
Promote Your Solar Financing Options: Highlight your solar financing program in marketing efforts, emphasizing benefits like $0 down solar panel loans, low-interest rates, and long-term electricity savings. Educate customers on how solar loans can lower their monthly energy bills.
Streamline Application Process: Make it easy for homeowners to apply for solar panel financing by simplifying paperwork and approval processes. A seamless, user-friendly financing experience encourages more customers to go solar.
Provide Excellent Customer Service: Train your team to answer questions about solar loan programs, ensuring they can explain financing terms and guide homeowners through the application process. Excellent service improves customer satisfaction and referrals.
Regularly Review and Update: Regularly assess your solar financing partnerships and update your offerings based on market trends and customer feedback. Adjust solar loan rates, terms, or eligibility requirements to remain competitive and attract more homeowners to solar energy.

How To Apply For A Loan For A Solar System

Many residential solar financing companies work with solar installers to help homeowners navigate the solar loan application process. If your business partners with a solar finance company or financial institution, you can guide your customers through securing the best solar panel financing option.

Solar Loan Application Process

Applying for a solar system loan typically involves:

Credit Check – Most lenders require a credit check to determine loan eligibility and interest rates.
Loan Application – Homeowners fill out an application with details about their finances and the solar energy system they plan to install.
Fast Approval – Many solar loans offer a quick and easy approval process, especially for unsecured solar panel loans.

Alternatives Solar Panel Financing Options

In addition to solar panel loans, there are other solar financing options that can make residential solar more affordable. Many residential solar financing companies recommend exploring local and state incentives to maximize savings.

State & Local Solar Incentives

Some solar finance companies help homeowners access solar energy incentives, such as state tax credits and utility rebates.
Utility companies may offer rebates for installing solar battery storage, lowering the upfront cost of adding a solar battery like the Tesla Powerwall or Enphase Encharge.
Incentive programs can change over time, and funds may run out, so staying informed about local solar financing programs is essential.

Solar Leases or Power Purchase Agreements

For homeowners who prefer not to take out a solar loan, a solar lease or power purchase agreement can be a viable alternative:

Solar Lease – The homeowner leases the solar panels but does not own them, paying a fixed monthly fee.
Solar PPA – A third-party company owns the solar energy system, and the homeowner pays for the electricity it generates at a set rate.

While solar loans are increasingly popular, a solar lease or PPA may be better for customers who cannot take advantage of the federal solar tax credit. Some solar financing companies and solar installers offer these options, particularly if they have access to enough capital to maintain ownership of the solar system.

FAQs About Loans for Solar Systems

Here are answers to common questions about solar panel loans, solar leases, and PPAs.

Who Qualifies For Solar Panel Financing?

The requirements for solar loans vary by the programs themselves. However, solar panel loans commonly involve conducting a credit check and require a minimum credit score to qualify. Typically, customers with poor or fair credit scores are not approved, while applicants with good and excellent credit qualify.

If you have a customer with a low credit score, there are ways to increase this score over time. Many solar installers partner with a specific loan program to help streamline the process for potential customers.

What is a PPA for Solar Financing?

A Solar Power Purchase Agreement is a contractual arrangement between a solar developer or installer and a customer, typically a business or homeowner. In a PPA, a solar company installs and maintains solar panels on the customer's property, and the customer agrees to purchase the electricity from the solar power system at a predetermined rate over a specified period, often 10 to 25 years.

What credit score is needed for residential solar financing?

The minimum credit score required for solar financing can vary depending on the financing option and the lending institution. Generally, for unsecured loans or power purchase agreements (PPAs), a credit score of around 650 or higher may be acceptable. However, secured loans or home equity financing may have lower credit score requirements, potentially in the range of 580 to 620.

Knowing Solar Panel Financing Options Can Help Clients

For many homeowners, solar financing is key to going solar. Since the upfront cost of solar panels is a major barrier, offering the right solar loan options can help close sales. In many cases, the savings on electricity bills offset the monthly solar loan payments, making the investment cash flow neutral or even positive.

By guiding customers toward solar-friendly loans with low interest rates, flexible terms, and minimal fees, solar installers can improve the customer experience and increase solar adoption.

Permitting is another complex area to navigate when it comes to solar installations. GreenLancer helps solar companies scale up their businesses with quality solar permit design and engineering services. Complete the form below to learn more or create a free account.