You’ve done some research and decided that a solar PV system would be a wise choice for your home and that buying would be better than leasing. Assuming you’re not planning to purchase the system outright with cash, now is a good time to consider your financing options. Here are some guidelines.
Ways to finance a solar installation
Personal, unsecured loan: Securing this kind of loan is usually a simple process. The drawback is that interest rates can be very high. If you have excellent credit, you might find a reasonable rate, but your interest payments won’t be tax-deductible.
Home equity loan: A popular way to finance a solar installation, a home equity loan is based on the amount of equity you have in your home. Because the loan is secured, interest rates are lower, and they’re tax-deductible. Getting a home equity loan generally takes longer than securing a personal loan.
FHA home improvement loan: Administered through HUD, FHA Title 1 loans are guaranteed by the government. Loans under $7,500 usually are unsecured, while loans over that amount are secured by a property deed or mortgage. Interest is tax-deductible on secured loans, but the application process can be lengthy and tedious.
Fannie Mae: Known as a HomeStyle Energy Mortgage, this loan focuses on helping borrowers raise their energy efficiency and lower the cost of utilities. The loan is made when a home is purchased or refinanced. You can borrow against your home’s appraised value and use 15% of that for your solar installation. Interest rates are low, but there may be closing costs.
Additionally, if you have net metering in your state you will be saving even more money while paying fewer bills. When you arrange for a free site assessment with a reputable solar installer, you’ll learn more about solar financing options, including zero-down offers. A site assessment also covers the numerous benefits of moving off the grid and generating your own electrical power.
Download our eBook, The True Cost of Solar, to learn what solar energy really costs and how much your own solar installation could save you today!