Ways to Pay for Home Solar
Cash, loans, leases, PPAs and home-equity options compared by how they work and who they suit.
Choosing how to pay is as important as choosing the equipment. The options below differ in who owns the system, who can claim any tax benefit, how much interest you pay and what happens when you sell the home. Read the table as a set of trade-offs, then check the details with your tax adviser and the written contract.
Select a column header to sort.
| Option | How it works | Good for | Watch out for |
|---|---|---|---|
| Cash purchase | You pay the installer directly and own the system from day one. | Owners who want the lowest total cost and have the funds. | Large upfront outlay; opportunity cost of the cash. |
| Unsecured solar loan | A lender finances the system without using your home as collateral. | Owners who want ownership without tapping home equity. | Higher rates than secured loans; dealer fees built into the loan amount. |
| Home equity loan or HELOC | You borrow against your home equity at a typically lower rate. | Owners with substantial equity and good credit. | Your home is collateral; HELOC rates are usually variable. |
| Cash-out refinance | A new, larger mortgage pays off the old one and releases cash. | Owners who would refinance anyway at a favorable rate. | Resets the mortgage term and adds closing costs. |
| Solar lease | A company owns the system; you pay a fixed monthly amount. | Owners who want little upfront cost and no maintenance duties. | Escalator clauses, transfer rules at sale, and no ownership benefits. |
| Power purchase agreement (PPA) | A company owns the system; you pay per kWh produced. | Owners who prefer to pay only for energy delivered. | Rates may escalate yearly; contract can complicate selling the home. |
| PACE financing (where offered) | Repaid through property tax assessments under a local program. | Owners in areas with a PACE program who do not qualify elsewhere. | Assessment attaches to the property and can complicate a sale or refinance. |
| Utility or state loan program | Some utilities and state agencies offer low-rate loans or on-bill repayment. | Owners in states or service areas with such programs. | Limited availability; eligibility and terms vary. |
Terms vary widely by lender, state and contract, so treat this table as a map of structures, not a list of offers. Verify consumer protections with the Consumer Financial Protection Bureau and the Federal Trade Commission, and check program availability through the DSIRE database. Ask a tax professional who can claim any federal tax benefit under your chosen structure.