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Solar Loans: 4 Ways to Finance Solar Panels

Last updated 03/15/2024 by

Aja McClanahan
There’s a reason the solar energy industry is growing 17 times faster than the U.S. economy as a whole. Solar-powered energy is becoming more common among American homeowners than ever. According to the Solar Energy Industries Association (SEIA), solar installations have been growing at an annual compound rate of 60% since 2006.
There are many benefits to installing solar panels for energy use. Not only can a homeowner save money using solar energy, but they can also reduce their carbon footprint by reducing greenhouse gas emissions. Additionally, solar panels have the potential to increase property value.
Though there’s an initial expense to install solar panels, the energy savings can add up over time. If you think you might be interested in installing solar panels, you’ll want to think about options for financing this project.
The good news is that there are plenty of ways to come up with the money you’ll need to install your solar panels. Before we go into the options for financing this home improvement, let’s talk costs and potential savings. You’ll want to have an idea of how much you’ll spend compared to the net savings of using solar energy.

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How much do solar panels costs?

Due to improved technology and increased demand, the costs of solar panel installation has come down substantially. It’s now well within reach for many Americans to install solar panels systems for their home energy needs.
The cost associated with installing your solar panels will include purchase, installation, and maintenance. You’ll need to budget for the labor and materials involved in each of these steps, as well. Additionally, if your home (like the roof, for example) will need structural improvements to support a solar panel installation, you’ll want to take that into account as well.
According to Energy Sage, an online solar marketplace, “In 2017, most homeowners are paying between $2.87 and $3.85 per watt to install solar, and the average gross cost of solar panels before tax credits is $16,800. Using the U.S, average for system size at 5 kW (5000 watts), solar panel cost will range from $10,045 to $13,475 (after tax credits).”
To make sure you’re getting the best possible deal on your material and labor costs, be sure to obtain several quotes from as many contractors as possible.

How much will I save on my energy bill?

This can depend on where you live (geography affects the amount of sunlight your panels capture) and the structure of your home. You’ll also want to factor in any tax credits, energy savings, or financing fees to get a net number on the actual cost of your solar-powered energy system.
Energy Sage offers this solar calculator to give you a ballpark idea of costs for your particular home and energy usage patterns.

Finance solar panels: How can I afford solar panels?

Solar panels are like any other home improvement but with additional tax and efficiency benefits. You can use one or more of the following methods to finance your solar panel installation:

Personal Loan

This includes general unsecured debt and credit cards. This type of debt can be useful in a pinch, but you’ll want to be mindful of fees and interest rates. Financing a large purchase, like a solar panel installation, over a long period of time could potentially negate expected energy savings because of loan fees and interest. See our best solar panel loans comparison page

Title 1 FHA Loan

This loan program is available to homeowners for upgrades that will enhance a home’s energy efficiency. The FHA Power Saver loan program would cover the cost of a solar panel installation because of the potential energy savings involved.


Portland homeowner, Luke Bonham, found this to be an extremely affordable option. He went with a company called SolarCity for his home’s solar installation. Under the arrangement Bonham chose, the company maintains ownership of the panels, then offers the homeowner the option to purchase, remove, or continue leasing the panels.
This program is appealing because there is no upfront cost involved, yet a homeowner is still able to take advantage of the tax credits and energy savings.
Other payment options offered by SolarCity include cash, loans, or the ability to purchase energy generated from solar power.

Home Equity Line of Credit (HELOC)

A HELOC allows you to borrow against the equity you’ve built up in your home. In order to qualify for this financing option, there will be an application process and home appraisal required.
Because you’re borrowing against the equity in your home, you’ll want to factor your HELOC payment comfortably within your budget. Missing payments would not only affect your credit score but could also put your home in jeopardy.
Just as you would get rates from one or more companies for your solar panel system, you’ll want to do the same with lenders. You can often get better terms by comparing rates and drumming up competition between lenders.

Ready to get going on solar energy?

If you think you might be ready to take advantage of the benefits a solar panel installation could bring, use the Super Money loan engine to get pre-approved loan offers. This loan engine will let you see what rates you can get for loans without affecting your credit score.
You can also compare the rates and terms on personal loans and home loans of leading lenders on the Super Money website.

SuperMoney may receive compensation from some or all of the companies featured, and the order of results are influenced by advertising bids, with exception for mortgage and home lending related products. Learn more

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