Alternative solar financing

Alternative ways to pay for solar

Adding solar to your home almost always pays off! However, assuming you purchase your solar system, you’ll have to either provide an upfront cash payment or monthly payments (like if you choose a $0 down loan). While there are several options to finance solar panels for your home, there are a few things you’ll need to be aware of to select the best option for you. In this article, we’ll discuss some alternative solar financing options that you may not know about! 

Disclaimer: This article is intended to provide an informational overview of the solar loan fees for interested homeowners. It is not intended to serve as official financial guidance. If you’re interested in installing a solar system, you should use your best judgment and seek advice from a licensed professional before making any purchase or investment.


Key takeaways


  • If you’re looking to go solar, you may want to consider some form of solar financing to avoid paying for your solar system upfront when installing it.
  • There are some non-traditional solar financing options to be aware of that may help you go solar if you’re looking to find alternatives to banks or leveraging your home equity.
  • The non-traditional options to pay for solar that are available to you will vary depending on where you live. 
  • Sign up for a free account on the EnergySage Marketplace to compare solar quotes, including financing options from top lenders.

What’s in this article?

Finding other options to pay for solar

The average solar panel installation cost in the U.S. is over $20,000, so many homeowners use some type of solar financing. If you’re looking for alternatives to a traditional loan, there are options to consider. Like with any significant purchase, you’ll want to ensure you understand the terms and conditions and any fees associated with your solar financing. Here are some ways to get started in exploring your options:

Check ratings and reviews

Regardless of the route you go, you’ll want to make sure whichever lender or financier you use is reputable and has a solid track record. You can check out reviews on EnergySage, Google, or TrustPilot.

Look at local options

You may have local credit unions in your area that aren’t necessarily your go-to lending option. However, many credit unions offer benefits like more personalized service, less red tape for approval, and competitive rates. They are also not for profit businesses, so they really focus on their members (customers). The National Credit Union Administration, part of the U.S. government, offers a credit union locator to find credit unions near you.

See if you have green banks in your area

State and local governments establish green banks to help residents and business owners have options for funding green upgrades to their homes and businesses. Often they may provide additional opportunities to get financing for renewable projects like installing a solar system or heat pumps – sometimes with lower credit requirements or more competitive interest rates. Each green bank is different, so you’ll have to see if you have a green bank in your area and what specific financing options they offer.     

Using your home’s equity to pay for solar

If you’re not looking to get a loan, leveraging your home’s equity may be another option to look into for funding your solar installation. There are also some commonly used options like a home equity line of credit (HELOC) or a home equity loan to make home upgrades like adding solar. However, you’ll need to have equity built up in your home, and you will still need to make sure you can cover additional monthly payments for these options in your budget.

Hometap

One newer option available to you comes via Hometap, a startup that helps you leverage a home equity investment to fund solar. This unique option works similarly to how an entrepreneur might get an investor in their business: equity is exchanged for an investment. In this case, Hometap provides a home equity investment to you as a homeowner in exchange for equity in your home.  

Please note: Hometap is a partner of EnergySage.

Hometap’s investment offering

A Hometap investment has a 10-year term. At the end of that, you can either buy out their investment with savings, take out a home equity (or other) loan, or sell your house during the effective period to settle the investment. You can use money from a Hometap investment towards various things, including installing solar panels or high-efficiency heating and cooling equipment like heat pumps. You can even use the funds to complete home projects. 

What makes Hometap stand out?

Unlike other solar loans, financing, or lines of credit, with Hometap you don’t have any monthly payments. You can also qualify with a lower credit score (sometimes as low as a 500 FICO Score vs. a 620 credit score compared to most solar lenders), and your debt-to-income ratio isn’t a factor like most loans. 

Hometap is also very transparent about their fees. Closing costs and fees are deducted from your investment total so there is no down payment either. Hometap charges a fee equal to 3 percent of the investment amount for arranging and funding the investment. There are no other Hometap fees; however, the appraisal and other third party costs associated with the signing (i.e.: escrow, attorney/notary, and document recording) are deducted from the investment amount. Costs like appraisal, title charges, and government recordings can vary by state. Hometap’s offering is intended to help you leverage your home’s equity without having to make payments, take out a loan, or obtain a line of credit. There are also no prepayment penalties. 

Who is eligible for a Hometap investment?

Your single-family home or condo must be located in one of the following 18 states to qualify with Hometap: Arizona, California, Florida, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New York, North Carolina, Ohio, Oregon, South Carolina, Pennsylvania, Utah, Virginia, or Washington. You also need to have a minimum FICO Score of 500 and 25 percent equity in your home. There is an approval process that may take up to three weeks.

Not ready for rooftop solar? Consider community solar


Community Solar offers you many of the benefits of rooftop solar without any upfront costs and less commitment. You can go solar by subscribing to a local community solar farm: you’ll save on electricity costs (usually by about 10 – 20 percent annually) and your climate impact without installing a single solar panel! Visit our Community Solar Marketplace to compare projects and find one near you.

How to find the best solar financing option for you

The best solar financing option for you depends on your location and your specific financial situation. Similar to selecting your solar equipment, getting various solar loan options and exploring some of these alternative financing methods is the best way to see what’s available to you. Regardless of the route you go, make sure you understand any solar loan fees and terms, look at reviews on the company you’re working with and make sure you’re comfortable with the monthly and total payment. Working with a trusted installer and financier will help ensure you’re satisfied with your solar purchasing and financing decisions.

Frequently asked questions about solar financing

Is financing solar a good idea?

Often, yes. It’ll just depend on your specific circumstances. Oftentimes your monthly loan payments will be lower than your monthly electricity bills pre-solar, allowing you to start saving day one – and once you repay your loan, you’ll often have energy free of charge! 

What is a finance charge on a solar loan?

Your finance charge or interest rate on a solar loan will vary depending on a few factors, including the type of loan (secured or unsecured), your credit score and current debt, and the current U.S. Federal Reserve (the Fed) rate. Your annual percentage rate for solar may be approximately 4 – 5 percent.

What are common solar loan fees?

There’s no standard when it comes to solar loan fees. You’ll just need to confirm with prospective lenders what closing or lender fees they charge to administer and manage your loan. You can contact trusted lenders to learn more about their requirements, get pre-approved, and see what terms you might qualify for with a solar loan.

Finding trusted solar lenders

You can easily join EnergySage today for free to connect with installers in your area who offer financing options or work with trusted local solar lenders. Through your EnergySage account, you can compare multiple quotes and financing options. Want to see who offers solar financing near you? Search for lenders in your area


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About Ellen Sirull

Ellen is an expert in content creation, with a specific focus in helping people learn more about clean energy, solar, and EVs. She graduated from the University of Georgia with a bachelor's degree in journalism and earned an MBA at Kennesaw State University. Outside of work, you can find her spending time with her family, friends, and dogs as well as traveling, exploring new places, trying new food, or watching Georgia football.

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