Looking for Fannie Mae solar panel loans? Check out our article on the Fannie Mae Homestyle Energy Program.Solar loans and solar financing provided by Fannie Mae have drawn major attention from homeowners as one of the new premier ways to save big withs solar panels. And one question that EnergySage receives regularly from our customers is: “Will solar panels increase the value of my property?” It is clear that the answer is already a resounding ‘yes’, and the evidence only continues to mount. We have compiled a list of studies that highlight this point, and recently wrote about Lawrence Berkeley Laboratory’s recent study showing that solar panels increase home values significantly across the US. These studies mainly look at cases where the homeowner is also the owner of the solar panel system.
We know for certain that owning your solar system will save you more money on your electricity bills in the long run than installing your system under a solar lease or power purchase agreement (PPA). This is the primary reason that homes with solar panels sell for more: they offer a definite financial benefit to the future owner.“Will a leased solar panel system add value to my home?” is another question we receive on a regular basis, but it is less clear whether value is added to your home if you’ve financed your system with a solar lease/PPA. Two recent documents which EnergySage has reviewed shed further light on the matter.
- If you own a home with a solar system, the FHA requires (to your benefit) that its value be assessed and added to the total appraisal value of your home when you want to sell it. However, if you do not own your panels, whatever value that they may add cannot be included for an FHA assessment
- Like the FHA, Fannie Mae has indicated that the value of a solar energy system may be included in an assessment of your home – but only if you (the homeowner) are also the owner of the system. If you lease your solar energy system, on the other hand, the system’s value (if any) may not be incorporated into the assessment, and there are a number of additional requirements that must be met before Fannie Mae will approve a mortgage for a potential buyer.
- Will a solar system add value to your home if you finance it with a solar lease or power purchase agreement (PPA)? The FHA and Fannie Mae have little to say about whether financed systems are an asset or a liability. The picture should become clearer as more solar homes are sold and more data becomes available.
Fannie Mae says that solar panels add value to your home (but only if you own the solar system)The first document that we examined is Fannie Mae’s Single Family Selling Guide (from December 2014). This document contains guidelines about which properties the company can furnish mortgages for. Fannie Mae is one of the largest FHA-approved lenders in the country, and like FHA, has strong influence over the nation’s market for single-family home mortgages. If a potential buyer wants to secure a mortgage for your home with Fannie Mae, your home must meet the eligibility requirements described in their Selling Guide. With regard to solar, the important point to take away from Fannie Mae’s Guide is this: If you own the solar panels on the roof of your home, you only need to meet the standard eligibility requirements in order for Fannie Mae to purchase or securitize a mortgage on your property – the same requirements that would apply even if you had no solar system. On the other hand, if you do you do not own the system (i.e. you have financed it through a solar lease/PPA), its value cannot be included in the value of your home when it is appraised. On top of this, there is more red tape if someone wants to secure a mortgage through Fannie Mae on a home with a leased solar energy system. Some of the additional requirements for homeowners who finance their solar panels with solar leases/PPAs include:
- The solar lease payments must be incorporated into the potential buyer’s debt-to-income ratio.
- The owner of the panels (i.e. the solar leasing company) must have third-party insurance to cover damage to the mortgaged property caused as a result of malfunction or faulty installation of the panels.