For property owners who want to maximize their solar savings, solar loans make it possible to buy a solar energy system even if you don’t have the cash on hand to make a purchase. Solar loans come in many different forms, including home equity loans and home equity lines of credit, unsecured loans from specialty lenders, and Property-Assessed Clean Energy (PACE) loans. Thanks to Fannie Mae, there’s a new solar financing option available to many homeowners – and it could be a game changer. If you’ve explored solar loans in the past and haven’t found what you’re looking for, it’s time to take a look at the new Fannie Mae HomeStyle Energy Program.
Fannie Mae HomeStyle Energy Program: Making Home Solar Easier
The HomeStyle Energy Mortgage is a new offering from Fannie Mae – one of the largest providers of mortgages in the country – that makes it easier and more affordable for homeowners to fund solar panel installations and other clean energy upgrades. According to Energy Sense Finance, the program offers “the lowest cost of capital for new solar installations to date” – meaning that the HomeStyle Energy Mortgage may be the best option yet for home solar financing.
How is the HomeStyle Energy Mortgage different from other solar loans?
Fannie Mae’s solar offering is different from other solar financing options in one major way: borrowers can use the HomeStyle Energy Program to finance their solar energy installation when they are purchasing a new home, or refinancing their current home. Other solar loan options require that homeowners take out a separate home equity line of credit, PACE loan, or unsecured loan.
Homeowners who have already installed solar with the help of a solar loan can benefit from HomeStyle Energy, too: the program can help them pay off existing, higher-interest unsecured loans and PACE loans, either by refinancing or rolling the loan into a new mortgage.
Unlike other solar financing options, homeowners who use the HomeStyle Energy Program to fund their solar energy installation are required to get an energy report that proves that their improvements are cost-effective. Luckily, there’s no question that solar installation costs are significantly less than the long-term financial benefits of solar: the average break-even point (or “payback period”) for a solar energy system in 2019 is between seven and a half and eight years. When you consider that solar panels continue to generate energy for 20+ years, there’s little question that going solar is a cost-effective home improvement strategy.
Who is eligible to use the HomeStyle Energy Mortgage for solar?
Owners of single-family homes, as well as multifamily properties with four units or less, can go solar with the HomeStyle Energy Program. However, the program can’t be used to finance energy upgrades on new construction or manufactured housing.
Is there a limit to the amount of money available to homeowners through the program?
You can finance up to 15 percent of the as-completed appraised property value of your home with a HomeStyle Energy Mortgage. So, for example, if the home you are buying has been appraised for $300,000 by your lender, and the new solar panel installation is expected to add another $25,000 by a property appraiser, you could finance up to $48,750 to go solar ($325,000 x 15 percent). This amount would more than cover your installation costs, meaning that you’d need to finance less than 15 percent.
Who offers Fannie Mae HomeStyle Energy Mortgages?
All Fannie Mae lenders are automatically eligible to offer HomeStyle Energy Mortgages. That means the program doesn’t just offer one of the smartest financial options for financing your solar energy system: it’s also one of the most accessible options in the United States.
Find the Best Value by Comparing Financing Options
As with any major home purchase, reviewing multiple offers is the best way to find the right option for your home. Use the EnergySage Solar Marketplace to solicit offers from solar installers in your area, and evaluate the comparative economics of all of your solar financing options. When installers compete for your business in the Marketplace, you can save 20 percent or more off your installation costs and ensure that you’re getting the most out of your solar investment.