You’ll hear it again and again – now’s the time to go solar! But what if you can’t front the full cost of a residential rooftop array? If you want to start reaping the rewards of solar sooner rather than later, and you don’t want to miss out on the federal Solar Investment Tax Credit (which expires at the end of 2023), you might want to consider taking out a solar loan.
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Below, we offer a quick look at 7 of the best solar loan providers. These companies offer ‘green’ loans with generous terms and conditions, such as low interest rates, no minimum credit scores, no prepayment penalties, long-term loan options, and quick approval online.
Why take out a solar loan?
It’s almost always best to pay for home solar upfront. That way, you are eligible for tax credits, rebates, net metering, and solar renewable energy credits (SRECs). What if you’re a few hundred or a few thousand dollars short, though? What if you’ve got nothing saved at all for an installation?
With the federal tax credit decreasing at the end of 2022 and expiring after 2023, taking out a solar loan and getting set up now might be better in the long run than waiting until you’ve got cash in the bank. That way, you can reduce your cost of installing solar by 26% right off the bat, take advantage of any rebates and incentives that are set to expire in the next year or two, and start saving on your energy bills while paying off your loan.
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Depending on your circumstances, solar loan payments may be canceled out by the savings on your electricity bill. And once your loan is paid off, you’ll still be saving on energy costs!
As always, it’s best not to borrow more than you need. And you’ll want to make sure your monthly payments are affordable, even if those energy savings don’t match up to the most optimistic estimates.
If you run the numbers and decide a solar loan doesn’t make sense right now, there are other ways you can go solar at home. For example, you could sign a power purchase agreement or solar lease. And if these aren’t a good choice for your family, consider community solar. You might even save enough on your monthly utility bills to start saving towards your own solar array!
Types of loans for home solar
If you’re lucky enough to have a lot of equity in your home, your best bet for financing will usually be a Home Equity Line of Credit (HELOC) or a home equity loan. These tend to have lower interest rates than other types of loan, though higher interest rates than most mortgages.
For newer homeowners with good cash flow but little built-up equity, solar loans are a particularly good option. Many banks and credit unions now offer specific loans to cover solar installations. Some utility companies, states, towns, and cities, as well as solar advocacy organizations and non-profits also offer low-cost or interest-free loans. We look at those options in our wider piece on solar financing.
Some loan providers offer loans just to cover your federal solar tax credit, with 0% payable if you pay the loan off in full by a certain date. Others offer funding for 100% of your solar project, including storage, any necessary roof upgrades, and other associated expenses.
As always, do your research before signing a contract. Make sure you understand all the terms and conditions and know exactly how much you’ll be paying each month. There’s a lot of small print when it comes to loans, and a lot of potential for error. Ask questions, check reviews, and take your time to find a provider that you feel comfortable with. After all, you might have a relationship with them that lasts the life of your solar panels!
The companies below offer specific solar loans or home improvement loans that can be used for solar installations. These are some of the most popular lenders in the solar sector currently. We don’t explicitly endorse any of these lenders, rates and conditions are subject to change and vary for each individual applicant. We offer the following for informational purposes only.
The best solar loan providers
Highlights: Offering instant decisions through their online application process and fast funding, Dividend is one of the nation’s leading solar loan companies.
Typical loan amounts: $20,000 to $50,000
Interest rates: as low as 3.99%
Loan terms: 10-25 years
- Fast, paperless, online application
- No repayment penalties
- Workmanship warranty
- Zero-down option
- Offers the Empower Loan and PACE loans
- Soft credit check that doesn’t affect your credit score
- Instant decision and fast funding.
- Only available in some states (though the company is expanding)
- Can only pay using Autopay
- Minimum loan of $20,000
- Uses your credit score to set interest rate
- Only available through solar installers (you can’t apply directly).
In 2016, Dividend Solar and Figtree Financing got together to make solar ownership easier for homeowners. At the time, Figtree was operating as a leading provider of Property Assessed Clean Energy (PACE) financing for energy efficiency improvements, including solar energy. Dividend Solar was an innovative solar financing company offering loans with production guarantees and warranty management.
Following the merger, Dividend Finance has become a leading solar lender and PACE financing provider with thousands of happy customers across the U.S. Dividend offers low-cost loans of $20,000 or more for home solar projects. You can apply online in just 10 minutes or so and get an instant decision and fast funding.
The main downsides to Dividend are the requirement to set up Autopay and a finicky system to make repayments. Each time you want to pay off an extra chunk of the loan, you have to enter your banking details through the online portal. The good news, though, is that there are no prepayment penalties, so you can always take out the minimum loan to bridge your federal tax credit or rebate and then pay off the loan early!
Dividend provides loans across most of the U.S., with the exception of Vermont, Wyoming, Montana, North and South Dakota, and Nebraska. Due to state regulations, however, Dividend can only offer PACE financing in California, Florida, and Missouri.
Highlights: Great solar loan option for those considering larger solar projects, or those looking to get started fast.
Typical loan amounts: $5,000 to $100,000
Interest rates: 6.99% – 22.23%
Loan terms: 2-7 years
- Offers large loans for bigger solar projects
- Available in most states
- No borrower fees
- No prepayment fees
- 0.25% discount with Autopay
- Offers short-term loans
- No project appraisal needed for approval
- Can be approved and funded same-day
- Not secured against your home
- No limits on how you use the loan.
- Not available in Mississippi
- Requires two years of verified annual income statements
- Minimum 640 credit score
- Doesn’t offer long-term loans
- Higher interest rates than other solar loans
- Technically a home improvement loan, not a solar loan (so no workmanship guarantees, etc.).
SoFi is the brainchild of Stanford business school students who leveraged the school’s alumni network to source funding for recent graduates. The company’s first offerings were mortgages and student loan refinancing, but SoFi now offers home improvement loans that can be used to finance solar.
SoFi is a great choice if you have a large solar project in mind. The company offers loans up to $100,000 and there are no limits on how you use the loan. Loans are available in all states in the U.S. (except Mississippi), and you get a 0.25% discount if you sign up for Autopay.
The downsides of SoFi are the higher interest rates compared to some other solar loan providers and the shorter loan terms, relatively. The longest loan term currently available for the home improvement loan is 7 years (84 months), while the shortest is 2 years (24 months). Interest rates range between 6.99% and 22.23%, with fixed and variable rate options.
You’ll also need a credit score of 640 or above and be able to verify a certain level of income for two years before approval. If those pieces are in place, the application takes just a few minutes online and you could see funding go through in seven days.
Highlights: Solar loan company that offers one of the lowest-cost solar loan interest rates on the market with a lower than normal credit score requirement.
Typical loan amounts: n/a
Interest rates: as low as 2.35%
Loan terms: 15-30 years
- Can be used to pay off higher interest energy-related improvement debt, including PACE loans
- No additional closing docs or disclosures required
- Mortgage loans available for up to 115% of the future appraised value of your home
- Government-backed loan
- Fixed rates
- Available in all states except Hawaii and New York
- APRs can be as low as 2.12%
- No prepayment penalties.
- Not a specific solar loan, rather a mortgage program
- Solar installation must be completed within 180 days of the mortgage note
- Can take 30-45 days to close
- Minimum credit score of 580.
Available in every state except Hawaii and New York, New American Funding connects customers to the Fannie Mae HomeStyle Energy Mortgage program. Through this program, you may be able to get a low-interest, long-term, mortgage-like loan for up to 115% of the future appraised value of your home.
With APRs as low as 2.12% over 15 years, these are some of the lowest-cost solar loans around. Rates are a little higher for 30-year loans, but are still much lower than most other solar loans. In fact, if you have other forms of debt with higher interest rates, you might want to go for a higher loan amount through New American Funding and pay off those other debts early (accounting for any prepayment penalties, naturally).
To receive a loan from New American Funding, you’ll need a minimum credit score of 580. This is lower than the threshold required for most solar lenders, and there’s no minimum income requirement. The lender will take your income and debt-to-income ratio into account though when determining funding and rates.
The one main downside of a solar loan from New American Funding is that your solar installation has to be completed within 180 days of the mortgage note. With serious demand and serious delays in some parts of the country, that means getting your ducks in a row before you apply for funding.
Highlights: Solar loan provider perfect for those looking for long-term loans, or those that already have a specific solar installer in mind.
Typical loan amounts: $50,000-$100,000
Interest rates: as low as 4.49%
Loan terms: up to 21 years (5, 7, 10, 12, 15, and 21)
- Built-in rate increase protection every seven years
- Easy online application
- No out-of-pocket costs
- Credit union pays the installer
- Long-term loan options available (Jackpot Solar loan)
- Low interest rates for shorter loan terms (5, 7, and 10 years)
- Instant approvals for some applicants
- No minimum credit score or income requirements
- No prepayment penalties
- Can finance your entire solar installation
- No appraisal needed
- Based in Washington State but available across the U.S. through affiliate Solar United Neighbors (SUN).
- You have to pick the installer
- Installers must be onboarded to ezSolarLoan and have a Solar Company Identifier (SCI) 4-digit code.
- No workmanship insurance from the credit union
- Have to send certificate of completion to the credit union.
If you have a specific solar installer you want to work with, but you need a solar loan, Community 1st Credit Union might be the provider for you. The credit union is also a great choice if you want a long-term loan of up to 21 years with in-built rate protections. Loans are available up to $100,000, making this a great choice for larger solar projects.
Community 1st Credit Union is based in Washington but works with customers across the U.S. by offering services through its affiliate Solar United Neighbors (SUN). It has a list of onboarded installers, but if your installer isn’t on that list, signing up is quick and easy. Once your loan is approved and you’ve signed the documents, the credit union will send funding directly to your installer.
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The credit union offers loans with terms of 5, 7, and 10 years. For longer-term loans, you can stack three 7-year-loans to create the Jackpot Solar Loan of 21 years. This comes with an APR as low as 4.74%. At the 7-year mark, the interest rate is reset to the U.S. Constant Maturity (CMT) rate, plus 3.25%, and the interest rate is protected for the next seven years until it resets again. At each renewal point, the interest rate can’t increase by more than 2.5% over the previous rate.
Shorter-term loans come with interest rates as low as 3.99%. You might be able to get instant approval after filling out its simple online form. This depends on your credit rating, income, and debt-to-income ratio. There are no minimum income or credit score requirements, however.
Highlights: Solar loan provider company backed by a major FDIC-insured lender with a smooth application process at the cost of a higher credit score requirement.
Typical loan amount: $5,000-$100,000
Interest rates: as low as 4.99% (maximum APR 20.49%)
Loan terms: 2-12 years
- Same-day approval possible
- Large loans up to $100,000 are available
- Discount for autopay
- Fixed-rate, straightforward loan
- Unsecured and no appraisal needed
- No fees or prepayment penalties
- Backed by Truist Bank, a major FDIC-insured bank
- LightStream will beat a competitor’s rate by 0.1%
- With every loan, LightStream plants a tree, in partnership with American Forests.
- Minimum credit score of 680
- Income verification needed for approval
- Have to sign up for autopay before loan is funded
- Loans without autopay are 0.5% higher.
LightStream is a division of Truist Bank, a major FDIC-insured lender. So, if you want a solar loan you can apply for online, but that is backed by a reputable outfit, this is a great option. Loan terms can be as short as two years or as long as 12.
Other things we like about LightStream include the lack of prepayment penalties, and the ability to fund your entire project up to $100,000. The company even offers to beat any rate by 0.1%, assuming similar conditions.
We also love that LightStream, like us, is an American Forests partner. For every loan funded, LightSteam plants a tree!
LightStream does require a higher credit score of 680 though, and you’ll need to verify your income. If you are approved, though, you may be able to get funding the same day you apply, which is pretty rare for solar lenders.
Highlights: One of few loan companies that opens solar loans to those with mobile homes. FHA loan may offer the ability to claim loan interest as a tax deduction.
Typical loan amounts: up to $65,000 (by combining two types of loan)
Interest rates: as low as 3.75%
Loan terms: Up to 20 years
- Fast approval
- Fixed rates
- No prepayment penalties
- Excellent customer service
- Long-established, licensed, and insured financial institution
- No equity or appraisal required
- Unsecured and secured loan options
- May be able to claim interest as a tax deduction
- Funds must be used for eligible upgrades only
- You have to mail in autopay forms
- Credit score of c600 or c680 required (depending on loan type).
Home Loan Investment Bank offers more than just solar loans and is federally regulated and FDIC-insured. It offers fast approval, competitive fixed rates, and excellent customer service. There’s no penalty for repaying early, and you don’t need home equity or an appraisal for approval.
The downsides of Home Loan Investment Bank include the need to mail in autopay forms and some limits on how you can use loan funds. You’ll also need a credit score of at least 600 or 680 for some loan products.
The two main loan funds for solar are the FHA Title I Home Improvement Loan and the HLIB Advantage Loans. These loan funds max out at $25,000 and $40,000, respectively, but you can apply for both to finance a project up to $65,000. Homeowners with mobile homes can also apply for a loan, which isn’t the case for many providers.
With the FHA Title I Home Improvement Loan, you may be able to claim your loan interest as a tax deduction.
Highlights: Easy to work with loan company that offers generous loan amounts and whole project funding.
Typical loan amounts: up to $150,000
Interest rates: n/a
Loan terms: up to 25 years
- Provides whole project funding
- Can cover solar PV, battery storage, and roof work
- No fees, no appraisals, and no home equity requirements
- Soft credit inquiry and fast approval online
- Offers solar tax credit deferral
- No prepayment penalties
- Works with approved partner installers (who’ll give you a link to apply)
- Winner of the U.S. Department of Energy SunShot Initiative award
- Loan secured against the solar equipment (with lien filed; no lien against your property)
- Funds must be used for eligible projects only (not all roofing qualifies, for instance).
With a reputation for being easy to work with, and a remit to provide loans specifically for residential solar installation, it’s no wonder Sungage is popular with homeowners. The company offers loans up to $150,000, the most we’ve seen for a solar loan (and far more than most homeowners need).
You can borrow money for up to 25 years through Sungage, with whole project funding available. This includes for solar, battery storage, and roof work. There are no fees, no appraisals, and no home equity requirements. The online application is straightforward, the customer service team ready to answer any questions, and many customers get instant approval for their solar loan.
Sungage maintains a list of experienced, qualified solar installers and will connect you with an installer to design a system for your home. The proposal will include information on savings you can expect on your energy bill, and your installer will then provide a link to a secure, online credit application that should take five minutes or less to fill out. You’ll get an instant decision and your installer can get started right away.
Once your installation is complete, and you’re satisfied, you sign the paperwork to release the funds to the installer. Your first loan payment will be due 60 days after your project is completed, with monthly payments thereafter, until the loan is paid off in full. There’s no fee or penalty for prepayments.
Sungage offers a generous zero-interest tax credit deferral. This means that you can borrow up to 26% of your solar installation cost and accrue no interest for up to 18 months while you wait to recoup the federal solar tax credit come tax time. If you anticipate it taking a few years to use all your tax credit, you will only start paying interest after the 18-month grace period.
It’s worth noting that Sungage is not a bank itself but offers residential solar loans through its partnership with NBT Bank. Sungage solar loans are also credit-based, so you will need a minimum credit score of 640 and your debt-to-income ratio can’t be higher than 50%. The solar installation for which you’re borrowing money must also be at your primary residence.