Best Solar Panel Loans

How to finance a shift to sustainable energy

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A solar panel loan is financing used to fund the purchase and installation of solar panel systems. Once you’ve decided that solar is right for you, one of the next steps is to figure out how you’re going to pay for it. Financing can be a great option, particularly if the system’s long-term benefits will eventually outweigh its costs. 

We evaluated over two dozen financing options before settling on our list of the best solar panel loans. In our review, we considered the type of solar panel loan, cost, timeline to repay the loan, and qualifications. We also considered the reputation of each lender. 

Read on to learn more about the best solar panel loans. 

Best Solar Panel Loans for 2021

Best Overall : New American Funding

New American Funding

New American Funding

Why We Chose It: New American Funding can help finance your solar panels through Fannie Mae’s HomeStyle Energy Efficient Mortgage program. You can get financing up to the nationwide conventional loan limits ($510,410 in most areas and up to $765,600 in higher-cost areas), with rates as low as 2.% to 2.5%.

What We Like
  • Low APRs starting at 2% to 2.5%

  • Minimum credit score of 620

  • No recent complaints with the CFPB

What We Don’t Like
  • Appraisal and closing costs required

  • Funding could take 45 to 60 days

New American Funding is a mortgage company founded in 2004 and headquartered in Greeley, Colorado. The company provides financing for solar panels and other energy-efficient improvement projects via Fannie Mae’s HomeStyle Energy Efficient Mortgage (EEM) program. A search of the Consumer Financial Protection Bureau’s (CFPB’s) consumer complaint data didn’t reveal any complaints over the past three years.

With an energy-efficient mortgage from New American Funding, you can finance up to 115% of the “as-completed” value of your home (appraised value after the energy-efficient improvements are complete). If you’re renovating your home, the energy-efficient improvements (e.g., the solar panels and related equipment) can total up to 15% of the as-completed value of your property. Plus, you can use the loan to refinance some energy-related improvements, such as paying off existing PACE loans

Most of the qualifications are similar to other conventional Fannie Mae loans, including needing a credit score of 620 or better and having a sufficient debt-to-income ratio. The better your qualifications, the lower the rate you’ll pay, with APRs starting as low as 2% (as of January 2021). Plus, various FHA loan options are available that you could potentially use to fund your solar panels. 

The terms and conditions you can expect with a New American Funding solar panel loan are as follows:

Loan Amount Fannie Mae’s nationwide conventional loan limit of $510,400 (up to $765,600 in higher-cost areas)
APR As low as 2% to 2.5%
Fees Standard closing costs and appraisal fees
Terms 15 or 30 years
Minimum Credit Score 620
Funding Speed Closing within 45 to 60 days is expected

Best for Good Credit : LightStream

LightStream

 LightStream

Why We Chose It: LightStream offers unsecured solar panel loans of up to $100,000 with APRs as low as 3.99%. Although there’s no stated minimum credit score requirement, you need to have good to excellent credit to qualify.

What We Like
  • High maximum unsecured loan amount of $100,000

  • No fees or prepayment penalties

  • Long maximum repayment terms of 12 years

  • Quick funding, as soon as the same day

What We Don't Like
  • Lower amount than you could get with a loan secured by your home

  • You may have to make two payments, as it’s separate from your mortgage

LightStream is a Truist Bank division offering an unsecured solar panel loan that’s best for people with good credit. This is because if you have good-to-excellent credit (no minimum, but expect to need a credit score of at least 680), you can potentially get up to $100,000 in financing with APRs as low as 3.99% (as of Januar 2021). 

Truist Bank, which owns LightStream, was founded in 1872 and is headquartered in Charlotte, North Carolina. A search of the CFPB’s consumer complaint database revealed 21 complaints about installment loans over the most recent three-year period. Some of the complaints didn’t have details associated with them, but many of the issues are related to getting the loan. The company’s responses to the complaints are timely, which is a good thing. 

As with all loan applications, make sure to provide all information that’s requested as quickly and accurately as possible. 

The terms and conditions you can expect with a LightStream solar panel loan are as follows:

Loan Amount $5,000 to $100,000
APR 3.99% to 17.49%
Fees No fees or prepayment penalties
Terms 24 to 144 months
Minimum Credit Score Good to excellent credit (680+ is expected)
Funding Speed As soon as the same day

Best for Fair Credit : Upgrade, Inc.

Upgrade

Why We Chose It: Upgrade offers an unsecured home improvement loan that can be used to fund the purchase and installation of solar panels. The company doesn’t have a minimum credit score requirement but rather looks at various factors when making its loan decision.

What We Like
  • No minimum credit score requirement

  • No prepayment penalty

  • No collateral is required since it’s unsecured

What We Don’t Like
  • Relatively short time in business

  • High maximum APR of 35.97%

  • Short maximum repayment terms of 5 years

  • Origination fee of 2.9% to 8%

Upgrade, Inc. was founded in 2016 and is headquartered in San Francisco. The company offers an unsecured home improvement loan that can be used to finance your solar panels. Rather than requiring a minimum credit score, the company evaluates various factors when making its lending decision, per a conversation with the company. Even so, we expect you’ll likely need a score of 580 or better to qualify. You can get up to $50,000 with APRs ranging from 7.99% to 35.97% (as of January 2021). 

A search of the CFPB’s consumer complaint database revealed 30 complaints related to installment loans with Upgrade during the most recent three year period. Some of the issues relate to unspecified problems with getting loans and making payments. Even so, Upgrade provides timely complaint responses.  

The terms and conditions you can expect with a home improvement loan from Upgrade to finance your solar panels are as follows:

Loan Amount $1,000 to $50,000
APR 7.99% to 35.97%
Fees Origination fee of 2.9% to 8%; no prepayment penalty
Terms 36 or 60 months
Minimum Credit Score No minimum (expect to need 580+)
Funding Speed As soon as the next day

Best Home Equity Loan : Discover Home Loans

Discover Home Loans

 Discover Home Loans

Why We Chose It: Discover Home Loans offers a home equity loan of up to $200,000 with no fees and APRs as low as 3.99% that can be used to finance your solar panels.

What We Like
  • Low APRs ranging from 3.99% to 11.99%

  • No fees are charged

  • Only 14 complaints with the CFPB during the most recent three year period

What We Don’t Like
  • You’ll have to make two payments if you already have a mortgage on the property

  • You may need to pay a $500 reimbursement fee for your appraisal if you repay early

  • Funding could take 45 to 60 days

Our choice for best home equity loan, Discover Home Loans is a Discover Financial Services division, which was founded in 1960 and is headquartered in Riverwoods, Illinois. With Discover Home Loans, you can get a home equity loan of up to $200,000 with low APRs ranging from 3.99% to 11.99% (as of January 2021) that you can use to finance your solar panels. Plus, it’s possible to qualify with a credit score as low as 620. 

A review of the CFPB’s consumer complaint database for Discover revealed 14 complaints during the most recent three-year period related to home equity loans or lines of credit. Notably, this is a fewer number of complaints than some of the other lenders on our list. Many of the complaints are related to the application and approval process but Discover seems to provide prompt responses. 

The terms and conditions you can expect with a Discover home equity loan for your solar panels are as follows:

Loan Amount $35,000 to $200,000
APR 3.99% to 11.99%
Fees None ($500 reimbursement for your appraisal may be required if repaid within 36 months)
Terms 10, 15, 20, or 30 years
Minimum Credit Score 620
Funding Speed Closing within 45 to 60 days is expected

Best Unsecured Loan : LendingClub

LendingClub

 LendingClub

Why We Chose It: LendingClub offers a home improvement loan that can be used to finance your solar panels and is completely unsecured. You can get up to $40,000 in financing in as quickly as four days, and there is no minimum credit score requirement.

What We Like
  • No minimum credit score requirement

  • No prepayment penalty

  • Quick funding in as few as four days

What We Don’t Like
  • High APRs ranging from 10.68% to 35.89%

  • Relatively short terms of three or five years

  • Origination fee of 2% to 6%

  • 273 complaints filed with the CFPB during the most recent three-year period

LendingClub is a peer-to-peer lender that offers an unsecured home improvement loan that can be used to finance your solar panels. You can get up to $40,000 in financing with APRs ranging from 10.68% to 35.89% (as of January 2021). Plus, there’s no minimum credit score required, although a customer service representative explained it usually takes a score better than 600 to qualify. Instead, the company will evaluate your financial condition using around 200 different metrics (details about these metrics aren’t disclosed). 

Founded in 2006, LendingClub is headquartered in San Francisco. A search of the CFPB’s consumer complaint database revealed 273 complaints with the CFPB related to installment loans during the most recent three-year period. Although this is the highest number of complaints out of the companies we reviewed, Lending Club provides timely responses to the issues. Some of the problems are related to trouble making payments, incorrect credit reporting, and unexpected fees or charges. 

The terms and conditions you can expect with a LendingClub unsecured solar panel loan are as follows:

Loan Amount 1,000 to $40,000
APR 10.68% to 35.89%
Fees Origination fee of 2% to 6%; no prepayment penalty
Terms Three or five-year terms
Minimum Credit Score No minimum (expect to need 600+)
Funding Speed As few as four days

Best for Cash-Out Refinancing : SoFi

SoFi

 SoFi

Why We Chose It: With SoFi, you can get cash-out refinancing on your mortgage to finance your solar panels, up to a loan-to-value (LTV) ratio of 80% on your property.

What We Like
  • APRs expected to start at 3% to 4%

  • Large loans are possible with an 80% LTV

  • Only 10 complaints with the CFPB related to mortgages in the past three years

What We Don’t Like
  • Administration fee of $1,495 is required

  • Appraisal and closing costs are required

  • Funding could take 45 to 60 days

SoFi offers cash-out refinancing up to an 80% loan-to-value ratio on your property that can be used to finance your solar panels. Per a conversation with a company representative, there is no cap on the loan amount (other than the LTV limit), you can expect APRs to start at 3% to 4% (as of January 2021) and you’ll need a credit score of at least 660 to qualify. It’s also possible to close in less than 30 days; however, it’s currently taking the company about 45 to 60 days on average to close.

Founded in 2011, SoFi is headquartered in San Francisco. A search of the CFPB’s consumer complaint database revealed only 10 complaints related to its mortgage products (under which this solar panel loan would fall since your home secures it) in the most recent three-year period. Plus, the company provides timely responses to all complaints. 

The terms and conditions you can expect with a SoFi cash-out refinance solar panel loan are as follows:

Loan Amount Up to 80% loan-to-value on your property 
APR 3% to 4% expected starting range
Fees Administration fee of $1,495; Standard appraisal fee and closing costs
Terms 10, 15, 20, or 30 years
Minimum Credit Score 660+
Funding Speed Less than 30 days possible; 45 to 60 days on average

Best Green Loan : Clean Energy Credit Union

Clean Energy Credit Union

 Clean Energy Credit Union

Why We Chose It: Clean Energy Credit Union is focused specifically on helping people finance clean energy improvements to their homes, including adding solar panels. It’s easy to become a member, and the company is a Green America certified business. Plus, you can get up to $90,000 in financing at rates as low as 4.99% to 6.75%.

What We Like
  • Green America certified business

  • Regulated by the National Credit Union Administration (NCUA)

  • Low APRs starting at 4.99% to 6.75%

  • Low processing fees and UCC-1 filing fees

  • No recent CFPB complaints

What We Don’t Like
  • Short time in business

  • You’ll have to make two payments if you already have a mortgage on the property

  • Funding could take 45 to 60 days or more

Clean Energy Credit Union was founded in 2017 and is headquartered in Centennial, Colorado. The company is regulated by the NCUA and certified by Green America, a designation showing Credit Energy Credit Union’s commitment to improve the economy and protect the environment. It’s easy for anyone in the United States to become a member, and the company offers a variety of green loans, including for solar electric systems, making it our choice for best for a green loan. 

The company offers two solar loans, which you can get separately or together. The first is a short-term loan (12 to 18 months) for solar tax credits, and the second is a long-term loan (12 to 20 years) to finance the remaining costs of your solar panel system. There’s no down payment, and you won’t pledge your house as collateral. The company instead takes a UCC-1 lien filing on your solar equipment. Per a conversation with a customer service agent, you’ll need to have a credit score of at least 680 to qualify. 

A search of the CFPB’s consumer complaint database didn’t reveal any complaints against the company during the most recent three year period. This is excellent compared to the other companies on our list.

The terms and conditions you can expect with a Clean Energy Federal Credit Union solar panel loan are as follows:

Loan Amount Up to $90,000
APR As low as 4.99% to 6.75%
Fees $25 per loan processing fee; $250-$350 in UCC-1 filing fees 
Terms 12, 15, or 20-year terms (12 to 18 months for solar tax credits)
Minimum Credit Score 680
Funding Speed Closing within 45 to 60 days or longer is expected

Compare Lenders

Lender Why We Picked It Expected Minimum Credit Score
New American Funding Energy-efficient mortgages for your solar panels with rates as low as 2% to 2.5%. 620
LightStream Funding as soon as the same day up to $100,000 with rates as low as 3.99%. 680
Upgrade Potential for $50,000 even if you only have fair credit with as soon as next day funding. 580
Discover Home Loans Home equity loan up to $200,000 with no fees and rates as low as 3.99%. 620
LendingClub Up to $40,000 in funding without pledging your home as collateral in as few as four days. 600
SoFi Cash-out refinancing up to an 80% LTV on your home, with APRs starting at 3% to 4%. 660
Clean Energy Federal Credit Union Up to $90,000 in financing for your solar panels, with APRs starting at 4.99% to 6.75%. 680

Final Verdict

There are various types of solar panel loans, including energy-efficient mortgages, cash-out refinancing mortgages, home equity loans, unsecured loans, and even loans secured directly by your solar panels. The best solar panel loans are offered by reputable companies that know how to get the solar panel funding you need. Rates range from APRs of 2% to 35.89%, with the lowest rates and longest terms available for solar panel loans secured by your home.

We chose New American Funding as the overall best solar panel loan because it offers an energy-efficient mortgage, with rates as low as 2% to 2.5% and terms up to 30 years. Plus, people with credit scores as low as 620 can get approved. 

FAQs

What Is a Solar Panel Loan?

Solar panel loans are used to finance the purchase and installation of solar panels and related equipment. Various types of loans can be used to finance solar panels, and the decision regarding which type of loan is right for you will depend on factors such as how much equity you have in your home, your credit score and debt-to-income ratio, and the length of the repayment term you desire. 

Solar panel loans secured by your home will typically carry lower interest rates and longer repayment terms than other financing types. Unsecured solar panel loans will usually have the shortest repayment terms and cost the most. This is because there is a higher risk to the lender with unsecured loans since there is no collateral in the event you don’t repay.

Who Should Get a Solar Panel Loan?

A solar panel loan is right for people who will have a satisfactory return on their investment through energy savings or potential increases in their home value. A couple of factors to consider before getting a solar panel loan include how long it will take for any potential energy savings to pay back the system’s costs and whether you’re going to live in the home long enough to reap these benefits. Also, solar panel loans are only right for people who have enough disposable income to make the payments. 

Solar panels can be a great way to save money and reduce your reliance on non-renewable energy sources. This is especially true if you live in an area where solar costs less than the prices charged for electricity by the utility companies or where there are solar tax breaks. Before getting solar panels, you should calculate your payback period to understand if going solar is right for you. 

Research also suggests that some buyers will pay a premium for homes with solar systems. In fact, when you get a mortgage to finance your solar panels, the appraisal will include a report of how much value the improvements are adding to your home. Even so, solar panels don’t always increase your home’s value. Plus, if your loan is secured by the home or the solar panels and related equipment, you’ll most likely need to pay it off if you sell the property. 

Make sure to consider how long you’re planning to live in the home before getting a solar panel loan. 

How Can I Qualify for a Solar Panel Loan?

Qualifications for a solar panel loan will depend on the type of loan you choose, your property’s characteristics, and your creditworthiness. If you get a mortgage, you’ll typically need to have sufficient equity in your home to finance the improvements or support a down payment. You’ll also usually need a credit score of 620 or better, although some FHA programs allow for credit scores as low as 500. 

If you don’t have sufficient equity in your home, you can consider taking out an unsecured loan.

How Do Solar Panel Loans Work?

Once your solar panel loan is funded, you can expect to repay the balance in equal installments of principal and interest over the loan term. 

Energy-efficient mortgages work very much like normal mortgages, except the approval and appraisal process will also include some evaluations related to your solar project. The same is true for loans secured by the solar panels themselves. Unsecured loans and home equity loans to finance solar panels follow the normal underwriting and approval process. 

What Are Other Options for Financing Solar Panels?

One place to start for other options is to review the DSIRE ® database to see if your state offers any solar incentives. For example, some states allow you to reduce your electricity costs by selling some of the power generated from your system via solar renewable energy certificates (RECs). You can also visit the Energy Star website to search for special offers on energy-efficiency initiatives. 

Note that some of these websites might not be updated, and the best way to find alternative funding for your solar panels is by contacting your state environmental agency or local electric utility for the most current and accurate information. 

You also consider using the property assessed clean energy (PACE) model to finance your residential solar panel project if you live in California, Florida, or Missouri. Residential PACE programs are typically offered by municipalities to help homeowners finance the up-front costs of energy-efficient and renewable energy home improvement projects, such as the addition of solar panels. 

With funding through PACE programs, you’ll typically repay the upfront costs of your improvements via property assessments for a set number of years (e.g., 10 or 20 years). The debt associated with the PACE funding is in addition to your normal property tax bill and is attached to the property rather than the owner. This means if you choose to sell the property, you could potentially pass along the debt to the new homeowner.

What Does a Solar Panel Loan Cost?

The cost of a solar panel loan will depend on the type of loan you choose. Loans secured by your home, such as mortgages and home equity loans, will often have appraisal fees and third-party closing costs but may carry APRs as low as 2% to 4%. Unsecured loans won’t have any third-party closing costs or appraisal fees but will carry higher APRs, starting as low as 4% to 10.5%. Unsecured loans have a higher level of risk, and so they cost more.

How We Chose the Best Solar Panel Loans

When choosing our best solar panel loan providers, we looked for companies with a good reputation along with offering a variety of solar panel loans to fit various needs. This includes loans secured by your home or the solar panels you’re installing as well as unsecured loans. 

All of our choices for the best solar panel loans carry affordable APRs, have reasonable repayment terms, and are offered by reputable companies. 

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