{"id":10841,"date":"2023-04-26T16:56:44","date_gmt":"2023-04-26T16:56:44","guid":{"rendered":"https:\/\/www.solar.com\/learn\/?p=10841"},"modified":"2023-04-26T16:56:44","modified_gmt":"2023-04-26T16:56:44","slug":"how-to-wrap-the-cost-of-solar-panels-into-your-mortgage","status":"publish","type":"post","link":"https:\/\/www.solar.com\/learn\/how-to-wrap-the-cost-of-solar-panels-into-your-mortgage\/","title":{"rendered":"How To Wrap The Cost of Solar Panels Into Your Mortgage"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">Most first-time homebuyers would love to find a home with solar panels already installed. They would switch them on to save themselves energy costs while doing the Earth a solid.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">But the reality is, it\u2019s hard to find a home with solar. In fact, <\/span><a href=\"https:\/\/www.eia.gov\/todayinenergy\/detail.php?id=54379\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">only 3.7% of homes in the U.S<\/span><\/a><span style=\"font-weight: 400;\">. were solar-equipped as of 2020.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">But what if you could finance the solar panels along with your home purchase \u2013 even your first home purchase? Certain mortgage programs let you do just that.<\/span><\/p>\n<p><a href=\"https:\/\/www.solar.com\/dashboard\" target=\"_blank\" rel=\"noopener\">Compare multiple solar quotes from vetted local installers.<\/a><\/p>\n<h2><span style=\"font-weight: 400;\">FHA Solar and Wind Technologies Mortgage<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">An FHA loan is a favorite among first-time buyers because it lets them put just 3.5% down and is lenient on credit scores and income levels.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">But another benefit is that you can wrap the cost of an owned (<a href=\"https:\/\/www.solar.com\/learn\/solar-lease\/\" target=\"_blank\" rel=\"noopener\">not leased<\/a>) solar panel system into your mortgage for whatever home you choose. <\/span><span style=\"font-weight: 400;\">No more wishing that you could find a home with solar panels in your price range. Find the home you want, then add a system.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Under FHA\u2019s Solar and Wind Technologies option, you can finance a system costing up to 20% of the property\u2019s value. You would pay just 3.5% down on the entire loan.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Here\u2019s an example:<\/span><\/p>\n<table style=\"width: 23.5982%; height: 314px;\">\n<tbody>\n<tr>\n<td><span style=\"font-weight: 400;\">\u00a0<\/span><\/td>\n<td><span style=\"font-weight: 400;\">\u00a0<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Home price<\/span><\/td>\n<td><span style=\"font-weight: 400;\">$350,000<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Solar panel system<\/span><\/td>\n<td><span style=\"font-weight: 400;\">$25,000<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Total FHA loan<\/span><\/td>\n<td><span style=\"font-weight: 400;\">$375,000<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Down payment<\/span><\/td>\n<td><span style=\"font-weight: 400;\">$13,125<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p><span style=\"font-weight: 400;\">The home and the solar panels would be covered with one mortgage loan. You would have just one mortgage payment each month based on market rates when you purchase the home.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">A bonus is that FHA allows you to qualify for a bigger home via its <\/span><a href=\"https:\/\/thisismortgage.com\/how-solar-can-help-you-afford-more-home-fha-eeh-stretch-ratios\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">EEH Policy<\/span><\/a><span style=\"font-weight: 400;\"> when you upgrade a home with energy-efficient upgrades. While you\u2019re at it, you can <\/span><a href=\"https:\/\/thisismortgage.com\/limited-203k-loan\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">finance other upgrades<\/span><\/a><span style=\"font-weight: 400;\"> like kitchen and bath remodels via the FHA 203k loan.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">To see if you qualify, get a pre-approval from an FHA lender specializing in energy-efficient loan options, then start shopping for homes in your price range.<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">Fannie Mae HomeStyle Energy Mortgage<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Like FHA, Fannie Mae allows you to finance energy-efficient improvements at the time of home purchase.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Fannie Mae isn\u2019t a lender; it\u2019s a government agency that standardizes mortgage rules nationwide. Lenders that approve loans by Fannie Mae standards may offer the agency\u2019s green mortgage.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">With the HomeStyle Energy Mortgage, you can finance up to an additional 15% of the home\u2019s purchase price for energy-efficient upgrades like solar.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">For example, you could finance a system costing up to $30,000 on a $200,000 home.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In this case, you would end up with a $230,000 mortgage that covered your home purchase plus the solar panels that power it. But if the solar installation is less, you only have to add that much to your loan amount.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">What\u2019s even better is that Fannie Mae has plenty of homebuying programs requiring only 3% down. In the above scenario, you would pay just $6,900 down for the home <\/span><i><span style=\"font-weight: 400;\">and<\/span><\/i><span style=\"font-weight: 400;\"> installed solar panel system.<\/span><\/p>\n<h2><img loading=\"lazy\" class=\"aligncenter size-medium\" src=\"https:\/\/assets.solar.com\/wp-content\/uploads\/2023\/01\/SRECs.jpg\" width=\"1200\" height=\"628\" \/><\/h2>\n<h2><span style=\"font-weight: 400;\">Freddie Mac GreenChoice Mortgage<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Freddie Mac, Fannie Mae\u2019s smaller counterpart, also offers a green mortgage.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Its GreenChoice program is similar to others already mentioned: it allows you to buy a home and add up to 15% to the mortgage loan amount to cover energy-efficient upgrades such as solar panels.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">You can combine it with Freddie Mac first-time buyer programs such as HomeOne\u00ae, which requires just <\/span><a href=\"https:\/\/thisismortgage.com\/freddie-mac-homeone\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">3% down<\/span><\/a><span style=\"font-weight: 400;\">.<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">Is it cost-effective to roll solar panel costs into a mortgage?<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">On a monthly basis, your solar panel purchase is very likely to \u201cpencil out.\u201d That\u2019s because your solar panels are financed at a low mortgage rate over 30 years.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">For example, financing a $20,000 system at 6.5% over 30 years would increase your mortgage payment by about $126 per month. <\/span><span style=\"font-weight: 400;\">That gives you a predictable monthly electricity cost that happens to be close to the same amount as the average U.S. electric bill of <\/span><a href=\"https:\/\/www.eia.gov\/electricity\/sales_revenue_price\/pdf\/table5_a.pdf\"><span style=\"font-weight: 400;\">$121<\/span><\/a> in 2021<span style=\"font-weight: 400;\">, according to the U.S. Energy Information Administration.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Of course, some areas like California and <\/span><a href=\"https:\/\/www.youtube.com\/watch?v=8WamQosyO9Y\"><span style=\"font-weight: 400;\">New York<\/span><\/a><span style=\"font-weight: 400;\"> have much higher energy costs. And unlike utility electricity prices, which rose over 15% in 2022 alone, the solar payments built into your mortgage won&#8217;t increase over time.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In short, if you could reduce your bill by $126 in the example above, you get a system that costs you $0 per month. If your energy cost savings are more, you save money monthly. And even if you don&#8217;t break even on Day 1, there are many <a href=\"https:\/\/www.solar.com\/learn\/advantages-of-solar-energy\/\" target=\"_blank\" rel=\"noopener\">additional benefits to solar panels<\/a>.<\/span><\/p>\n<p><span style=\"font-weight: 400;\"><a href=\"https:\/\/www.solar.com\/dashboard\" target=\"_blank\" rel=\"noopener\">Compare multiple quotes from trusted installers<\/a> to see how much a solar panel system would cost. Ask a lender how much it would add to your mortgage payment. Then, see if you can save at least that much monthly with solar panels.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Also important: Make sure the home you\u2019re buying is a <\/span><a href=\"https:\/\/www.solar.com\/learn\/how-many-solar-panels-do-i-need-to-install\/\"><span style=\"font-weight: 400;\">good candidate for solar<\/span><\/a><span style=\"font-weight: 400;\">.<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">Does the home seller have to agree to add solar panels?<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">You might be wondering, when exactly do you add the solar panels? <\/span><span style=\"font-weight: 400;\">After all, not many home sellers are going to agree to add solar panels before the sale is a done deal.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The beauty of all three above programs is that the <\/span><b>solar panels are installed after you close on the house.<\/b><\/p>\n<p><span style=\"font-weight: 400;\">The lender closes the loan and sets aside funds equal to the solar bid amount. You have a few months to get your solar contractor to install the system. The lender pays the solar contractor <\/span><i><span style=\"font-weight: 400;\">after the loan closes.<\/span><\/i><\/p>\n<p><span style=\"font-weight: 400;\">This helps you finance the cost of the solar panel system upfront, then use those funds to get everything installed after you officially own the house.\u00a0<\/span><\/p>\n<p><em>Pro tip: It&#8217;s worth asking the seller to look at recent copies of their electricity bills to accurately size and price the solar system.<\/em><\/p>\n<h2><span style=\"font-weight: 400;\">Where to find a lender<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Not every lender will offer these \u201cgreen mortgages\u201d even if they offer standard FHA, Fannie Mae, and Freddie Mac loans.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">However, an online search should reveal lenders who specialize in the energy-efficient loan process and can handle your request.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Ask your chosen lender which program is right for your income and credit level. Also ask how many of these loans they have done in the last six to 12 months. That will reveal if they are truly experienced with the programs.<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">Are solar panels in your future?<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">If you\u2019ve been frustrated because you can\u2019t find a home with solar panels \u2013 and you won\u2019t be able to afford to add them after buying a house \u2013 you have a secret weapon as a homebuyer.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Thanks to generous mortgage programs now available, you could buy any home you want, then add solar panels.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Most first-time homebuyers would love to find a home with solar panels already installed. They would switch them on to save themselves energy costs while doing the Earth a solid&#8230;.<\/p>\n","protected":false},"author":57,"featured_media":10842,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"content-type":""},"categories":[86,5],"tags":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v19.5 (Yoast SEO v19.10) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>How To Wrap The Cost of Solar Panels Into Your Mortgage | Solar.com<\/title>\n<meta name=\"description\" content=\"Wrapping the cost of solar panels into your mortgage can reduce and flatten your electricity costs. 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