Financing solar through your home mortgage

Financing solar through your home mortgage

If you’re building a brand new home, have recently moved into a home you bought, or are currently planning to buy a home, you have some great options for incorporating solar financing into your mortgage!

Ipsun Solar is proudly working with US Mortgage of Maryland to bring a special program to customers looking for a financing option for those that want to own their system rather than leasing.

FHA's Program

FHA has a program that can make a difference for both the customer and the solar installer. This is known as the FHA SWT (Solar and Wind Technologies). For solar customers that may not qualify for a personal loan, home equity line, or some other type of secondary financing and FHA is often easier to qualify for.

FHA allows the cost of the solar system to be financed in an FHA Mortgage - either through a refinance of an existing home or a purchase of a new home, up to 20% of the current appraised value. FHA rates are typically much lower than home equity lines or unsecured personal loans and the cost of the system is amortized over the term of the mortgage, making affordability of the system appeal to more customers.

There is an online application option for customers that prefer this, and there are also do face-to-face appointments for DC area customers with loan agents as well.

Why do Ipsun Solar and U.S. Mortgage go out of their way to offer this?

After long talks with the folks at U.S. Mortgage, it’s clear to us that they care about getting more solar electric systems in our communities. Done right, solar home financing represents a win all around, helping homeowners get lower electric bills, making the air cleaner and our neighborhoods healthier, benefiting the solar installer with more business and supporting more jobs.

US Mortgage is set up very well to facilitate solar contracts, with staff that routinely work on home improvements that require multiple payments to a contractor during the process. They’ve also already learned that no two solar customers are the same, and offer personal attention.

What are the advantages for customers that integrate solar into their mortgage?

The upsides of funding a solar energy installation purchase via an FHA or Fannie Mae home refinance include amortizing the cost of the system over the entire length of the mortgage, providing affordability to more people; enjoying one single mortgage with one single monthly payment, no junior lien or second lien; and the mortgage interest is considered tax-deductible, but we won’t advise you about that since we aren’t accountants! Please see your tax preparer or look at your tax software for how to go about this. Basically though, some clients depending on when they bought and current interest rates may not see an increase in their monthly payment, and can count on smaller electric bills as energy from their solar locks in savings.

The solar purchase price that’s acceptable for an FHA loan is up to 20% of home value - which in our region would be a very large solar installation indeed! This limit generally won’t curtail the size of a system you would qualify for. The Fannie Mae limit is more like 15% of home value.

How HELOC is different and why we aren’t suggesting it to most customers

A home equity line of credit could be seen as a good alternative to these mortgage refinance options or a regular solar loan. It depends totally on how much equity the residents have in their home and how good their credit is. In today’s home buying market, down payments tend not to be very high, and that small 5% or 10% of home value won’t be getting approved for a HELOC.

If you’ve been in your home for between 6 months and 4 years, the home refinancing option may make the most sense for you! If you’re currently working with a builder, we can help there too and would aim to get solar rolled into your mortgage right off the bat. If you’re a realtor or builder who frequently gets questions about solar financing options, connect with us and we’ll be happy to talk you through things and provide printed info sheets about the opportunity.

Here's a downloadable pdf for Realtors: A Guide to Mortgage-Funded Solar

This downloadable pdf is a resource for Customers: Go Solar with Your Mortgage

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