Buying a House with Solar Panels | GO Mortgage

Solar panels can be a smart, eco-friendly feature—but when you’re buying a home that already has them installed, there’s more to consider than just lower utility bills. 

From ownership status to financing implications, understanding how solar panels affect your mortgage and long-term costs is key to making an informed decision.

What should you know before buying a home with solar panels?

Before making an offer, gather these essential details:

• Ownership status: Are the panels owned outright, financed, or leased?
• Financing details: If financed, is there a lien or UCC filing attached to the property?
• Lease terms: If leased, can the agreement be transferred to you?
• Warranties: Are there manufacturer or installer warranties in place?
• Maintenance history: How have the panels been maintained?

These factors can impact your mortgage approval, debt-to-income (DTI) ratio, and the property’s appraised value.

What questions should you ask the seller about the solar panels?

Before finalizing your purchase, ask the seller these key questions to ensure you’re fully informed:

• Who installed the panels, and when?
• A professional, licensed installation company with a solid track record ensures better performance and warranty coverage.
• What type of warranty is included, and how long does it last?
• Most solar panels come with warranties for both equipment (typically 20–25 years) and performance guarantees. Ask for documentation.
• Is there a monitoring system in place?
• A monitoring platform helps you track energy production and spot performance issues early.
• Have the panels ever needed repairs or service?
• Understanding the solar panel maintenance history gives you insight into potential future issues.
• Are there any roof or structural concerns?
• Ask if the roof has been inspected since installation and whether any reinforcements were made to support the panels.
• Can I see recent utility bills?
• Comparing energy bills before and after solar panel installation gives you real-world insight into the savings.

Asking these questions gives you a comprehensive picture of the system’s condition, value, and future impact, making you a more confident buyer.

Leased vs. owned solar panels: What’s the difference?

The distinction between leased and owned panels significantly affects both your mortgage process and potential benefits:

• Owned panels: If the seller owns the panels outright (paid in cash or fully financed), they are considered part of the property and can increase its appraised value.
• Financed panels: If the panels are financed and secured by a separate loan, they may have a lien attached to them. This lien must be addressed before or during closing, as it can complicate the mortgage process.
• Leased panels: Leased panels are not included in the property’s value. The lease must be transferable, and the lease payments will be factored into your DTI ratio. Additionally, the leasing company must have third-party insurance to cover potential damages.

Fannie Mae and FHA have specific guidelines for properties with solar panels, especially when panels are leased or separately financed.

How do solar panels impact home value?

Solar panels can enhance a home’s value, but the extent depends on several factors:

• Ownership: Owned panels typically add value; leased panels do not.
• Local market: In areas where solar energy is popular, buyers may be willing to pay more for homes with solar installations.
• Appraisal considerations: Appraisers will assess the value added by solar panels based on comparable sales and the panels’ contribution to energy savings.

It’s important to note that the added value may not always equal the cost of the solar panel system.

What are the maintenance requirements for solar panels?

Solar panels require minimal maintenance, but regular upkeep ensures optimal performance:

• Cleaning: Dust, pollen, and debris can reduce efficiency. Clean panels every 6–12 months, or more frequently in areas with high dust or pollen levels.
• Inspections: Conduct visual inspections periodically to check for damage or shading issues.
• Professional maintenance: If panels are difficult to access or if you notice a decline in energy production, consider hiring a professional for maintenance.

Always follow the manufacturer’s maintenance guidelines to avoid voiding warranties.

What are the pros and cons of buying a home with solar panels?

Pros:

• Lower energy bills: Solar panels can lower your electricity costs significantly
• Environmental impact: Using solar energy reduces your carbon footprint
• Potential tax incentives: Owned solar panels may qualify for federal and state tax credits

Cons:

• Upfront costs: If the panels are not fully paid off, you may need to assume the remaining loan or lease
• Maintenance responsibilities: While minimal, maintenance is necessary to ensure efficiency
• Resale considerations: Leased panels can complicate future sales, as new buyers must agree to take over the lease.

Are there tax credits available for solar panels?

Yes, there are tax incentives for solar panel installations:

• Federal Investment Tax Credit (ITC): Homeowners may be eligible for a tax credit covering part of the expenses for installing solar panels
• State incentives: Many states offer additional rebates or tax credits.

To qualify, the solar panels must be owned, not leased.

What should you do before buying a home with solar panels?

1. Review documentation: Obtain all relevant documents, including purchase agreements, warranties, and maintenance records.
2. Consult your lender: Discuss how the solar panels will affect your mortgage approval and DTI ratio.
3. Assess the system’s condition: Have the panels inspected to ensure they are in good working order
4. Understand the financial implications: Determine if you’ll be assuming any loans or leases and how that impacts your finances.

Taking these steps can help you make an informed decision and avoid unexpected complications.

Ready to explore your mortgage options?

At GO Mortgage, we’re here to help you navigate the complexities of buying a home with solar panels. Our experienced team is ready and waiting to guide you through the mortgage process and help you understand how solar installations impact your loan.

Whether you’re a first-time homebuyer or looking to upgrade to a solar-equipped home, we’re committed to making your homeownership journey smooth and successful.