By now, you’ve heard the old news.

Last year, California required all construction contractors and businesses to install panels on newly-built homes.

You may find this to be an annoying box you now need to check off. 

We totally get it. You’re insanely busy.

Making this headache even worse, you and your potential buyers are wondering how to finance these contraptions.

Perhaps this will change your mind about solar:

Solar energy homes sell for 4.1% more on average, putting more money in your pocket.

Now back to the matter at hand: How do we finance these things? 

You have no idea what it is?

You’re not alone.

But there’s nothing to fear. We come bearing plenty of aspirin (and straight answers to help your bottom line).

Solar Panel Financing Options

For some extra good news, solar components have gotten cheaper over the years. 

And while the price of building materials has soared 26% – higher than the international space station – solar system prices have defied all odds to remain steady.

For not so great news, the upfront cost of a solar system is still hefty. 

And since it’s a sizable investment, buyers will ask you what their payment options are. 

This depends on what they can afford to pay right off the bat. 

Option #1: Purchase the System

Do you think this sounds too easy? Thankfully, it is.

All your buyer has to do is purchase the solar system outright, either directly with cash or a loan. 

This option gives the buyer complete ownership of the solar system to sweeten the deal, providing super-sized energy cost savings now and forever (or until they sell).

And if you buy the system for them (which you should do), you rake in some sweet federal and state incentives

For Example: If you buy the solar kit for $7,000, plus the additional cost of conduit, wiring, and labor (electrician and roofer hours) puts you at $10,000 net solar install costs — your tax credit would equal $2,600 (0.26 x net solar installation costs). 

This keeps more money in your pocket! 

Option #2: Power Purchase Agreements 

Selling your soul to the Devil. 

WARNING: Don’t do it. You and your home buyer will lose out on thousands upon thousands of dollars! 

Under a Power Purchase Agreement, a buyer signs a contract with a solar provider, sometimes the developer or a third party.

This can be thought of as a kind of lease — the developer, working with a solar panel provider, handles the financing and permitting for the new solar system on the buyer’s behalf, then sells power to the new homeowner. 

The homeowner pays little to nothing upfront, doesn’t have to handle repairs, and gets a fixed rate on energy that should be lower than what local utility companies offer. 

But not everything is as rainbows and unicorns as it would seem.

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With a third-party solar provider, your buyer will get slapped with unexpected costs up the wazoo!

The buyer typically pays a 2% to 3% annual increase for power and is held captive in a 20 to 25-year contract they cannot escape. 

If they want to sell their home, the new buyer must be willing to take on this contract from hell, killing any potential sales.

If a new buyer doesn’t want to take this on, the seller could pay a king’s ransom to end the contract. Your initial buyer is going to despise you with the passion of a thousand burning suns.

Either way, the former and new homeowners are going to be furious:

Don’t let your buyers get sucked into this pyramid scheme with a third-party provider who promises to make your and your buyers’ lives so much easier. 

It will ruin your reputation and cost the buyer more than they bargained for!

Check it out:

On the other hand, if your buyer doesn’t have the tax liability to use the 26% Federal Solar Tax Credit, you could purchase the solar system and sign a lease with your buyer.

This is a win-win option for you both.

Since you own the system, you receive the corresponding tax benefits and incentives, along with the second stream of revenue (again, worth several thousand dollars). And your buyer will receive reduced power costs.

Mortgages Provide Solar Power Financing

There’s a third way to make things crazy simple for you and your buyer: a mortgage.

In many cases, solar panel installation costs can be rolled into the mortgage for the property. 

Since 2016, the Federal National Mortgage Association has offered the HomeStyle Energy Program as an option to mortgage energy-efficient homes, including solar panel financing. This reduces your customers’ upfront cost and overall monthly outlays.

Here’s the Low-Down

These mortgages can be made either for a new home to install a solar power system or for the new installation of a system to an already owned home — the latter lets homeowners refinance to take advantage of the lower costs.

The HomeStyle Energy Program requires the building to undergo a Home Energy Score audit to guarantee the installation represents an improvement in energy efficiency. An independent accredited auditor or state or local programs can handle it. 

The loan is made with a usual lender and includes property-assessed clean energy loans and energy efficiency loans with eligible banks. 

Maybe your eyes glazed over for a minute there.

Just know that buying the system outright is our top recommendation. 

Encourage your buyer to roll the system’s cost into their mortgage or take out a loan. They could start with a smaller system, such as our expandable Enphase solar starter kits (starting from just $1,000), and add more panels later. 

Looking for Third-Party Solar Panel Financing Options? 

Solar isn’t actually a headache. It’s a freakin’ awesome opportunity to power your profits!

Get about $9K more per home, and if you get your crew and/or subcontractors trained to handle the installations, you save another $5K.

This compounds over time and makes solar work in your favor after adding up all additional margin it brings to your home value. 

At Unbound Solar, we can simplify the process for you! 

We have over 30 years of expertise in designing and constructing solar systems.

You’ll also get access to our special rebates, discounts, and hands-on training for our building partners

We’d love to chat with ya! Schedule your free consultation today.

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