Guide to buying a home with solar panels

Written by Samantha SheltonNMLS 1647301Updated September 2026

Home buyers looking up at rooftop solar panels on a craftsman house they are considering purchasing

This article is for informational purposes only and is not legal, financial, or tax advice. PACE assessments, property tax treatment, solar incentives, and lease buyout terms are general information, confirm your situation with a licensed tax professional or attorney.

The single most important question when buying a home with solar panels is whether the system is owned or leased. Owned panels transfer with the house and can add value, the U.S. Department of Energy cites research finding buyers have been willing to pay a premium of about $15,000 for a home with an average-sized solar array. While leased panels or power purchase agreements (PPAs) mean you must qualify for and assume a monthly contract that can complicate your mortgage.

Before you offer, verify the system’s age and warranty status, request production monitoring data and recent electric bills, and check for liens. PACE-financed systems attach to the property tax bill and may need to be paid off at closing. Learn more about buying a home with solar panels, including how to tell who owns the system, what to inspect before your contingency expires, and how each ownership structure changes your loan.

Key takeaways:

Ownership is the deciding factor: Owned panels convey with the home, while a lease or power purchase agreement commonly runs 20 – 25 years and must be assumed, bought out, or removed before closing.
Warranties and inverters age differently: Panels typically carry performance warranties up to 25 years, but a string inverter usually needs replacement at 10 – 15 years, so ask for the install date and the inverter model.
PACE liens follow the property, not the seller: A PACE-financed system is repaid through the property tax bill and stays with the home, and lenders require it to be paid off or held in a truly subordinate position before closing.

Are the solar panels owned or leased?

Ask this before you ask anything else, because value, warranty coverage, financing, and negotiation all branch off the answer. There are four structures you will run into on a solar-equipped listing, and only one of them is simple.

Owned outright: The seller paid cash, rolled the system into a prior purchase price, or paid the loan off. The panels are part of the real estate, and Fannie Mae applies its standard appraisal, insurance, and title requirements, nothing extra for you to assume.
Separately financed with a solar loan: The seller still owes a lender for the equipment. That balance has to be resolved at closing, and how it was filed in the land records changes what your lender requires.
Leased or under a power purchase agreement (PPA): A third party owns the panels, so you assume the contract or the seller buys it out or relocates it. Under Fannie Mae’s rules those panels are personal property and cannot be included in the appraised value.
PACE-financed: Property Assessed Clean Energy financing is repaid as an assessment on the property tax bill. It attaches to the parcel, not the person, which is why it draws the strictest treatment of the four.

You cannot settle this from the listing sheet. Ask for the installation contract and any lease or PPA documents the week you go under contract, and expect your lender to check the title report for UCC fixture filings. Pinning down ownership is the lender’s job because the mortgage has to stay in first lien position. Fold that into the early diligence in the home buying guide, timed out in the home buying process.

What to inspect on a solar-equipped home

Start with the install date, because the two most expensive components age on different clocks: residential panels commonly carry 20- to 25-year performance warranties and now run longer in service, while a string inverter usually lasts 10 – 15 years and may need replacing once during the panels’ life. A ten-year-old system is not half worn out. It is one component away from a bill.

System age and panel life: The Department of Energy reports the average operational lifespan of a solar panel has risen to roughly 25 – 35 years. Get the commissioning date in writing.
Inverter type and age: String inverters convert power centrally and generally last 10 – 15 years. Microinverters sit on each panel and last about as long as the panels. Ask which type, which model, and when it was installed or last replaced.
Production data: Request at least 12 months of monitoring data. A year-over-year production drop of more than about 10%, after adjusting for weather, is a sign the system needs maintenance attention.
Utility bills: Production tells you what the array made; 12 – 24 months of actual bills tell you what it saved on this utility, on this tariff.
Warranty status and transferability: Module performance warranties commonly extend up to 25 years, but coverage only helps if it transfers. Confirm the manufacturer and installer warranties convey.
Roof condition and remaining life: Panels come off and go back on for a roof replacement, and that labor is not cheap. If the roof has under 10 years left and the array has 15, you are buying a scheduled expense.

A general home inspector will look at the roof; most will not evaluate the array. Hire an inspector with solar experience and add it to the standard home inspection checklist for buyers. The benefits of a home energy audit cover what an audit adds beyond the panels.

How solar panels affect your mortgage

Ownership decides whether the panels count as value, as debt, or as neither, only owned systems land in the appraised value. Fannie Mae’s Selling Guide treats each structure differently, and one Freddie Mac requirement drives all of it: the mortgage has to be in first lien position and stay there for the life of the loan.

Ownership structure	Counted in the appraised value?	Counted in your DTI?	What your lender will require
Owned outright (cash, in a prior purchase price, or paid off)	Yes. The appraiser can give contributory value	No separate payment to count	Standard appraisal, insurance, and title requirements
Separately financed, with a UCC fixture filing	Yes, if the panels cannot be repossessed on default	Yes. The solar loan payment counts	A fixture filing senior to the mortgage must be subordinated; the balance counts in the CLTV
Separately financed, no fixture filing	No, the appraiser gives no contributory value	Yes	Panels are excluded from the LTV and CLTV
Leased or under a power purchase agreement	No, treated as personal property	Usually yes; may be excluded if the agreement meets Fannie Mae’s fixed-payment or production-only tests	The home must keep access to an alternate power source meeting community standards, damage is the equipment owner’s responsibility, and the panel owner cannot be named loss payee on your policy
PACE-financed	Not credited to you as value	Repaid through the property tax bill	Fannie Mae will not buy the loan unless the PACE financing is paid in full before or at closing; Freddie Mac requires the obligation to be, and remain, truly subordinate

Two consequences follow. First, a lease or solar loan payment moves the same ratio everything else does, see how lenders calculate your debt-to-income ratio if you are near a limit. A $120 lease payment shrinks your qualifying price more than most buyers expect.

Second, do not count on a federal tax credit you did not earn. The Residential Clean Energy Credit equaled 30% of qualifying clean energy property, but under Public Law 119-21 it is unavailable for property placed in service after December 31, 2025, and it always applied to the original installation, so it belonged to whoever put the panels up, not to a later buyer.¹

The documents to collect before your contingency expires

Eight documents settle nearly every solar question, and all of them belong in hand before your inspection period closes, commonly a 7- to 14-day window in Michigan purchase agreements. Ask in one written request, not one at a time.

Installation contract and system specification: Installer name, commissioning date, panel and inverter make and model, and system size in kW.
Permits and final inspection sign-off: An unpermitted array is a title and insurance problem, not a cosmetic one.
Warranty documents and transfer paperwork: Manufacturer, workmanship, and any production guarantee, plus whatever moves coverage into your name.
The lease or PPA, in full: Payment amount, escalator clause, remaining term, transfer requirements, and buyout price. The escalator is the line buyers skip and regret.
The interconnection or distributed generation agreement: The utility contract governing how excess generation is credited, and confirmation it transfers to you.
Monitoring access and 12 – 24 months of utility bills: The only honest measure of what the system saves at this address.
Title work and UCC search results: Ask early whether a fixture filing or PACE assessment exists, because the fix takes time.
Insurance and association rules: Confirm your carrier covers the array while evaluating home insurance options, and read the association documents on panel placement, one more entry in the pros and cons of buying a home with an HOA.

The panels are one system among several, so check whether the home’s other equipment carries ENERGY STAR, the federal efficiency certification program labeling. Our guides to energy-efficient home upgrades and alternative energy products for homeowners cover the rest, and the CFPB’s home-buying resources map the disclosure timeline these documents fit inside.

How solar changes the negotiation

Solar is a negotiating asset when it is owned and a problem when it is not. An owned, documented system is a reason to pay near asking. A 22-year lease with an escalator is a reason to ask the seller to buy it out before closing.

In a slower market: A seller-paid buyout is a realistic ask, because the seller’s alternative is a smaller buyer pool, the leverage in navigating a buyer’s market as a home buyer applies directly.
In a competitive market: You will likely assume the contract or walk, so set your ceiling before you write, using the posture in navigating a seller’s market as a buyer.
In any market: Assumption is not automatic. Transferring a lease usually requires the solar company to run a credit check on you, so put that approval on your timeline while preparing to buy.

Because Align is a broker, we can move a file with a leased array or a solar loan to the wholesale lender whose guidelines handle it best, instead of forcing it into one bank’s box.

What Michigan buyers should know

Michigan replaced net metering with a distributed generation program under 2016 Public Act 342, effective April 2017, and expanded it under 2023 Public Act 235, and which program the account sits on is the biggest variable in whatever savings estimate a seller hands you.

Legacy net metering customers are grandfathered: Under MCL 460.6a(14), a customer who was participating in net metering before the commission established the distributed generation tariff continues under that program at the same site or facility. Ask when the system was interconnected and which program the account sits on, then confirm with the utility how long that treatment runs.
Outflow is credited below retail: Under MCL 460.1173, distributed generation customers pay the retail rate for all electricity the utility delivers (inflow) and receive a monthly bill credit for outflow set by the Michigan Public Service Commission to reflect cost of service in practice, less than the full retail rate. That smaller offset makes consuming your own production more valuable than exporting it.
The array is sized to the prior owner, not to you: State law limits each customer to generation capacity designed to meet up to 110% of that customer’s electricity consumption over the previous 12 months, and reserves at least half of each utility’s program capacity for systems of 20 kW or less. An array built around the seller’s usage may not pay back the same way for you.
Rebuild the math on your own usage: Confirm the utility, the tariff, and whether the interconnection agreement transfers, then run the numbers against your consumption, not the seller’s.

How Align fits your buying strategy

Local real estate agents bring Samantha in for a second opinion when their buyer arrives preapproved somewhere else. She regularly finds a lower rate or less cash to close, whichever helps the buyer more.

That comes from the broker model. One application goes to multiple wholesale lenders, so your offer is built on the loan that fits your situation, not the only one a single bank sells. A 2024 Polygon Research analysis of federal mortgage data found broker borrowers paid about $10,662 less over the life of a $400,000 loan than borrowers at nonbank retail lenders.

Build your homebuyer game plan

Sources: Polygon Research, Loan Costs Channel Study 2024 (2023 federal HMDA data, 30-year fixed purchase loans; commissioned by United Wholesale Mortgage and Willow Canyon Advisors).

FAQ: Buying a home with solar panels

Here are answers to common questions about buying a home with solar panels.

Do solar panels increase a home’s value?

Owned systems generally do. Buyers pay a premium for lower electric bills, and appraisers can credit an owned, functioning system. Leased systems usually add no appraised value because the panels belong to the leasing company, and the monthly payment obligation can actually narrow your buyer pool. Ownership status is the first thing to verify on any solar-equipped listing, and our breakdown of solar panel costs and benefits covers what a system is worth on its own.

What happens to a solar lease when the house is sold?

The lease must be dealt with in one of three ways: the buyer assumes it, which usually requires a credit check with the solar company, the seller buys out the contract, or the seller pays to relocate the system. If you’re the buyer, get the full lease terms early, payment, escalator clauses, remaining term and transfer requirements, before you commit. The seller’s side of the same transaction is in our guide to selling a home with solar panels.

Can you get a mortgage on a house with leased solar panels?

Yes, but the lease payment counts in your debt-to-income ratio, and lenders will review the lease terms. Fannie Mae and Freddie Mac both set specific requirements for properties with leased panels or PPAs, including that the home keeps access to an alternate source of electric power. PACE-financed systems are stricter: because the assessment can take priority over the mortgage, it generally has to be paid off or held subordinate before closing. It’s one of several property conditions in buying strategies and situations that reshape a loan file rather than kill it.

What should I inspect before buying a home with solar panels?

Request the installation contract, permits, warranty documents and at least a year of production monitoring data plus utility bills. Check the system’s age, string inverters often need replacement around years 10 to 15 even though the panels commonly last 25 years or more. Confirm the roof’s remaining life, since removing and reinstalling panels adds real cost. A solar-experienced inspector can evaluate all of it, and how to evaluate a home’s energy efficiency tells you what else to measure.

The bottom line on buying a solar home

Ownership is the hinge. Owned panels convey with the house, can be credited in the appraised value, and are the version the Department of Energy associates with roughly a $15,000 premium over comparable homes without solar. A lease or PPA is a 20- to 25-year contract you assume that adds no appraised value and does add a payment to your debt-to-income ratio, and a PACE-financed system must be paid off or made truly subordinate before your loan can close. Get the install date, the inverter model, a year of production data, and the full contract before your contingency expires.

If you’re ready to buy a home with solar panels, talk to Align Lending, we know which wholesale lenders handle solar leases and PACE liens smoothly, and we’ll shop your scenario across our lender network and show you the numbers side by side. Call 248-506-5727 or start online today.

Footnotes:

This article is for informational purposes only and is not legal, financial, or tax advice. PACE assessments, property tax treatment, federal and state solar incentives, and lease buyout terms depend on facts specific to the property and the taxpayer. Consult a licensed tax professional or attorney about your situation. Return to text

Program terms and figures shown are illustrative, are not a rate quote or an offer of credit, and are subject to change. Investor guidelines for solar-equipped properties can change without notice. Align Lending is an independent Michigan mortgage broker and is not acting on behalf of, endorsed by, or sponsored by the U.S. Department of Energy, the IRS, the Michigan Public Service Commission, Fannie Mae, Freddie Mac, or any government agency.