Source-backed buyer guide
Solar financing: compare ownership and total cost before the payment pitch
Cash, loans, leases, and power purchase agreements solve different problems. Compare who owns the system, what the contract makes you pay, and what happens if you sell the home.
Last verified July 22, 2026
The four common structures
The Department of Energy separates homeowner-owned purchases and loans from third-party-owned leases and PPAs. That ownership line affects contract obligations, maintenance responsibilities, incentives, transfers, and end-of-term choices. Start there before comparing a monthly payment.
| Method | Who owns it? | How payment works | Put these in writing |
|---|---|---|---|
| Cash purchase | Homeowner | Full contract price upfront or by project milestones | Cash price, scope, equipment, warranties, and payment schedule |
| Solar loan | Homeowner | Principal and interest over the loan term | Amount financed, APR, finance charge, total of payments, cash price, and prepayment terms |
| Solar lease | Third party | Contract payment for use of the system | Starting payment, escalator, term, maintenance, transfer, buyout, and end-of-term terms |
| Power purchase agreement | Third party | Contract rate for the electricity the system produces | Starting energy rate, escalator, term, production terms, transfer, and buyout terms |
Cash purchase: compare scope and payment milestones
A cash purchase gives you a direct contract price without loan interest, but it still needs an itemized scope. Confirm equipment, roof and electrical work, change-order rules, warranties, cancellation terms, and when each payment becomes due. Do not pay for a promise that is not in the written agreement.
Solar loan: compare the credit disclosures with the cash alternative
Ask for the cash price for identical equipment and scope, then place it beside the amount financed. For covered consumer credit, Regulation Z disclosures include fields such as APR, finance charge, payment schedule, and total of payments. These answer different questions; no single monthly-payment figure replaces them.
If the amount financed exceeds the separate cash price, ask for an itemized reconciliation. Do not infer that the entire difference is a dealer fee unless the documents say so.
Calculate payment and total scheduled cost →Solar lease
You pay under a contract while a third party owns the system. Review the starting payment, any annual escalator, maintenance obligations, term, transfer process, buyout formula, and what happens when the agreement ends.
Power purchase agreement
A third party owns the system and the homeowner pays for its electricity under the agreement. Review the starting per-kWh price, escalator, term, production terms, transfer, buyout, and end-of-contract choices.
Federal incentive assumptions changed after 2025
Current IRS guidance says the Residential Clean Energy Credit is not available for property placed in service after December 31, 2025. If a financing proposal assumes that credit, request revised payment, net-cost, and savings figures without it. Verify any federal claim using the current IRS page and qualified tax advice; state, utility, and local incentives follow separate rules.
Put these answers in writing
- Who owns the system today and at the end of the term?
- What is the cash price for the same equipment and scope?
- What are the APR, finance charge, total of payments, and schedule?
- Does any payment or energy rate increase over time?
- What happens if production differs from the projection?
- Who handles monitoring, maintenance, roof work, and removal?
- What are the transfer and buyout steps if the home is sold?
- Which incentives are assumed, and who is entitled to them?
Compare complete proposals, not slogans
Terms such as “zero down” describe the starting payment, not the lifetime obligation. “Free solar” does not identify who owns the equipment or what the contract requires. Translate each offer into ownership, scope, price, financing disclosures, escalation, transfer, buyout, warranty, and incentive assumptions.
Open the free side-by-side worksheet →Primary sources
Verified July 22, 2026
- Homeowner's Guide to Solar Financing: Leases, Loans and PPAsU.S. Department of EnergyOfficial overview of ownership, loans, leases, PPAs, and contract questions.
- Solar Power for Your HomeFederal Trade CommissionConsumer guidance on comparing offers, contracts, claims, and financing.
- 12 CFR § 1026.18 — Content of disclosuresConsumer Financial Protection BureauFederal disclosure requirements that include APR, finance charge, payment schedule, and total of payments for covered credit transactions.
- Residential Clean Energy CreditInternal Revenue ServiceCurrent federal guidance, including the end date for eligible expenditures.
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