Solar Lease vs Buy vs Loan: The Numbers Every Homeowner Needs to Know

The short answer: buying outright saves the most money over 25 years, a solar loan is the best option for most homeowners, and a lease makes sense only in a handful of specific situations. The gap between the right choice and the wrong one can be $20,000 or more over the life of your system — so this decision is worth getting right.

Here's how each option actually works, what the numbers look like, and when each one makes sense for your situation.

The Three Ways to Finance Solar

Every homeowner considering solar will end up choosing one of these paths:

Cash purchase — you pay the full cost upfront
Solar loan — you borrow the money and own the system
Lease or Power Purchase Agreement (PPA) — a third party owns the panels; you pay a monthly fee or per-kWh rate to use the power they produce

The critical distinction between options 1 and 2 versus option 3 is ownership. When you own the system — whether you bought it with cash or a loan — you capture the full financial upside: the 30% federal tax credit, all the electricity savings, and any increase in your home's value. When you lease, someone else captures most of that upside.

We'll run the numbers on all three using a realistic baseline: a 9 kW system in a state with average sun exposure, producing about 12,000 kWh per year, with a pre-incentive cost of $25,000 and an electricity rate of $0.16/kWh.

Option 1: Cash Purchase

How it works: You write a check (or wire) for the full system cost — typically $22,000–$32,000 for a whole-home system before incentives.

Who gets the tax credit: You do. The federal Investment Tax Credit (ITC) is 30% of the system cost, which means a $25,000 system generates a $7,500 credit on your federal tax return. That brings your real out-of-pocket cost to $17,500 (assuming you have enough tax liability to use it — see the ITC guide for details if you're not sure).

The 25-year math:

System cost after ITC: $17,500
Annual electricity savings at $0.16/kWh × 12,000 kWh: $1,920/year
Payback period: ~9 years
Total savings over 25 years: $48,000 in electricity minus the $17,500 net cost = ~$30,500 net profit

That's the ceiling. Cash buyers keep every dollar of savings from year one.

The catch: Most homeowners don't have $25,000 sitting around, and tying up that much capital in a roof-mounted system isn't always the right call even when you do. If your money would earn more invested elsewhere, a loan can actually pencil out better.

Best for: Homeowners with the cash available, a high tax liability to absorb the ITC, and a long horizon (10+ years) at the property.

Option 2: Solar Loan

A solar loan is how the majority of homeowners go solar today. You borrow the installation cost, own the system outright, and pay the loan off over time while the panels produce free electricity.

Types of solar loans:

Dealer-fee loans (most common from installers): Interest rates look low (often 0.99%–3.99%) but the installer charges a "dealer fee" of 15–30% that's baked into the inflated system price. A $25,000 system quoted to you at $29,000 with a 1.99% loan is really a higher-rate loan in disguise.
Home equity loans / HELOCs: Use your home as collateral. Rates are tied to prime but interest may be tax-deductible. Longer repayment terms keep monthly payments low.
Unsecured solar loans: No home equity required. Rates typically run 6%–12% depending on your credit score. Available through solar lenders like Mosaic, Dividend, and GreenSky.

The 25-year math (unsecured loan at 7.99%, 12-year term):

Loan amount: $25,000
Monthly payment: ~$282
ITC credit ($7,500) applied to principal in year 1: effective loan balance drops to $17,500 if you use the credit to pay it down (most lenders allow this)
Revised monthly payment after ITC paydown: ~$197
Annual electricity savings: $1,920
Net year-one cash flow after ITC paydown: roughly cash-flow positive from month one at typical utility rates
Total interest paid over 12 years: ~$4,800
Net profit over 25 years: ~$24,000

You give up about $6,500 in total savings versus a cash purchase (interest cost), but you kept $25,000 of capital free to deploy elsewhere.

The dealer-fee trap: Always ask the installer for the system price in cash, then separately for the financed price. If they differ by more than 5%, you're seeing the dealer fee. Get competing quotes through a marketplace like EnergySage to see actual cash prices and finance side-by-side.

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Neither replaces a whole-home battery for whole-house coverage, but both give you meaningful resilience for a fraction of the cost — and they move with you if you relocate.

How to Get the Best Numbers on Any Option

The single biggest variable in your 25-year math isn't which financing type you choose — it's the price you pay for the system itself. A $4,000 difference in system cost swings your payback period by two full years.

The most reliable way to find the real market price in your area is to collect at least three quotes from vetted local installers. EnergySage lets you do this without giving your phone number to a sales rep — you post your project details, licensed installers compete for your business, and you compare real bids in writing including both cash and loan prices.

Once you have competing quotes, revisit the math above with your actual numbers. Plug in your real electricity rate, your actual ITC eligibility, and the loan rate you qualify for. The decision often becomes obvious in the first pass.

The Bottom Line

If you can use the federal tax credit and qualify for a reasonable loan, owning your system — whether through cash or a solar loan — will put $15,000–$30,000 more in your pocket over 25 years than leasing the same system. Leases make the solar industry's marketing easier to sell, but they transfer the financial upside from you to the finance company.

Run your actual numbers, collect competitive quotes, and make the decision with real math — not a salesperson's monthly payment calculator.

Last updated: 2026-06-19

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