Can I get a VA loan on a house with leased solar panels?
By Kyle Melvin · NMLS #1486450 · REV Mortgage ·
Short answer
Usually, with conditions. A solar lease or power-purchase agreement is fine as long as it is transferable to you, the lease payment is counted in your debt-to-income ratio, and the agreement does not give the solar company a lien that comes ahead of the mortgage. Owned panels are simply part of the house, and the real problem is a PACE assessment — a solar or energy loan repaid through the property tax bill that sits ahead of the mortgage. VA has issued guidance allowing a loan behind a PACE obligation under conditions, but most lenders will not close behind one, so in practice it is paid off at or before closing.
Solar comes up on a large share of purchases in California, Arizona, Florida and Texas, and the answer depends on how the panels were financed.
Owned outright. Part of the real estate. The appraiser may or may not give value for them; nothing else changes.
Leased, or a power-purchase agreement. The panels belong to the solar company, and the agreement is a contract that has to transfer to you. The lender will want: the agreement itself; confirmation that it is assumable by you and that the solar company will approve the transfer; and that any UCC filing the company recorded is against the panels only and does not encumber the house or take priority over the mortgage. The monthly lease payment is counted as a debt in your ratios, and the transfer approval can take weeks — start it at contract, not at closing. Sellers who cannot transfer the lease sometimes have to buy out the panels.
Financed with a solar loan. Usually a personal loan to the seller, paid off at closing like any other seller debt. Check for a UCC filing on the fixtures.
PACE / HERO assessments. This is the one that kills deals. A PACE assessment is repaid through the property tax bill and sits ahead of the mortgage lien. VA's guidance allows a guaranteed loan behind a PACE obligation only if specific conditions are met and the veteran acknowledges it; most lenders will not originate one at all. In practice the assessment is paid off before or at closing, typically from the seller's proceeds. It shows on the tax bill and in the title report; ask for both early.
The appraisal page covers how the appraiser treats improvements; the Camp Pendleton and MacDill guides cover the markets where this comes up most.
Questions people also ask
- Do solar panels add to the appraised value?
- Owned panels can, if the appraiser finds comparable sales that support it. Leased panels do not; they are the solar company's property, not the home's.
- What is a PACE lien?
- Property Assessed Clean Energy financing — common in California, Florida and Missouri — repaid as a line on the property tax bill and secured ahead of the mortgage. VA permits a guaranteed loan behind a PACE obligation only under specific conditions; most lenders decline it, so expect a payoff, usually by the seller, before closing.
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