Solar Financing Guide
Multiple ways to go solar with little or no money out of pocket. Find the option that fits your budget.
The 30% Federal Investment Tax Credit (ITC)
The single biggest incentive for homeowners going solar — and it's available right now.
What Is the Solar ITC?
The federal Investment Tax Credit (ITC) lets you deduct 30% of the total cost of your solar energy system from your federal income taxes. This isn't a deduction — it's a dollar-for-dollar credit that directly reduces what you owe the IRS.
For a typical $25,000 residential solar installation, the ITC saves you $7,500 in federal taxes. That immediately brings your net cost down to $17,500 — before any additional state or local incentives.
The 30% rate was extended through the Inflation Reduction Act and is available through 2032. After that, it steps down to 26% in 2033 and 22% in 2034. There is no cap on the credit amount for residential systems.
How to Claim the ITC
- 1
Install Your System
Your solar system must be installed and operational during the tax year you claim the credit.
- 2
Own the System
You must own the system outright — either through cash purchase or a solar loan. Leases and PPAs do not qualify.
- 3
File IRS Form 5695
Complete IRS Form 5695 (Residential Energy Credits) with your federal tax return. We provide all the documentation you need.
- 4
Receive Your Credit
The credit reduces your tax liability. If you can't use the full credit in one year, the remaining amount rolls forward to future tax years.
ITC Savings by System Size
| System Size | Avg. Cost | 30% ITC | Net Cost |
|---|---|---|---|
| 6 kW | $15,000 | -$4,500 | $10,500 |
| 8 kW | $20,000 | -$6,000 | $14,000 |
| 10 kW | $25,000 | -$7,500 | $17,500 |
| 12 kW | $30,000 | -$9,000 | $21,000 |
California State Incentives & SGIP
California offers additional programs that stack on top of the federal tax credit.
Self-Generation Incentive Program (SGIP)
California's SGIP provides rebates for installing battery energy storage systems. If you're in a high fire-risk area or meet income qualifications, you may qualify for rebates covering up to 100% of your battery cost.
- Rebates for battery storage paired with solar
- Higher rebates for equity and resiliency categories
- Available statewide through participating utilities
Net Energy Metering (NEM)
California's NEM program credits you for excess solar energy your system sends back to the grid. While the state has transitioned to NEM 3.0 with lower export rates, pairing solar with battery storage maximizes your savings by letting you use your own energy during peak rate hours.
- Credits for excess energy exported to the grid
- Battery storage helps maximize self-consumption
- Prop 13 exemption — no property tax increase for solar
Property Tax Exemption
Under California's Proposition 13, your solar energy system is 100% exempt from property tax reassessment. This means your home value increases by $15,000–$25,000 without any additional property taxes — a benefit unique to California homeowners.
Utility-Specific Programs
Depending on your utility provider (PG&E, SCE, or a local municipal utility), additional time-of-use rate plans and demand response programs may be available. Our team analyzes your specific utility situation to maximize every available benefit.
$0-Down Solar Loan Options
Start saving on day one with no upfront cost. Your monthly loan payment is typically less than your current electric bill.
How Solar Loans Work
A solar loan lets you finance the full cost of your system with no money down. You own the system from day one, which means you qualify for the 30% federal tax credit — a benefit you lose with leases or PPAs.
Most homeowners use their tax credit refund to pay down the loan principal after year one, significantly reducing monthly payments for the remainder of the term.
Loan Terms Available
- 10-year terms: Higher monthly payments, lower total interest. Best for fast payoff.
- 15-year terms: Balanced monthly payments. Most popular option.
- 20-25 year terms: Lowest monthly payments. Savings often exceed payment from month one.
- No prepayment penalties — pay off your loan early any time.
Why Loans Beat Leases
- You keep the 30% tax credit — worth $4,500–$9,000+
- Home value increases — owned solar adds $15,000–$25,000
- Fixed payments — unlike leases that escalate 1–3% per year
- No complications when selling — pay off the loan or transfer it
PACE / HERO Financing
Property-assessed financing that attaches to your home, not your credit score.
How PACE Works
Property Assessed Clean Energy (PACE) financing lets you fund energy improvements through a voluntary assessment on your property tax bill. Instead of a traditional loan, the repayment is tied to your property — making it accessible even if you don't qualify for conventional financing.
PACE programs like HERO (Home Energy Renovation Opportunity) are available in Kern County and throughout California. Approval is based on your property's equity and your ability to pay, rather than your credit score alone.
Key Benefits
- No money down — 100% financing available
- Repayment through property tax bill (up to 20–25 years)
- Transfers to the next owner if you sell your home
- Interest may be tax-deductible (consult your tax advisor)
Is PACE Right for You?
PACE financing is a strong option when:
- + You have sufficient home equity but limited credit
- + You want the longest repayment terms available
- + You're combining solar with other home upgrades (roofing, insulation, HVAC)
Consider other options when:
- - You plan to sell your home soon (PACE can complicate the sale)
- - You want the lowest possible interest rate (solar loans are usually lower)
- - You need to refinance your mortgage in the near future
Cash Purchase Benefits
If you have the capital available, paying cash delivers the highest long-term return on investment.
Interest Paid
No interest charges means every dollar of savings goes straight to your bottom line. Over 25 years, this often saves $5,000–$15,000 compared to financing.
Typical ROI
Cash buyers typically see a 300–500% return on investment over the life of the system, factoring in energy savings, tax credits, and increased home value.
Payback Period
Most cash buyers break even in 5–7 years, then enjoy 18–20+ years of free electricity from a system warranted for 25 years.
Cash Purchase Savings Example: 10 kW System
System Cost
$25,000
After 30% ITC
$17,500
25-Year Savings
$55,000+
Net Profit
$37,500+
Compare Your Financing Options
Every option lets you own your system and keep the tax credit. Here's how they stack up.
| Feature | Cash Purchase | Solar Loan | PACE/HERO |
|---|---|---|---|
| Upfront Cost | Full system cost | $0 down | $0 down |
| 30% Federal Tax Credit | Yes | Yes | Yes |
| Monthly Payments | None | Fixed monthly | Via property tax |
| Interest Rate | None | 3.99%–8.99% | 6.00%–9.00% |
| Term Length | N/A | 10–25 years | 10–25 years |
| Credit Requirements | None | Good credit (650+) | Home equity based |
| Home Value Increase | $15K–$25K | $15K–$25K | $15K–$25K |
| Overall ROI | Highest | High | Moderate |
| Best For | Maximum savings | Most homeowners | Limited credit options |
Monthly Payment Examples
See what solar could cost per month with a $0-down loan — and how it compares to your current electric bill.
| System Size | Net Cost (After ITC) | 15-Year Loan | 20-Year Loan | Avg. Electric Bill Replaced |
|---|---|---|---|---|
| 6 kW | $10,500 | ~$85/mo | ~$70/mo | $120–$180/mo |
| 8 kW | $14,000 | ~$115/mo | ~$95/mo | $160–$240/mo |
| 10 kW | $17,500 | ~$140/mo | ~$115/mo | $200–$300/mo |
| 12 kW | $21,000 | ~$170/mo | ~$140/mo | $250–$400/mo |
* Estimated monthly payments based on a 5.99% APR solar loan after applying the 30% federal tax credit. Actual rates and payments vary based on creditworthiness, lender, and market conditions. Electric bill estimates based on Central Valley residential averages. Contact us for a personalized quote.
Find the Best Financing Option for Your Home
Every home is different. Our solar advisors analyze your energy usage, roof, utility rates, and financial goals to recommend the financing option that saves you the most money.
- Personalized savings estimate based on your actual utility bill
- Side-by-side comparison of financing options for your specific situation
- Help claiming all available federal, state, and local incentives
- No pressure, no obligation — just honest guidance
Get Your Free Solar Financing Quote
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