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Using a HELOC to fund a Solar Installation
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Using a HELOC to fund a Solar Installation

If you have equity in your home and you are considering solar panels, a HELOC is a great way to finance your solar installation.


Financial Flexibility: A Home Equity Line of Credit (HELOC) provides financial flexibility, allowing you to access funds as needed for your solar installation while only paying interest on what you borrow.

Tax Deductibility: HELOC interest used for home improvements, including solar panels, may be tax-deductible, providing significant cost savings compared to traditional loans.

Fast Approval: HELOCs offer a speedy approval process, with access to cash in as little as five days, making them a convenient option for financing your solar project.

Environmental and Financial Benefits: Going solar not only reduces your energy bills but also contributes to a cleaner environment by reducing carbon emissions. Moreover, with the federal solar tax credit, you can enjoy substantial cost savings on your solar energy system.

Can You Use a HELOC to Buy Solar Panels?

The short answer: Yes, using a HELOC to pay for your solar project makes perfect sense! Solar panels are expensive.  Despite a big federal tax credit , solar panels cost a lot of money. A typical solar panel system can cost $30,000 or more.  Where do you get the cash?

Home equity loans and HELOCs are often utilized to finance home improvement projects, and solar panels serve as a prime example of such improvements.

There are multiple financing options available for solar panels, including those offered by your solar installer.  However,  a Home Equity Line of Credit (HELOC)  is often considered the most favorable choice.

Benefits of using a HELOC to finance your solar panels

  • Flexibility: With a HELOC as compared to a traditional loan, Instead of getting a lump sum up front, you get a line of credit. Think of it like a credit card, but with a lower interest rate and somewhat different terms. You don't have to take all the money out at once, and you only pay interest on what you actually borrow. So if you have a $50,000 HELOC, you have a standing ability to borrow money to pay for your solar panels.  If the installation is only $35,000, you of course only pay tax on that $35,000 but still have $15,000 available in case something else arises. 

  • Tax deductibility: HELOC interest may be tax-deductible if the funds are used for home improvements, including solar panel installations.  This is a significant savings compared to taking a traditional loan.

  • Fast approval process -  Your HELOC can be approved in minutes and the cash available in as soon as 5 days

  • Get the huge tax credit - The federal solar tax credit is an incredibly powerful incentive for homeowners to install solar energy systems. With the passage of the Inflation Reduction Act in August 2022, this incentive is now even more valuable, covering up to 30% of a system's cost. This has been quantified by a survey across over 400,000 U.S. homeowners who received a solar quote on Solar Reviews. The data showed that the tax credit was the single most influential financial factor when making decisions about solar energy systems. Furthermore, it can be carried over to multiple years if you don't require the full credit. 

Remember, a tax credit is an absolute reduction in your tax liability, not your taxable income.   For example, a $30,000 installation will give you a $9000 tax reduction.  In addition, that credit

Many States also have solar incentives, check this article to see what incentives your state offers. 

It’s a Great Time to go Solar! 

Going solar is an increasingly popular choice among homeowners, businesses and other organizations due to the financial benefits that come along with it. Solar panel systems help offset or even eliminate your electric bills, meaning you’ll save a significant amount of money over time. In fact, depending on where you live, electricity costs can account for a large portion of monthly expenses. This means you could be saving hundreds every month after installing solar panels. Additionally, the savings don’t stop there as solar panel systems are designed to last 25 years or more. This means you’ll produce free power for an extended period of time compared to the life cycle of many appliances and electronics in your home. Even if your system doesn’t generate 100 percent of your energy needs, it still reduces utility bills significantly enough to return some serious savings over time that;s  compounded.  

Solar Protects our Environment 

Replacing traditional methods of energy production with solar energy brings numerous environmental benefits. The conversion from polluting fossil fuels to renewable sources like solar helps to reduce carbon emissions, which has a positive impact on the environment. According to the Environmental Protection Agency (EPA), electric utilities account for 27 percent of America’s carbon emissions. Solar panels are clean and efficient, meaning that people using them are avoiding buying electricity from those power plants that create carbon emissions and pollute local air quality.

Cashing in on Solar Savings with HELOCs

In conclusion, using a Home Equity Line of Credit (HELOC) to finance your solar installation offers a range of benefits, from the flexibility of funds to potential tax savings. With the significant federal tax credit and the opportunity to reduce your energy bills, going solar not only makes financial sense but also helps protect the environment. As solar energy systems continue to become more cost-effective and efficient, there has never been a better time to embrace this sustainable power source. By leveraging the advantages of a HELOC, you can not only enhance your home but also make a positive impact on your finances and the planet.


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