Does a solar lease affect my home's resale value?

An owned solar system increases home value — studies by LBNL show buyers pay a premium of roughly $4 per watt. A leased system is more complicated: potential buyers may see the lease as a liability rather than an asset, especially if the lease payments are high or the transfer process is complicated. You'll need to either buy out the lease before selling or have the buyer assume it, and some buyers walk away from homes with lease complications.

Can I buy out a solar lease early?

Most solar lease and PPA agreements include a purchase option at certain intervals (typically years 5, 7, and 10) at a predetermined price or fair market value. Early termination outside of these windows typically involves a fee calculated as the net present value of remaining payments. If you're considering leasing, review the buyout terms before signing — some contracts make early ownership very expensive.

What is a solar PPA and how is it different from a lease?

In a Power Purchase Agreement (PPA), you pay for the electricity your panels produce at a fixed per-kWh rate, rather than a flat monthly lease payment. In a traditional lease, you pay a fixed monthly amount regardless of how much the panels produce. PPAs more directly tie your payment to production — in a low-production month, you pay less. Both structures involve third-party ownership, and neither qualifies you for the federal ITC.

Is a solar loan better than a solar lease?

For most homeowners, yes. A solar loan lets you own the system and claim the 30% federal ITC, while paying a similar monthly amount to a lease. Over the loan term, your payments stop; lease payments continue for 20–25 years. The break-even math typically favors ownership. Key considerations: the loan interest rate (secured loans using home equity are usually better than high-dealer-fee solar loans) and whether you have sufficient tax liability to fully use the ITC.

What happens at the end of a solar lease term?

Most 20–25 year lease agreements offer the homeowner several options at expiration: renew the lease at a new rate, purchase the equipment at fair market value (often minimal for 25-year-old equipment), or have the company remove the panels at no cost. Review your specific contract for these end-of-term options. Equipment removal is typically handled by the lessor, who may repurpose or recycle the panels.

Solar Lease vs. Buy — Which Option Is Right for You?

Buying Solar Panels: What It Means

When you buy a solar system — whether with cash or a solar loan — you own it outright. The panels, inverter, and all equipment are yours, permanently attached to your home and increasing its value.

Ownership comes with the full financial upside. You claim the 30% federal Investment Tax Credit (ITC), any applicable state credits, and any utility rebates. Your electricity is effectively free once you've recovered the system cost. When you sell your home, owned solar systems have been shown to increase property values — a Lawrence Berkeley National Laboratory study found buyers pay a premium of approximately $4 per watt for solar, translating to roughly $15,000–$25,000 of added home value for a typical system.

The downside of buying is the upfront cost — $25,000–$35,000 gross before the ITC — and taking on system maintenance responsibility. However, panel maintenance is minimal, and the ITC brings the effective cost down to $17,500–$24,500 for most systems.

Leasing and PPAs: Third-Party Ownership

Solar leases and Power Purchase Agreements (PPAs) are structurally similar: a third-party company (the developer/lessor) owns the panels installed on your roof. You pay a monthly lease payment or a per-kWh rate for the electricity produced, rather than buying the equipment.

The main attractions are no upfront cost and no maintenance responsibility — the leasing company handles repairs under its own warranty. Monthly payments are typically lower than a loan payment, and you're usually locked in to a rate below your current utility rate, offering immediate savings.

However, you don't own the system, so you don't claim the 30% ITC — the leasing company does. Your long-term savings are smaller: over 25 years, owned systems typically save $20,000–$50,000 more than leased systems at the same location, because you're not paying the developer's margin.

Leases also complicate home sales. Before selling, you'll need to either buy out the lease, transfer it to the buyer (who must qualify), or pay an early termination fee. Many homebuyers are cautious about inherited solar leases.

Solar Loan Options

Most homeowners who want to own their system don't pay cash — they finance it. Several loan types are commonly used:

Solar-specific loans (offered by lenders like Mosaic, GreenSky, and Goodleap) are unsecured personal loans tailored to solar financing. Rates typically run 5–9% for well-qualified borrowers on 12–25 year terms. These don't require home equity but carry higher interest rates than secured options.

Home equity loans and HELOCs use your home as collateral, offering lower interest rates (typically 6–8% as of 2026) with interest that may be tax-deductible if the funds are used for home improvement. These are excellent options for homeowners with significant equity.

FHA PowerSaver and similar government-backed loans exist in some markets for energy efficiency improvements, sometimes at below-market rates.

When comparing loan options, pay attention to the "dealer fee" or "origination fee" built into solar-specific loans — some add 15–30% to the loan principal, which offsets the headline low interest rate.

Third-Party Ownership Statistics

Third-party ownership (leases and PPAs) has been declining as a share of residential solar installations as loan products have improved. LBNL's Tracking the Sun data shows that nationally, third-party ownership represented about 30–40% of new residential installations in 2015–2018 but has fallen to roughly 20–25% of new installs in 2023–2024 as more homeowners choose to own via loans.

California historically had the highest rate of third-party ownership — at its peak, over 60% of California residential solar was third-party owned as SolarCity and Sunrun dominated the early market. That share has declined significantly as loan products became more accessible and the ITC became more relevant to a broader range of income levels.

Which Is Better? A State-by-State Perspective

Buying (or financing) is nearly always better from a pure long-term financial standpoint for homeowners who have sufficient tax liability to use the ITC and plan to stay in their home for 10+ years. The ITC alone represents a 30% discount on the system cost that lessees forgo.

Leasing makes the most sense for homeowners who have low tax liability (making the ITC less valuable), want zero upfront cost with no financing complications, don't plan to sell their home in the near term, or live in a state with particularly attractive PPA rates.

For renters, leasing is moot — only community solar offers a practical path. For homeowners in high-electricity-cost states like California, Hawaii, Massachusetts, and Connecticut, the math on ownership is compelling because every kWh generated has high replacement value. In states with lower electricity rates (Louisiana, Oklahoma, Arkansas), the payback period is longer and leasing's simplicity may be more attractive for some buyers.