The three real options to put solar on a U.S. residential roof are cash purchase, loan (which is what most people end up taking), and lease or PPA (power purchase agreement). They look interchangeable on the surface — same panels, same warranty, similar monthly savings. They’re not the same financially.
Cash purchase
You write a check (or wire transfer) for the system. You own the panels, the inverter, and every kilowatt-hour they produce. You claim the federal Investment Tax Credit on your tax return. Your monthly electric bill drops sharply — often by 80%–95% net of fixed utility charges.
Best for: Homeowners with the capital available, federal tax liability sufficient to use the ITC, and a 5+ year horizon in the home.
Lifetime cost: System price minus tax credit minus net-metering credits over panel lifetime. Often the cheapest option in absolute dollars.
Solar loan
A lender (Sunlight Financial, GoodLeap, Mosaic, etc.) finances the system. You own the panels and capture the tax credit, but pay a monthly loan payment for 10–30 years. The dealer-fee structure folds the lender’s margin into the financed price.
Best for: Mid-prime borrowers (700+ FICO) with federal tax liability, who want ownership without the upfront cost.
Lifetime cost: Financed system price plus interest, minus tax credit, minus net-metering credits. Higher than cash, lower than lease.
Solar lease or PPA
A third party (often the installer’s leasing subsidiary, or in Sunlight’s case IGS Solar) installs and owns the system. You pay a fixed monthly lease or a per-kilowatt-hour PPA rate, typically less than your current electric bill, for 20–25 years. The lessor claims the tax credit and depreciation benefits.
Best for: Borrowers who can’t use the federal tax credit, have credit below 650, or want zero maintenance responsibility.
Lifetime cost: Lease payments over 25 years (with annual escalator) minus utility savings. Often the highest lifetime cost — but the lowest upfront commitment.
Lifetime cost on a $30,000 system
Comparing approximate 25-year lifetime cost for a representative 10-kW system:
| Path | Upfront | Monthly | 25-yr net cost (post-ITC, post-utility) |
|---|---|---|---|
| Cash purchase | $30,000 | $0 | ~$5,000 (savings exceed cost early) |
| Loan (5.99%, 20 yr, no dealer fee) | $0 | $215 | ~$15,000 |
| Loan (0.00%, 25 yr, $20K dealer fee) | $0 | $167 | ~$20,000 |
| Lease (2.9% annual escalator) | $0 | $95 → $190 | ~$28,000 |
Illustrative figures based on representative scenarios; your actual numbers vary by utility rate, sunlight exposure, system production, and applicable credits.
The tax credit problem
The single biggest financial decision is whether you can use the federal ITC. The credit is 30% of system cost, claimed against your federal tax bill in the year of installation. On a $30,000 system, that’s $9,000.
But it’s a credit, not a refund. If your federal tax liability is $4,000, you can only use $4,000 of the credit this year. The remainder carries forward — but if you’re retired, on a fixed income, or otherwise have low federal tax exposure, the lease becomes more attractive because the lessor uses the credit instead.
What happens when you sell
- Cash purchase: Easiest. The panels convey with the home. Some buyers love it, some are indifferent.
- Solar loan: The loan is yours, not the home’s. You pay it off from sale proceeds, or transfer it to the buyer if your lender allows. Adds friction.
- Solar lease: The buyer must assume the lease (subject to lessor approval), or you buy out the lease at the contract’s buyout price. Often the most complicated of the three.
Our framework
The decision in three questions:
- Do you have $25,000+ in liquid capital and can use the ITC? Cash.
- Do you have 700+ FICO and tax liability for the ITC? Loan.
- Below 650 FICO, low federal tax liability, or want zero responsibility? Lease.
Anyone outside those three clean cases should run side-by-side quotes from a loan lender and a lease provider before deciding.