Going solar as a first-time homebuyer

If you just purchased your first home, first of all, congratulations! Buying a home is no small feat, and immediately planning home upgrades may feel overwhelming–but it doesn't have to be.

Solar is an excellent upgrade for first-time homebuyers because it can save you tens of thousands of dollars in the long run and increase your home value. We've laid out some key questions to answer when deciding to go solar as a first-time homebuyer.

Many first-time homebuyers don't plan on living there forever. The average payback period for a solar energy system on EnergySage is around 10 years, so if you plan on selling your home in five years, you might wonder: what's the point? While it may make assessing the benefits of going solar a little trickier, installing a solar panel system is typically still worth it even if this isn't your forever home.

According to 2025 research conducted by SolarInsure, investing in a solar installation for your home can increase your home's value by 5% to 10%. From here, it's easy to calculate how much of an impact solar can have on the value of your home, as well as the portion of your solar costs covered by this benefit: all you need to know is the price of your home and the cost of your solar panel system.

While home value–and thus added home value from solar–varies by location, the median price for a standalone, single-family home in the United States has crept above $403,000. For the median home, a solar panel system can add $20,150 to $40,300 to your home's value ($403,000 home price * 5-10% added home value from solar).

Let's say you plan on installing an 8-kilowatt (kW) solar panel system on your home. We estimate that the average cost of an 8 kW system is usually $20,880 before incentives. That means you could recoup your entire investment and then some when you sell your home. All while enjoying plenty of free, solar-generated electricity during the years you're living in your home.

Of course, these values vary significantly, depending on your home's price, location, local electricity rates, and the cost of your solar panel system.

If you just purchased your first home, you may be a bit low on savings, and paying for solar upfront might not be feasible. Fortunately, there are several ways to finance your solar panel installation.

First up: solar loans. Solar loan products are broadly divided into two categories: secured and unsecured. Neither type of solar loan typically requires a down payment, which is good news if you've just spent a lot of money on a down payment for your house. However, you must consider a few factors about each type of loan before choosing one.

Secured solar loans

Secured loans, also known as second mortgages or home equity loans, may sound enticing because they generally offer tax-deductible low-interest rates. But that's because they require collateral–typically in the form of your home. If you default on the loan, the lender can repossess your home.

To be approved for a secured loan, you'll usually need significant equity in your home and a favorable debt-to-income ratio, which may be difficult if you've just purchased your first home and taken on a considerable amount of debt (i.e., a mortgage). Additionally, if you plan on selling your new home in just a few years, secured loans may not be your best option unless you can fully pay off your solar loan before you move. Once you sell your home, you'll have to pay off the remaining loan balance, but you can do so with the additional revenue generated by your solar energy system's added value.

Unsecured solar loans

With an unsecured loan, your home isn't on the line if things go sideways. But lenders take on more risk, so the interest rates tend to be higher and aren't tax-deductible. Most loan providers won't charge interest on the portion of your loan covered by any state or local incentives you receive upfront.

If you think you might sell before the loan is paid off, an unsecured loan gives you more flexibility. You'll still be responsible for the remaining balance after you move, but loan terms typically run five to 20 years.

Third-party ownership: leases and power purchase agreements (PPAs)

Leases and power purchase agreements (PPAs) let you go solar with no upfront cost. Under both arrangements, a third-party company installs and owns the panels, and you pay them for the electricity produced—usually at a lower rate than your utility charges. You won't own the system, and you won't be eligible for most incentives, but you also won't have to worry about maintenance.

In the past, we were cautious about recommending third-party ownership (TPO) options because owning your system almost always came out ahead financially. That math has shifted a bit now that the federal solar tax credit expired for purchased systems in 2025.

That said, there are risks to understand, particularly if you're thinking about selling your home before the lease ends (typically 20–25 years):

• Lease transfers can complicate home sales. When you sell a home with a leased solar system, the buyer has to qualify to take over the lease—which includes a credit check. Not every interested buyer will want to inherit a long-term contract they didn't negotiate, which can shrink your pool of potential buyers and slow down closing.

• Early termination fees can be steep. Buying out a lease early can cost anywhere from $15,000 to $25,000, depending on the provider and how much time is left on the contract.

• Leased panels don't increase your appraised home value. Fannie Mae guidelines exclude leased solar from appraisals, so you won't get the same property value boost as you would with a purchased system.

• Annual escalators can chip away at your savings. Many leases include 1–3% annual payment increases. A $120 monthly payment can grow to nearly $200 by year 20, potentially outpacing any savings.

If you're a first-time homebuyer who isn't sure how long you'll stay, the prepaid lease option deserves a closer look. With a prepaid lease, you pay the full contract amount upfront (usually at a discount) and then use the system rent-free for its term. There are no ongoing monthly payments to transfer, no escalators, and the process of selling your home is considerably simpler than with a monthly-payment lease or PPA. Buyers won't need to qualify for ongoing payments—they'll simply inherit a system with years of free electricity remaining.

For a detailed side-by-side of all your financing options, see our solar financing guide.

The federal solar investment tax credit (ITC) expired for residential systems installed after 2025, but solar is still financially attractive. Depending on where you live, you may have access to great incentives at the state and local level.

Net metering

Net metering is one of the most valuable ongoing financial benefits of going solar. It allows you to send excess electricity your panels generate back to the grid, earning credits on your utility bill. You can then draw on those credits at night or when your panels underperform—essentially using the grid as a giant battery.

Not all states offer net metering, and the rules vary widely. Some utilities pay you full retail rates for every kilowatt-hour you send back; others pay at a lower wholesale rate (often called net billing). It's worth checking with a local solar installer if net metering is available in your city.

State tax credits and rebates

Many states offer their own solar tax credits or direct rebates to homeowners. These can range from a few hundred dollars to several thousand, and they apply regardless of whether you own your system or go the lease route (though ownership-based incentives are more common). Some utilities also offer their own rebate programs.

Check our list of solar incentives by state to see what's available where you live.

Your payback period depends on a lot of variables, like your system cost, your local electricity rates, whatever incentives you qualify for, and how you finance your system. With the federal tax credit no longer available for purchased systems, the average payback period has extended by a couple of years, but rising electricity prices help offset that.

According to the EIA, the average residential electricity rate in the U.S. was around $0.18 per kWh as of early 2026, up from $0.17 in 2025. Rates are expected to keep climbing, and electricity has consistently outpaced general inflation over the past several years—which makes locking in solar's fixed energy costs more valuable each year.

Here's a simplified example using an 8 kW system. At the current average cost of $2.58 per watt, an 8 kW system runs about $20,880 before any incentives. In a moderately sunny area, that system generates roughly 10,000–11,000 kWh per year. At $0.18/kWh, that's about $1,800 to $1,980 in avoided electricity costs annually—and that number grows each year as rates rise.

Dividing the system cost by your annual savings gives you a rough payback period. If your state has a tax credit worth $2,000, for instance, your system cost drops to $18,880, and your payback at $1,900 in annual savings would be around 9.9 years.

Now factor in home value. If that same $20,880 system adds $27,800 to your home's value (based on a 6.9% premium on a $403,200 median home), the cost of solar from a resale perspective becomes essentially zero—before you've saved a dollar on electricity. If you plan to sell in five years, you could realistically come out ahead on the investment.

Plus, that calculation doesn't account for net metering or SRECs, which would further shorten your payback period.

Are solar panels a good investment in 2026?

In most cases, yes. The federal tax credit is no longer available for systems purchased in 2026, but state incentives, rising electricity rates, and the home value premium solar provides still make it a strong investment for most homeowners. Use our solar calculator to run the numbers for your specific situation.

What other incentives or credits do I qualify for with solar?

It depends on where you live. State and local incentives vary widely—some states offer robust tax credits or rebates, while others have few extended benefits for solar homeowners. Check out what's available in your state to get a sense of what you can apply.

How do I determine the payback period when getting solar for my first home?

Your payback period depends on your system cost, your local electricity rate, and any incentives you receive. The basic formula: take your total system cost (after any upfront rebates or credits) and divide it by your estimated annual electricity savings. If you plan to sell before the payback period is up, factor in the home value increase solar provides—it can make the investment worthwhile much sooner.

For competitive prices on solar panel systems, visit the EnergySage Marketplace, where you can get and compare multiple quotes from solar installers. Still unsure if installing a solar system is the right option for you? Visit our Community Solar Marketplace to explore solar projects near your new home that could save you money and support local companies.