Zero-down solar: Which financing option is best?

Most homeowners who go solar don't pay cash upfront. They finance their systems with $0 down and start saving on day one.

If you've decided to go solar but don't want to spend thousands of dollars out-of-pocket to have solar panels installed, you can finance your system with a zero-down solar loan, lease, or power purchase agreement (PPA). Each option lets you start generating clean energy immediately without tying up significant capital.

Zero-down financing is appealing, but it's important to understand the trade-offs of each option before committing to a system you'll rely on for over two decades. The right choice depends on what you value most: maximum long-term savings, true energy independence, predictable monthly costs, or complete freedom from maintenance responsibilities.

We'll walk you through the benefits and drawbacks of all your zero-down financing options and help you determine which one makes the most sense for your personal financial situation.

There are three main ways to go solar without any upfront costs: solar loans, solar leases, and power purchase agreements (PPAs). Each option has distinct advantages depending on what matters most to you—whether that's maximizing savings, minimizing responsibility, or keeping your capital flexible.

Comparing zero-down solar options

Solar loans

A solar loan lets you own your system while spreading costs over time. When you take out a solar loan, you borrow money from a lender at a fixed interest rate and pay it back in monthly installments. Your monthly payments remain consistent and don't increase—in some cases, you may even be able to refinance your loan for a lower rate.

Ownership is the key advantage here. When you own your system, you increase your home value, and any available state tax incentives or rebates go directly to you rather than to a solar company. While the federal solar tax credit is expiring for systems installed after December 31, 2025—and most installers are already at capacity through year-end—many states and utilities still offer valuable incentives for solar installations. Your eligibility for these programs depends on where you live, but ownership through a loan ensures that you capture those benefits directly.

Most solar loans come with a zero-down option. The amount you pay monthly depends on your system's installation cost, your interest rate, your loan term, and the type of loan you choose. In most cases, your monthly loan payments will cost less than your previous electric bill, providing immediate savings while you build equity in your home.

The main consideration with loans is that you're responsible for maintenance, though solar panels require minimal upkeep, and installer warranties typically cover any issues for the first few years. You'll also pay interest over the life of your loan, which reduces your net savings compared to a cash purchase and can make them competitive with leases and PPAs.

Solar leases

Solar leases offer another way to go solar without spending money upfront. With a lease, a solar company installs panels on your roof, owns the system, and charges you a fixed monthly rate for the electricity it generates.

With a solar lease agreement, you pay the leasing company a fixed monthly price based on your system's estimated electrical production. Your monthly costs should be 10% to 30% lower than your previous electric bill. Most leases include annual rate increases of 1-3%, commonly referred to as escalator clauses. These yearly increases mean your payments grow over time, which is an important factor to consider when evaluating total costs over 20-25 years.

As a result of the tax credit ending for purchased residential systems, the solar industry is evolving its leasing practices. Leasing companies can still access federal tax credits under Section 48E of the tax code through 2027—but the amount of that benefit passed on to customers varies by provider. The potential for more competitive lease offerings is increasing as companies adapt to market changes.

The key advantage of leases is that they eliminate maintenance responsibilities—the company handles all repairs, monitoring, and performance issues. If you prefer simplicity and don't want to own the equipment, a lease might make sense for your situation.

Keep in mind that leasing can complicate home sales, as the buyer must either assume your lease or you'll need to buy out the remaining term. You also won't benefit from any increase in home value that owned solar systems typically provide.

Power purchase agreements (PPAs)

Power purchase agreements (PPAs) work similarly to solar leases, with one key difference in how you're billed: With a PPA, you agree to purchase the power generated by your system at a set per-kWh rate rather than the fixed monthly rate you pay for a solar lease. This means your payments fluctuate from month to month based on the amount of electricity your system produces. You should be prepared to make higher payments during summer months, for example, when your system generates more electricity and you're likely using more power.

With a zero-down PPA, you owe nothing to your provider upfront. Your monthly bill will likely be between 10% and 30% lower than your previous electric bill, and you'll likely face an annual rate increase of 1-3% per year (depending on your agreement).

Like leasing companies, PPA providers can access federal tax credits under Section 48E through 2027, though how much of that benefit reaches customers depends on the provider.

PPAs also offer the same maintenance-free benefits as leases—the company handles all system monitoring and repairs. However, you're paying for actual electricity production, so if your system underperforms due to shading or equipment issues, you only pay for what you get. This can be an advantage over leases if system performance varies throughout the year.

And, like leases, PPAs can complicate home sales and don't provide the home value increase associated with owned systems.

If you're weighing zero-down financing against a cash purchase, here's the fundamental trade-off: Paying cash for solar delivers the highest long-term returns because you avoid all interest charges and own your system from day one. For an average 12 kW system costing $29,649, a cash buyer captures every dollar of savings over the system's 25-30 year lifetime.

But cash purchases require significant upfront capital—which you might prefer to keep available for other investments, emergencies, or opportunities. Zero-down financing options let you start saving immediately while preserving your liquidity. You'll pay interest (with loans) or accept different savings structures (with leases and PPAs), but you maintain financial flexibility that can be valuable depending on your broader financial strategy.

When considering your zero-down solar financing options, you're not just choosing a payment plan—you're choosing your relationship with solar for the next 20-30 years.

A loan means you're building an asset. Every payment increases your stake in something you'll own outright, which will keep delivering value long after you've made that final payment.

A lease or PPA means you're buying a service. The solar company owns the system, and you purchase the electricity it generates at a lower rate than what your utility offers, while they handle any maintenance that may pop up.

So, do you want to own your energy independence, or do you want someone else to handle it for you?

Neither answer is wrong. They're just different approaches to the same goal: reducing your reliance on utility companies while saving money.