Deciding how to pay for solar used to have an easy tiebreaker: buy the system, claim the 30 percent federal tax credit, and come out ahead. That tiebreaker is gone in 2026. This guide compares the three ways to pay for rooftop solar, a cash purchase, a solar loan, and a lease or power purchase agreement (PPA), on the things that actually decide it: who owns the panels, who keeps the incentives, what each really costs, and the fine print that trips homeowners up. Every figure is sourced and dated.
- Cash costs the most today and the least over time. You pay the full system price up front (about $31,000 for a typical 12 kW system before incentives), you own the panels, and you keep any state and utility incentives, which is why a cash purchase has the lowest lifetime cost (EnergySage, as of early 2026).
- A loan lets you own it with little or nothing down, but scrutinize the dealer fee. Many solar-specific loans bury a hidden “dealer fee,” often 10 to 30 percent of the cash price and sometimes more than 50 percent, inside the loan principal and outside the stated APR, so the financed price is higher than the cash price (CFPB Issue Spotlight: Solar Financing, as of August 2024).
- A lease or PPA can mean no up-front cost, but you do not own the system. A third party owns the panels, so that company keeps the tax credit and incentives, and you pay a monthly amount that often rises each year under an escalator clause, commonly about 2 to 5 percent (SEIA Solar Power Purchase Agreements, as of 2026).
- The federal homeowner tax credit ended, which reshapes the choice. The 30 percent federal Residential Clean Energy Credit (Section 25D) ended for expenditures made after December 31, 2025 (IRS; SEIA, as of 2026), so a homeowner who buys in 2026 cannot claim it, and the old “own it to grab the 30 percent” edge over leasing is gone.
- One federal credit still exists, and it is not the homeowner’s. With the residential Section 25D credit ended after December 31, 2025, the only federal credit left on a home solar system is the commercial Section 48E credit, and the company that owns a leased or PPA system claims it, not you (IRS Clean Electricity Investment Credit; IRS Residential Clean Energy Credit, as of 2026).
- There is no single right answer. Cash suits the most lifetime savings, a loan suits ownership without paying cash up front, and a lease or PPA suits no up-front cost and a hands-off system. What fits depends on your budget, how long you will stay, and whether owning matters to you.
This guide is the cornerstone of the MySolarFY solar financing hub, our home for how to pay for solar and how cash, loans, and lease or PPA options compare.
Should you buy, finance, or lease solar in 2026?
For most homeowners who can afford it, a cash purchase gives the lowest lifetime cost, a solar loan is the middle path that keeps ownership without a big up-front check, and a lease or PPA trades ownership away for no up-front cost. Buying (with cash or a loan) means you own the panels and keep any state and utility incentives; a lease or PPA means a third party owns the system and keeps those benefits while you pay a monthly amount (DOE Homeowner’s Guide to Going Solar, as of 2026). The right pick is the one that matches your budget and your plans, not a one-size answer, and the rest of this guide gives you the numbers and the fine print to choose.
The decision at a glance: cash vs loan vs lease or PPA
Start with what each path does to ownership, incentives, and cost, because that is where the three diverge most. The table below lays the options side by side. Read “lifetime cost” as the total you pay for the system over its life, before counting the electricity-bill savings that all three deliver.
| Factor | Cash purchase | Solar loan | Lease or PPA |
|---|---|---|---|
| Up-front cost | Full system price (about $31,000 for a typical 12 kW system before incentives) | Little to none, financed | Little to none where eligible |
| Who owns the panels | You | You | A third party (the leasing or PPA company) |
| Who gets the tax credit and incentives | You (state and utility incentives; the federal 25D credit ended after 12/31/2025) | You (same as cash) | The third-party owner, via the commercial Section 48E credit |
| Monthly payment | None | Fixed loan payment | A monthly payment that often rises each year under an escalator |
| Lifetime cost | Lowest | Higher than cash (interest, plus any dealer fee) | Higher than cash; you own nothing at the end |
| Selling the home | Simplest; the system conveys with the house | Pay off or transfer the loan at sale | The buyer must assume the agreement and meet the provider’s credit requirements, or you buy it out |
| Best for | The most lifetime savings and the fastest payback | Owning the system without paying cash up front | No up-front cost and a hands-off, maintained system |
Sources: ownership, incentive, and sale mechanics per DOE Homeowner’s Guide to Going Solar and SEIA; the federal Section 25D homeowner credit ended after December 31, 2025 per IRS, as of 2026.
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What changed in 2026: the credit that used to reward buying is gone
The biggest shift in the buy-versus-lease decision this year is not about interest rates, it is about a tax credit that no longer reaches homeowners. For years, the strongest argument for owning your system (with cash or a loan) was that you, the owner, could claim the 30 percent federal Residential Clean Energy Credit. That credit, Section 25D, ended for expenditures made after December 31, 2025 under the 2025 budget law (IRS Residential Clean Energy Credit; SEIA summary of the law, as of 2026). So a homeowner who buys solar in 2026 cannot claim that 30 percent federal credit. You will still see installers and search results say the 30 percent credit applies; for a 2026 homeowner purchase, that is out of date. MySolarFY does not provide tax advice, so confirm your own situation with a tax professional.
Here is the twist that actually moves the lease-versus-buy math. A separate, commercial credit, the Section 48E Clean Electricity Investment Credit, still exists, and it can apply to a leased or PPA system. But it is claimed by the business that owns the panels, not by you (IRS Clean Electricity Investment Credit, as of 2026). In practice that means a leasing or PPA company can still capture a federal credit on your roof in 2026, while a homeowner-buyer cannot, because the residential Section 25D credit ended after December 31, 2025. That does not automatically make leasing the better deal, because the owner prices its lease to keep most of that benefit, but it does remove the clean “own it to get the 30 percent” advantage that buying used to hold. The table shows the before-and-after.
| Federal tax credit | Through 2025 | 2026 onward |
|---|---|---|
| Homeowner who buys (cash or loan) | Could claim the 30% Section 25D credit | Section 25D ended after 12/31/2025; no longer any federal credit for the buyer (IRS, 2026) |
| Third-party owner of a lease or PPA | Claimed a commercial credit | The commercial Section 48E credit stays with that owner, never the homeowner (IRS, 2026) |
| Net effect on the decision | Buying carried a clear federal-credit edge | That edge is gone for homeowners; the case for buying now rests on ownership and lifetime savings |
For the full breakdown of what ended after December 31, 2025 and what did not, see our guide on what the end of the federal solar tax credit means in 2026.
Paying cash: the lowest lifetime cost, the highest up-front
A cash purchase is the simplest path and the cheapest over the life of the system, because you skip both loan interest and lease payments. You pay the full price up front, roughly $31,000 for a typical 12 kW system before incentives, at a national average around $2.58 per watt (EnergySage, as of early 2026). In return you own the panels outright, you keep every state and utility incentive and net-metering credit, and once the system pays back its cost, the electricity it makes is effectively free of a monthly payment. The trade-off is the obvious one: it ties up a large sum, and in 2026 there is no federal tax credit to refund part of it, because the residential Section 25D credit ended after December 31, 2025. If you have the cash and plan to stay in the home, this is usually the most money saved over 25 years. To see how those savings stack up, read how much money solar can save over 20 years and the solar payback period explained.
Solar loans: you own it, but read the dealer fee
A solar loan gives you ownership with little or nothing down, which is why it is the most popular path, but the fine print is where loans get expensive. Because you still own the system, you keep the same state and utility incentives a cash buyer gets, and you spread the cost over a fixed monthly payment instead of one big check. The catch is a fee most homeowners never see itemized. The Consumer Financial Protection Bureau found that many solar-specific lenders build a hidden “dealer fee” (also called a program, platform, or finance fee) into the loan principal, typically 10 to 30 percent of the cash price and sometimes more than 50 percent, and that this fee is often left out of the stated APR (CFPB Issue Spotlight: Solar Financing, as of August 2024). That is how a loan can advertise a low interest rate while the financed price runs well above the cash price for the exact same system. For a full explainer of the two loan types, the APR and term math, and how to spot that dealer fee, see how solar loans work.
Note: Before you sign any solar loan, ask the installer for the cash price in writing, then compare it to the financed price. If the financed price is much higher, a dealer fee is likely buried in the loan. A low advertised APR does not tell the whole story, because the fee can be baked into the principal rather than the rate (CFPB, as of August 2024). Comparing total cost, not just the monthly payment or the rate, is the single most valuable thing you can do on a loan quote.
Leasing and PPAs: no up-front cost, but you do not own the system
A lease or a power purchase agreement (PPA) can put solar on your roof with no up-front cost, in exchange for a monthly payment and giving up ownership. With a lease you pay a fixed monthly amount to use the system; with a PPA you pay a per-kilowatt-hour price for the power it makes. Either way, a third party owns the panels and handles maintenance, and in 2026 that owner is the one that can use the commercial Section 48E investment credit, which is never the homeowner’s to claim, now that the homeowner’s own Section 25D credit ended after December 31, 2025 (IRS Clean Electricity Investment Credit; IRS Residential Clean Energy Credit, as of 2026). These agreements commonly run 20 or 25 years for a lease, and about 10 to 25 years for a PPA, and many include an annual escalator clause that raises your payment each year, often by about 2 to 5 percent, though some contracts are fixed at a 0 percent escalator (SEIA Solar Power Purchase Agreements; NREL Homeowner’s Guide to Leasing a Solar Electric System, as of 2026). That escalator is the clause to flag, because a payment that starts below your utility bill can climb over a 20-year term. For a full side-by-side of how the two actually differ, see our guide to solar lease vs PPA.
The other place a lease or PPA gets complicated is when you sell the house. Because the panels are not yours, the agreement usually has to be transferred to and assumed by the buyer, who must meet the leasing company’s credit requirements, or you have to buy the contract out before closing (NREL; EnergySage, as of 2026). That extra approval and payoff step is a real source of friction that a cash or loan-owned system does not have, since an owned system simply conveys with the home. A lease or PPA is a genuine option for a homeowner who wants solar with no out-of-pocket cost and no maintenance role. It is a long-term financial agreement, not free solar, and the trade-off is that you never build ownership and you hand the incentives to the company that does.
What a $31,000 solar system can cost you three ways
To make the trade-offs concrete, here is the same system priced three ways. This is our own illustration, not a quote, built to show the direction and rough scale of the difference, so read it with the assumptions below and get real numbers from your own quotes.
| How you pay | Up-front | Rough monthly | Rough total paid for the system | Own it at the end? |
|---|---|---|---|---|
| Cash | about $31,000 | none | about $31,000 | Yes |
| Loan (with a 22% dealer fee) | little to none | about $360 | about $65,000 over 15 years | Yes |
| Lease or PPA (2.9% escalator) | little to none | about $140 to start, rising yearly | about $60,000 over 25 years | No |
The assumptions, so you can follow the math. The system is a typical 12 kW install with a $31,000 cash price (EnergySage, early 2026), and there is no federal 25D credit in 2026 to offset any of it, because that credit ended after December 31, 2025 (IRS, 2026). The loan row adds a 22 percent dealer fee (the midpoint of the CFPB’s 10 to 30 percent range) to reach a roughly $37,800 financed amount, then amortizes it at an illustrative 8 percent APR over 15 years (CFPB, 2024). The lease row starts at about $140 a month and grows 2.9 percent a year for 25 years, within SEIA’s typical escalator range (SEIA, 2026). These are illustrative estimates, and every one of these numbers moves with your quote, your credit, your state, and your rate.
Now net each path against the electricity it saves you, because that is the number that actually decides it. All three paths put the same panels on your roof, so all three offset the same power. At the U.S. average residential rate of 18.83 cents per kWh (EIA, March 2026), a 12 kW system producing roughly 14,000 kWh a year offsets about $2,600 of grid power annually, or roughly $65,000 over 25 years (an illustrative figure, before panel degradation and future rate changes, which roughly offset each other here). Subtract that from what each path pays and the ranking becomes concrete.
| How you pay | Total paid for the system | Bill savings it offsets (25 yr) | Approx. 25-year net position | Own it at the end? |
|---|---|---|---|---|
| Cash | about $31,000 | about $65,000 | about $34,000 ahead | Yes |
| Loan (with a 22% dealer fee) | about $65,000 | about $65,000 | roughly break-even | Yes |
| Lease or PPA (2.9% escalator) | about $60,000 | about $65,000 | about $5,000 ahead | No |
Read the loan row as a warning about the fee, not about loans. The reason a loan lands near break-even in this illustration is the 22 percent dealer fee, which nearly doubles the financing cost. Swap it for a no-fee option such as a credit-union loan or a home-equity line and the loan’s net position moves much closer to cash, because you keep ownership without the buried markup. Cash still comes out furthest ahead because it pays no interest and no fee, and the lease nets positive here but leaves you owning nothing at the end and exposed to the escalator. This is an illustration at the national average rate, not a quote; in a high-rate state the savings column grows and every owned path improves. To run the savings side for your own home, see our full solar cost and savings guide, how much solar panels cost, and whether solar panels are worth it.
Questions to ask before you sign any solar financing deal
The best protection against a bad financing deal is a short list of direct questions, asked before you sign. These cut straight to the terms that cost homeowners the most, and any reputable company will answer them in writing.
- Get the cash price in writing. Then compare it to the financed price. A gap points to a hidden dealer fee (CFPB, 2024).
- Ask for the dealer fee and the all-in APR on a loan. A low headline rate can hide a large fee baked into the principal.
- Pin down the escalator percentage on a lease or PPA. A 0 percent (fixed) escalator protects you; a 3 to 5 percent escalator compounds over 20 years (SEIA, 2026).
- Get the buyout schedule and the earliest buyout date. Ask for the buyout price in writing and how it changes over time.
- Confirm how the agreement transfers if you sell. Nail down the assumption and credit-check process, or the payoff, so a future sale is not blocked (NREL, 2026).
- Ask who owns the system and who claims the incentives. On a lease or PPA, that is the third-party owner, not you.
A note on choosing the company itself. Financing is only half the decision; the installer matters just as much. Rather than trusting a “best installer” list, get quotes from more than one licensed company and compare them on objective criteria: licensing, warranties, equipment, the cash price, and a written production estimate. To see how we source and check the figures on this page, read how MySolarFY works and our data and methodology.
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Frequently asked questions
Should I buy or lease solar panels in 2026? For most homeowners who can afford the up-front cost or qualify for a fair loan, buying wins on lifetime savings because you own the system and keep the state and utility incentives. Leasing or a PPA makes more sense if you want no up-front cost, no maintenance role, or you cannot use incentives yourself. The decision shifted in 2026: the 30 percent federal Residential Clean Energy Credit (Section 25D) ended for expenditures after December 31, 2025 (IRS, as of 2026), so buying no longer carries a federal-credit edge. It still carries the ownership and lifetime-cost edge. MySolarFY does not provide tax advice; confirm your situation with a tax professional.
Is it better to get a solar loan or a solar lease? A loan is usually better if you want to own the system, since you keep the incentives and build equity, while a lease hands ownership and those benefits to a third party. The loan’s risk is cost: many solar loans carry a hidden dealer fee, often 10 to 30 percent of the cash price, baked into the principal (CFPB, as of August 2024), so the financed price can run well above the cash price. A lease avoids that fee and the maintenance, but you never own the system and the payment often escalates each year. Compare the total cost of each, not the monthly payment alone.
What is a solar dealer fee and how much is it? A dealer fee is a hidden charge that many solar-specific lenders add to the loan principal to “buy down” a low advertised interest rate. The Consumer Financial Protection Bureau reports these fees (also called program, platform, or finance fees) typically run 10 to 30 percent of the system’s cash price and can exceed 50 percent, and that they are often not reflected in the stated APR (CFPB Issue Spotlight: Solar Financing, as of August 2024). Because the fee sits in the principal rather than the rate, a loan can look cheap on APR while the financed price runs far above the cash price. Always ask for the cash price and compare.
What are the downsides of leasing solar panels? With a lease or PPA you do not own the system, so a third party keeps the tax credit and incentives, and you pay a monthly amount that often rises each year under an escalator clause, commonly about 2 to 5 percent (SEIA, as of 2026). Over a 20 or 25 year term that escalator can push your payment above what a fixed cost would have been. Leases also add friction when you sell the home, because the buyer must assume the agreement and meet the provider’s credit requirements or you must buy it out. The upside is no up-front cost and no maintenance role, but the lifetime cost is higher than owning.
Is it hard to sell a house with leased solar panels? It can add steps. Because the leasing or PPA company owns the panels, a sale usually requires the buyer to assume the agreement and pass the provider’s credit check, or the seller to buy the contract out before closing (NREL Homeowner’s Guide to Leasing a Solar Electric System; EnergySage, as of 2026). That approval and payoff process can slow a closing if the buyer does not want the lease. A system you own with cash or a loan avoids this, because it simply conveys with the house or the loan is paid off at closing. Before signing a lease, ask for the transfer and buyout terms in writing.
Is the 30% federal solar tax credit gone for 2026 buyers? Yes. The 30 percent federal Residential Clean Energy Credit (Section 25D) ended for expenditures made after December 31, 2025 under the 2025 budget law (IRS; SEIA, as of 2026), so a homeowner who buys solar in 2026 with cash or a loan cannot claim it. A separate commercial credit, Section 48E, can apply to a leased or PPA system, but the company that owns the panels claims it, not you (IRS, as of 2026). State and utility incentives and net metering were not affected by this change. MySolarFY does not provide tax advice; consult a tax professional.
What is a solar lease escalator? An escalator is a clause in a lease or PPA that raises your payment by a set percentage every year, commonly about 2 to 5 percent, though some contracts are fixed at 0 percent (SEIA, as of 2026). It is meant to track expected utility-rate increases, but it also means a payment that starts below your electric bill can climb over a 20 or 25 year term and, in some years, rise faster than your actual utility rate. When comparing a lease or PPA, ask for the escalator percentage and model the payment in year 10 and year 20, not just year one. A 0 percent escalator gives you a fixed, predictable payment for the life of the contract.
Reviewed by the MySolarFY editorial team, as of July 2026. Figures were verified against the linked IRS, SEIA, CFPB, DOE, NREL, EIA, and EnergySage sources; financing terms, fees, escalators, and incentives change and vary by lender, installer, state, and utility, so confirm current details for your own quote before you decide. MySolarFY does not provide tax, legal, or financial advice; consult a licensed professional about your own situation. See how MySolarFY works and our data and methodology.
MySolarFY is a free service that matches homeowners with licensed solar installers. We are not an installer, financing company, lender, tax advisor, or government program. “No up-front cost” refers to qualifying lease or PPA financing, where eligible homeowners may have no out-of-pocket cost at installation. Lease and PPA terms commonly run 20 or 25 years (PPAs about 10 to 25 years), often include an annual price escalator, and total payments may exceed the cost of a cash purchase; on a lease or PPA the tax and incentive benefits go to the company that owns the system, and the homeowner does not get the federal residential credit (Section 25D) that ended for expenditures after December 31, 2025. Solar panels are not free and monthly payments apply. Eligibility, savings, incentives, fees, and rates vary and are not guaranteed. See our full disclaimer.
