Leased Solar on a Pinal County Home? What Buyers Should Know
Can you get a mortgage on a Pinal County home with leased solar?
Quick answer: Yes, you can often buy a house with leased solar in Pinal County. But the lease becomes part of your loan approval. On a Fannie Mae conventional loan, the lease payment usually counts in your debt-to-income ratio, and the panels can't add to the appraised value, so it's smart to review the solar paperwork before you write an offer.
Hi, I'm Andria Townsend, a loan officer with NEXA Mortgage here in San Tan Valley. I've lived in Arizona for more than 15 years.
If you're shopping for your first home in San Tan Valley, Queen Creek, Florence, Casa Grande, or Maricopa, you'll likely tour a house with panels on the roof. That's great for summer power bills. But if the seller leases those panels instead of owning them, it changes a few things about your loan.
Here's what you need to know, in plain English.
Is the solar owned, financed, leased, or a PPA?
This is the first question to ask. "The house has solar" can mean four different things:
- Owned: The seller paid for it. It comes with the house.
- Financed: The seller took out a loan for the panels. That loan often has to be paid off at closing.
- Leased: A solar company owns the panels. The homeowner pays a set monthly amount to use them.
- Power purchase agreement (PPA): A solar company owns the panels. The homeowner pays for the power they make, usually per kilowatt-hour.
Leases and PPAs are the ones that need the most attention. You'd be taking over the seller's contract with the solar company.
How does leased solar affect your mortgage approval in Arizona?
On a conventional loan that follows Fannie Mae rules, here's how leased solar is handled:
- The lease payment counts as a debt. Your lender usually adds it to your debt-to-income ratio, just like a car payment. The exception is certain agreements with a fixed payment and a production guarantee.
- The panels don't add to the appraisal. Fannie Mae says the value of leased panels can't be included in the home's appraised value.
- Your lender needs a copy of the agreement. They'll review who's responsible for damage, repairs, and removal.
- The house still needs regular power. The home has to stay connected to a normal electric source, too.
FHA and VA loans have their own rules for leased solar. I'll check the exact guideline for your loan type when we look at the agreement together.
Subject to eligibility, credit approval, and program guidelines. Programs can change.
Why does the solar lease matter for your pre-approval?
Your pre-approval is based on your income and your debts. A solar lease adds a new monthly debt that wasn't there when you got pre-approved.
If you're close to your limit, that extra payment could change how much home you qualify for. That's why I like to see the lease terms before you write the offer, not after.
Some leases also have an "escalator." That means the payment goes up a set amount every year. Ask about it up front.
Does the solar company have to approve you, too?
Often, yes. Many solar companies run their own credit check before they'll transfer a lease to a new owner.
That's a separate approval from your mortgage. You can pass one and still get stuck on the other. So ask the seller to start the transfer paperwork early, ideally during your inspection period.
What's a UCC-1 filing, and why does it matter?
A UCC-1 is a notice a solar company or lender may record with the county. It says they have an interest in the equipment on the roof.
Title will usually find it. Your lender may need it released, subordinated, or handled before closing. Finding it late can push back your closing date, so it helps to ask the seller about it early.
If you have questions about what a filing means for you legally, a real estate attorney is the right person to ask.
What should first-time buyers ask before making an offer?
Here's a simple list you can hand to your agent:
- Is the solar owned, financed, leased, or a PPA?
- Can we get a copy of the full agreement?
- What's the monthly payment now, and does it go up each year?
- How many years are left on the contract?
- Does the solar company need to approve the buyer? How long does that take?
- Is there a UCC-1 filing on the property?
- Would the seller pay off or buy out the lease instead?
- Who handles roof leaks or repairs around the panels?
What does this mean for current homeowners and sellers?
If you own a home with leased solar, keep a copy of your agreement handy. You'll need it if you refinance, and a new lender will look at it the same way.
If you're selling, get your transfer packet and buyout figure from the solar company before you list. It gives buyers answers fast and can help avoid delays in escrow.
Clear solar paperwork also helps your listing stand out when buyers are comparing homes.
Is leased solar a deal breaker?
Not usually, as long as the agreement fits your loan program's rules.
It just takes a little more homework. The key is knowing the numbers early so there aren't surprises in underwriting.
If you're still working on your pre-approval, these may help, too: Do You Still Need a 620 Credit Score to Buy in Arizona?, Can the Seller Pay Your Closing Costs in Pinal County?, and what the Loan Status Update tells the seller during escrow.
Frequently asked questions
Can I buy a house with leased solar panels in Arizona?
Often, yes. The lease has to meet your loan program's rules, and the payment is usually counted in your debt-to-income ratio. Your lender will review the agreement.
Do leased solar panels add value in the appraisal?
Not on a Fannie Mae conventional loan. Fannie Mae says the value of leased panels or panels under a power purchase agreement can't be included in the appraised value.
Does a solar lease count as debt when I apply for a mortgage?
Usually, yes. Under Fannie Mae rules, the monthly lease payment is counted in your debt-to-income ratio unless the agreement meets a specific fixed-payment, production-guarantee exception.
Will the solar company check my credit?
Many do. Solar companies often approve the new owner separately before transferring the lease. Ask the seller to start that process early.
Is owned solar better for my loan than leased solar?
Owned solar doesn't add a monthly lease payment, and it may be considered in the appraisal. Financed solar is different, since that loan may need to be paid off at closing.
When should I talk to a lender about a home with solar?
Before you write your offer. That way we can see how the lease fits into your pre-approval and avoid surprises later.
Looking at a home with solar? Let's check it first.
Send me the solar agreement and I'll walk you through how it fits into your pre-approval. No pressure, just clear answers.
Get pre-approved or ask Andria a question at andriatownsend.com
Andria Townsend | Mortgage Loan Originator | NMLS #2154631
NEXA Mortgage, LLC | NMLS #1660690
480-487-9166 | [email protected]
San Tan Valley, Arizona
Andria Townsend, Mortgage Loan Originator, NMLS #2154631. NEXA Mortgage, LLC, NMLS #1660690. Equal Housing Opportunity. This is not a commitment to lend. All loans subject to credit approval, underwriting, and program guidelines.
