The HomeStyle Energy Mortgage is a new offering from Fannie Mae - one of the largest providers of mortgages in the country - that makes it easier and more affordable for homeowners to fund solar panel installations and other clean energy upgrades. According to Energy Sense Finance, the program offers "the lowest cost of capital for new solar installations to date" - meaning that the HomeStyle Energy Mortgage may be the best option yet for home solar financing.
How is the HomeStyle Energy Mortgage different from other solar loans?
Fannie Mae's solar offering is different from other solar financing options in one major way: borrowers can use the HomeStyle Energy Program to finance their solar energy installation when they are purchasing a new home, or refinancing their current home. Other solar loan options require that homeowners take out a separate home equity line of credit, PACE loan, or unsecured loan.
Homeowners who have already installed solar with the help of a solar loan can benefit from HomeStyle Energy, too: the program can help them pay off existing, higher-interest unsecured loans and PACE loans, either by refinancing or rolling the loan into a new mortgage.
Unlike other solar financing options, homeowners who use the HomeStyle Energy Program to fund their solar energy installation are required to get an energy report that proves that their improvements are cost-effective. Luckily, there's no question that solar installation costs are significantly less than the long-term financial benefits of solar: the average break-even point (or "payback period") for a solar energy system is between seven and a half and eight years. When you consider that solar panels continue to generate energy for 20+ years, there's little question that going solar is a cost-effective home improvement strategy.