Quick answer
You can refinance with solar. Owned, paid-off panels can add appraised value. If a solar lender recorded a UCC fixture filing that would rank ahead of the new mortgage, Fannie Mae requires it to be subordinated, not necessarily paid off, and solar loan payments count in your debt-to-income ratio. Leased panels add no appraised value, and many lease payments count as debt too.
How does solar affect a mortgage refinance?
| Solar setup | Appraised value | Debt-to-income | Paperwork |
|---|---|---|---|
| Owned, paid off | Can add value under standard appraisal rules | No effect | Minimal |
| Owned with a solar loan | Valued only if the panels can't be repossessed | Loan payment counts | A UCC filing senior to the mortgage must be subordinated |
| Leased or PPA | Not included in appraised value | Lease payments usually count; PPAs billed only per kWh may be excluded | Lease terms and the leasing company's sign-off |
Freddie Mac has similar rules. Tell your loan officer about the solar at the start, so the appraiser and title company know what to look for.
What is a UCC filing, and why does my lender care?
Solar lenders commonly record a UCC fixture filing on the panels themselves, a public notice that they have a claim on the equipment. The Consumer Financial Protection Bureau notes these filings can complicate sales and refinances. Fannie Mae says that if a UCC fixture filing would have priority over the new mortgage, it must be subordinated: the solar lender agrees in writing that the mortgage comes first.
Subordination is routine but takes time. Ask your solar lender how long its subordination process takes as soon as you apply to refinance. See selling a home with solar for the same issue at sale time.
Should I pay off my solar loan when I refinance?
Sometimes. Rolling a higher-rate solar loan into a lower-rate mortgage can lower the payment and clear the UCC filing in one step, but it spreads the cost over a longer term. If your solar loan rate is low, subordinating it and keeping it separate may be cheaper. Compare the total interest both ways. See solar loans and dealer fees.
Is PACE financing an issue for Illinois homes?
Rarely. In some states, Property Assessed Clean Energy loans put a lien ahead of the mortgage, which Fannie Mae won't accept. Illinois's PACE law was written for commercial and larger buildings and, when passed, did not cover single-family homes, so most Illinois homeowners financed solar with a loan or lease instead.
Sources
- Fannie Mae Selling Guide: Special property eligibility considerations (B2-3-04)
- Fannie Mae: Appraising properties with solar panels
- CFPB: Issue spotlight, solar financing (August 2024)
- Fannie Mae Selling Guide: Property Assessed Clean Energy loans (B5-3.4-01)
- Renewable Energy World: Illinois PACE legislation (2017)
- Consumer Financial Protection Bureau: Report on markup fees in solar energy loans (2024)
This guide is general information, not tax, legal or financial advice. Incentive programs change, so confirm current terms with your installer, your utility and a tax professional.