A straight answer
The house I'm buying has financed solar panels. Can that stop my mortgage from closing?
The direct answer
Yes, it can, and it usually does not have to. Whether financed panels stop a closing depends on who owns the panels and what is recorded against the home. I offer the purchase loan and check both first. I'm Zach von der Linden (NMLS 1652805), a mortgage broker with West Capital Lending, based in San Clemente.
There are four ways the panels can be held: owned outright, financed as personal property with a filing in the land records, leased or under a power purchase agreement, or paid through a PACE assessment. Each one gets a different answer from the lender, and the seller's solar contract and the preliminary title report tell me which one you have. Text or call me with the state, how the panels are held and your closing date. I work with buyers in California, Utah, Oregon and Arizona.
Zach von der Linden, mortgage broker and Branch Manager, West Capital Lending · NMLS 1652805
Wholesale pricing · California, Utah, Oregon and Arizona
5.0 across 66 reviews on Experience.com (read on 2026-09-24) · Text reaches Zach directly · Last updated 2026-10-17
Solar panels on the house you are buying? Text me the state, how the panels are held and your closing date.
No credit pull happens from a text or a call. Texts and calls go to Zach's cell.
What happens after you text me?
Texts go straight to my cell, and I answer them myself when I'm free. I'll ask for the few details that actually matter, tell you whether the structure looks worth pursuing, and explain the next step. If I don't think the loan fits, I'll tell you that too.
A text or phone conversation does not pull your credit.
The four ways solar panels are held
Owned outright. The seller paid cash, or paid off the solar loan, or the panels were part of the original purchase. They are part of the house like the roof is.
Financed as personal property. The seller took a solar loan, and the solar lender often records a UCC fixture filing against the property in the county land records. The panels are collateral for that loan, and the filing shows up on the preliminary title report.
Leased, or under a power purchase agreement. The solar company owns the panels. Under a lease the homeowner pays a monthly amount for the system; under a power purchase agreement the homeowner pays for the electricity the panels produce. Either way the contract has to be dealt with before the house changes hands.
PACE. The panels were financed through a Property Assessed Clean Energy program, and the repayment is collected with the property taxes as an assessment. It travels with the property, not with the seller.
Owned panels: the ordinary case
Fannie Mae's guide says that "If the borrower is, or will be, the owner of the solar panels," the standard requirements for appraisal, insurance and title apply (Fannie Mae Selling Guide B2-3-04). That covers panels bought with cash, panels included in the purchase price, panels whose loan has been repaid, and panels secured by the existing first mortgage.
If the seller's solar loan is paid off from the sale proceeds at closing and the filing is released, you will own the panels, and the lender treats them as part of the house. That is the cleanest outcome, and the purchase contract can require it.
Financed panels with a UCC fixture filing
This is the case the question is usually about. The guide separates two situations by what the title report shows.
If the solar debt is separate and "a UCC fixture filing" is recorded in the land records, the lender must count the solar payment in your debt-to-income ratio and must include the solar panels in the "other debt secured by the real estate" when it measures total borrowing against the home's value. In plain words: if you are taking over the solar loan, its payment counts against you like any other debt, and its balance counts as a lien on the house.
If the panels are collateral for a separate debt but do not appear on the title report, the guide tells the lender not to give the panels any contributory value in the appraisal, to leave them out of the value the loan is measured against, and not to count that debt as borrowing against the home. The panels are then neither an asset nor a lien in the lender's math.
Either way the lender needs the solar loan documents and must make sure the appraiser has accurate ownership information. Without that documentation, "no value may be attributed to the panels" unless a UCC personal property search confirms no non-mortgage lender claims them as collateral. And "Any exceptions to coverage on the title insurance policy for recorded instruments relating to the solar panels" have to comply with the guide's title rules, so a filing left on title at closing is a title question as well as a debt question.
What actually happens is a contract decision. The seller can pay the solar loan off from the sale proceeds, which is the common fix. You can assume the solar loan, which needs the solar lender's approval and puts the payment in your debt ratio. Or the seller can negotiate a release of the filing. Which one fits depends on the balance, the contract and the numbers on your file, and I read all three before the appraisal is ordered.
Leased panels and power purchase agreements
Here the solar company owns the panels, and the guide requires the lender to obtain and review the lease or power purchase agreement. The agreement typically moves to you at closing, so the lender reads what you would be signing.
Three rules follow. "The value of the solar panels cannot be included in the appraised value of the property." The property has to keep access to an alternate electric power source that meets community standards. And the monthly payment goes into your debt-to-income ratio, with exceptions: a lease that provides a fixed energy amount with a production guarantee, and "Payments under power purchase agreements where the payment is calculated solely based on the energy produced," may be excluded. Which exception applies is read from the agreement itself.
FHA reads the same agreement for a different thing: whether it restricts your right to sell. HUD's Handbook says a property with "a leased energy system or Power Purchase Agreement (PPA), may be eligible for FHA-insured financing but only when such agreements are free of restrictions that prevent the Borrower from freely transferring the Property" (HUD Handbook 4000.1, II.A.1.b). The agreement cannot make a sale void or voidable, give the solar company a right of first refusal or an option, require a third party's consent to a sale, cap what you keep from a sale, or be grounds for accelerating or repricing the mortgage.
A lease or power purchase agreement rarely stops a closing by itself. What stops closings is the transfer: the solar company has to approve you as the new customer, and that approval has its own timeline. Start it the week you go under contract.
PACE assessments: the one that has to be gone
This is the holding structure that does stop closings. HUD describes PACE as "an alternative means of financing energy and other PACE-allowed improvements for residential properties using financing provided by private enterprises in conjunction with state and local governments," repaid "in the same manner as a special assessment tax." Because it is an assessment, it stays with the property through a sale.
Fannie Mae's guide says properties with improvements financed by a PACE loan "are not eligible for delivery to Fannie Mae if the PACE loan is not paid in full prior to or at closing." HUD says "Properties which will remain encumbered with a PACE obligation are not eligible for FHA mortgage insurance." Under both, the PACE balance is paid off at or before closing, which in practice means from the seller's proceeds.
A PACE assessment shows on the property tax bill and in the title report. If the listing says the solar is "paid through the property taxes," ask for the tax bill before you write the offer, and tell me.
Jumbo and other programs
Everything above is Fannie Mae's rule for the loans it buys and FHA's rule for the loans it insures. A jumbo program or another lender writes its own solar rules, and some are stricter about leases and filings than the guide is. Which rulebook your file is under depends on the price, the county and the program, and I tell you which one applies before we talk about the solar contract.
What to text Zach
- The state and city of the home, and your closing date.
- How the panels are held: owned, financed, leased, power purchase agreement, or PACE, as far as you know.
- Whether the seller has given you the solar contract or a recent solar statement.
- Whether the preliminary title report shows a UCC filing or a PACE assessment.
- Whether you want to take over the solar agreement or want it paid off.
Send the solar contract and the title report through the secure process I give you when we talk, not by ordinary text. A conversation does not pull your credit.
Questions people ask next
Do I have to take over the solar loan on the house?
No. The seller can pay it off from the sale proceeds, which is the common fix, or you can assume it with the solar lender's approval, or the seller can negotiate a release of the filing. If you assume it, the payment counts in your debt ratio and, when a UCC fixture filing is recorded, the balance counts as a lien on the home.
Will the solar panels add value on the appraisal?
Only if you will own them. Fannie Mae's guide says the value of leased panels cannot be included in the appraised value, and panels that are collateral for a separate debt get no contributory value unless the documentation supports ownership. Owned panels are appraised as part of the house.
What if the solar was financed through PACE?
It has to be paid in full at or before closing. Fannie Mae will not buy a loan on a property with an unpaid PACE loan, and HUD says a property that will remain encumbered with a PACE obligation is not eligible for FHA insurance. In practice the seller pays it off from the proceeds.
Does a solar lease payment count against my qualifying?
Usually yes. Fannie Mae puts the monthly lease payment in your debt-to-income ratio, with exceptions for a lease that provides a fixed energy amount with a production guarantee and for a power purchase agreement whose payment is calculated solely on the energy produced. The lender reads your agreement to see which applies.
Does FHA allow leased solar panels?
Yes, when the agreement is free of restrictions that prevent you from freely transferring the property. HUD lists what it will not accept: a sale made void or voidable, a right of first refusal or option for the solar company, a third party's consent to sell, a cap on your sale proceeds, or grounds to accelerate or reprice the mortgage.
The title report shows a UCC filing for the panels. Is that a problem?
It is a question to settle, not a stop. The filing means the solar lender claims the panels as collateral. It is released when the loan is paid off, or it stays if you assume the loan, and in that case the debt counts in your ratios. Any title exception for it has to meet the guide's title rules, so the escrow officer and I handle it together.
Should I ask about the solar before I write the offer?
Yes. Ask whether the panels are owned, financed, leased or on PACE, and ask for the contract and the most recent statement. Those two documents and the title report decide the answer, and knowing them before the offer lets the contract say who pays what at closing.
What clients say
Zach was so easy to work with. He made a stressful situation into a very positive experience for us and did push us one way or another. He listened to what we hoped we could accomplish and made it happen.
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Sources and checked dates
Sources: Fannie Mae Selling Guide, B2-3-04, Special Property Eligibility Considerations (10/08/2025) (checked 2026-10-17) · HUD Handbook 4000.1, FHA Single Family Housing Policy Handbook (revised August 12, 2026; lenders must apply the changes by November 10, 2026), II.A.1.b (checked 2026-10-17) · Supplied by Zach, September 9, 2026 (checked 2026-09-09).
Show each claim on this page, what it depends on, and the date it was checked (3)
| What we say, and what it depends on | Source | Checked |
|---|---|---|
| Fannie Mae Selling Guide B2-3-04, Special Property Eligibility Considerations (10/08/2025), Properties with Solar Panels. Owned: "If the borrower is, or will be, the owner of the solar panels," standard requirements apply (appraisal, insurance, title), covering panels bought with cash, included in the purchase price, financed and repaid, or secured by the existing first mortgage. Financed as personal property: where the panels are separately financed and a UCC fixture filing is recorded in the land records, the lender must include the debt in the debt-to-income calculation and "Include the solar panels in other debt secured by the real estate in the CLTV ratio calculation"; where the panels are collateral for separate debt but do not appear on the title report, the lender must not give them contributory value, must exclude them from the LTV ratio, and must not include that debt in the CLTV ratio. Leased or power purchase agreement: the lender must obtain and review the lease or PPA; "The value of the solar panels cannot be included in the appraised value of the property"; the property must maintain access to an alternate electric power source that meets community standards; the monthly lease payment is included in the debt-to-income ratio unless the lease provides a fixed energy amount with a production guarantee, and "Payments under power purchase agreements where the payment is calculated solely based on the energy produced" may be excluded. Lenders must ensure the appraiser has accurate ownership information, and without sufficient documentation no value may be attributed to the panels unless a UCC personal property search confirms no non-mortgage lender claims them as collateral; "Any exceptions to coverage on the title insurance policy for recorded instruments relating to the solar panels" must comply with B7-2-05. PACE: properties with improvements financed by a PACE loan "are not eligible for delivery to Fannie Mae if the PACE loan is not paid in full prior to or at closing." | Fannie Mae Selling Guide, B2-3-04, Special Property Eligibility Considerations (10/08/2025) | 2026-10-17 |
| HUD Handbook 4000.1 (revised August 12, 2026), II.A.1.b, General Mortgage Insurance Eligibility (11/10/2026). Legal Restrictions on Conveyance: "A Property that contains leased equipment, or operates with a leased energy system or Power Purchase Agreement (PPA), may be eligible for FHA-insured financing but only when such agreements are free of restrictions that prevent the Borrower from freely transferring the Property." Such agreements are acceptable provided they do not cause a conveyance of the insured property by the borrower to "be void, or voidable by a third party; be the basis of contractual liability of the Borrower (including rights of first refusal, preemptive rights or options related to a Borrower’s efforts to convey); terminate or be subject to termination all or part of the interest held by the Borrower; be subject to the consent of a third party; be subject to limits on the amount of sales proceeds a Borrower can retain (e.g., due to a lien, “due on sale” clause, etc.); be grounds for accelerating the insured Mortgage; or be grounds for increasing the interest rate of the insured Mortgage." Property Assessed Clean Energy: PACE "refers to an alternative means of financing energy and other PACE-allowed improvements for residential properties using financing provided by private enterprises in conjunction with state and local governments. Generally, the repayment of the PACE obligation is collected in the same manner as a special assessment tax". "Properties which will remain encumbered with a PACE obligation are not eligible for FHA mortgage insurance." | HUD Handbook 4000.1, FHA Single Family Housing Policy Handbook (revised August 12, 2026; lenders must apply the changes by November 10, 2026), II.A.1.b | 2026-10-17 |
| Zach reports placing loans through more than one wholesale lender and program via his broker channel: the standard home equity line described on this site, plus conventional, government, bank statement and investment-property options. Individual lender names are kept off the public pages until the executed broker agreement for each is on file (California 10 CCR 2848(a)(3)). | Supplied by Zach, September 9, 2026 | 2026-09-09 |
Written for and accountable to: Zach von der Linden, Mortgage broker and Branch Manager, West Capital Lending.
Last updated 2026-10-17.
Verify him: NMLS Consumer Access, ID 1652805 · 66 reviews on Experience.com.
Sources for product claims are listed on this page, with the date each was checked.