Can You Use a VA Loan to Buy a House With Solar Panels?

If you’re shopping for homes in California, chances are you’re going to come across solar panels. If you’re using a VA loan, you need to pay close attention, not to the panels themselves, but to who owns them. That could be the detail that can make or break the deal.

The VA Does Allow Solar Panels

Let’s be clear:

There’s no VA guideline that says you can’t buy a home with solar panels.

But the VA does require that any home financed with a VA loan is:

• Free of title or lien issues
• Safe, sound, and move-in ready
• Properly valued if owned out right (via the appraisal)

Solar panels can impact all three depending on how they’re financed.

The Key Question: Are the Panels Owned, Financed, on a PPA or Leased?

Owned outright:

No problem. If the seller owns the system and it’s staying with the home, there’s nothing to worry about. It may even add value during appraisal.

Financed separately with a PACE or HERO loan:

This is where deals often blow up. PACE and HERO programs attach the solar loan as a lien to the property tax bill. That creates:

• A title issue
• A payment complication
• A potential VA eligibility conflict

In most cases, these must be paid off at closing or removed from the property to make the loan eligible.

Leased panels or Financed panels (not with a PACE or HERO loan):

Not ideal. VA appraisers can’t give value for leased/financed panels and the monthly installment payment will most likely be counted against the buyer's DTI (debt-to-income) ratio which may lower the amount they qualify for. Also, the buyer may need to:

• Qualify for the lease transfer 
• Assume the monthly payment
• Or require the seller to buy out the lease

I can help navigate this in escrow to keep things on track but it’s critical to flag it up front.

On a PPA (Power Purchase Agreement):

VA appraisers can’t give value for panels on a PPA and since the monthly payment is based on your usage, it is not counted against your DTI but is treated more like a utility bill. Also, the buyer may need to assume the seller's PPA so that involves additional paperwork to be signed and you may need to "qualify" with the solar company in order to assume.

What I Do When You’re Looking at a Solar Home

• I ask the listing agent how the panels are financed
• I review the title report early in escrow for liens
• I talk to the appraiser if solar is being claimed as added value
• I help your agent structure a clean offer if solar is involved

You’re not just buying the roof panels you’re buying the contract attached to them so it's important that you read it thoroughly!

Bottom Line

VA loans and solar panels can work together but only if the solar setup doesn’t interfere with title, value, or loan guidelines. So before you fall in love with that “energy-efficient home,” let’s double-check the solar paperwork first.