About the First Mortgage Company to Add Solar to Home Loans

For the first time, a mortgage company out of San Diego sees solar panels as part of the future of homes and they are doing something to help. Guild Mortgage, one of the largest independent mortgage lenders in the U.S., announced an innovative mortgage program allowing homebuyers to include solar panels in their mortgage loan account. The program is called FHA Solar.

Loan is Only Available to California Residents for Now

This new solar mortgage option is part of a growing trend of solar power becoming more mainstream, but right now the loan is only available to California residents. This loan provides home buyers with option and convenience of combining their solar loan and their mortgage into one transaction. With this program, solar panels can be added to any home purchase. Guild’s FHA Solar program adheres to Federal Housing Administration loan requirements and offers down payment options as low as 3.5 percent. The down payment is based on the purchase of the home before the panels are added into the cost of the mortgage, giving consumers a little break so they don’t have to come up with a down payment for the home as well as a down payment for the solar system.

Program’s Flexibility

“This program will give more options to homebuyers looking for solar because it gives them the flexibility to purchase panels and add them to any home they choose,” said Mary Ann McGarry, Guild’s president, and CEO. “FHA Solar is ideal for individuals who are looking to buy a home that they plan to live in for several years and realize the return on their investment. It will also be attractive to customers who want to lower their monthly utility bill and have a greener footprint.” David Battany, Guild Mortgage’s executive vice president of capital markets, said FHA Solar is a result of the company’s efforts to continue to expand its array of loan options to better serve future homebuyers.

“Research shows an increasing number of people are looking for homes with solar installed, and we expect that trend to increase over the next five to 10 years,” he said. “Few lenders currently offer programs for the purchase of solar panels with a new home. We see this as a great opportunity to serve the next generation of homebuyers.” It is true that a shorter loan will mean that the system pays for itself faster, but in some circumstances, tying it to a mortgage might make sense for some customers. Plus they might get a much lower interest rate than if they had a separate loan for the solar panels.

Other programs, such as PACE loans, typically charge the borrower interest rates that range between eight and 12 percent. Homeowners who invest in solar panels after the purchase of their property often have to finance the panels through an equity home loan or equity line of credit, which can also be a higher interest rate than a mortgage. FHA loans are government loans widely used by first-time homebuyers, borrowers with low-to-moderate incomes or those with down payments of less than 20 percent of the purchase price. Guild Mortgage currently participates in these FHA loans, they are just the first company that sees the value in having solar panels on those homes. For more info, click here.

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