Solar Panel Mortgage 2026: Owned vs. Leased Panels and How Underwriting Handles Each

Solar panels are now common enough on single-family homes that MLOs encounter them on most purchase transactions in solar-heavy markets like California, Arizona, and Nevada. The underwriting treatment depends entirely on whether the panels are owned outright or leased, and whether a UCC-1 financing statement is on file.

Owned Solar Panels

When the seller or borrower owns the solar panels free and clear (or they are financed as personal property with no lien on real property), the appraiser can include their value in the appraised value of the home. The appraiser must use comparable sales with and without solar to isolate the contribution. Owned panels do not create a title issue.

Leased Solar Panels and UCC Liens

Leased solar panels are different. The solar company retains ownership and files a UCC-1 financing statement against the property or personal property. When the home is sold, the buyer must either assume the lease or the seller must pay off and remove the solar system. Some lenders will not close a loan with an active solar UCC lien until it is subordinated or removed.

• ✦Fannie Mae will not purchase loans where a PACE lien or similar is senior to the first mortgage
• ✦Solar company UCC liens must be subordinated to the first mortgage at closing
• ✦Title search must identify all UCC filings tied to the property
• ✦Solar lease assumption requires the buyer to qualify with the solar company
• ✦Monthly lease payment is included in DTI if the buyer assumes the lease

What to Do When You See Solar

Pull title early. If there is a UCC filing, identify the solar company and determine whether it is a lease or a loan. If a loan, confirm it is secured by personal property only, not the real property. If a lease, coordinate between seller, buyer, and solar company on assumption or payoff before committing to a close date.