Will FHA Lend on a Leased Solar Home?
Yes, FHA will lend on a home with leased solar panels. The FHA Single Family Housing Policy Handbook outlines all rules and guidelines for FHA properties. If the existing solar is leased it is not able to be included in the appraised value of the home (Page 493 & 534) . Leased solar, however, is not eligible for an FHA home improvement loan, only owned solar is eligible for these programs (Pages 449-450).
Fannie Mae did release a statement that they will not fund on a home if the home owner had purchased solar panels under the PACE program (Property Assessed Clean Energy). This does not apply to Arizona homeowners since the PACE program is specific to California.
Does Solar Add Value to a Home?
How much value solar adds to a home depends on if the solar is leased or owned. Unfortunately leased solar, of any kind (monthly, prepaid, etc.), does not add any appraised value to a home. This was determined by the guidelines set forth by Fannie Mae, also known as The Federal National Mortgage Association.
Owned solar, on the other hand, can and should add appraised value to a home. In order to better establish guidelines for valuing solar the Appraisal Institute released the Green Energy Efficient Addendum, Form 820.04. This form is used by an appraiser to gather details about the solar system such as system size, type of panels, age of the system, and energy production, etc. Appraisers then use this information to determine the value of the solar system. Despite this published form and available information, sellers should be aware that there are very few appraisers who have the knowledge and experience in valuing solar homes. Working with competent and knowledgeable professionals, such as listing agents and appraisers who understand solar is important, as it can effect the value of a home.
Does Leased Solar Add Value to a Home?
Fannie Mae has published guidelines specifically stating leased solar, of any kind (monthly, prepaid, etc.), is not to be calculated into the appraised value of the home. Fannie Mae Guidelines to Leased Solar Panels.