Solar Loan vs. HELOC: Which Financing Option Is Better?
By Solar Cost Predictor Team · May 19, 2026 · 7 min read
Beyond a solar-specific loan from your installer or a solar lender, many homeowners also consider a HELOC (home equity line of credit) to finance their system. Both can get you to $0 down — the right choice depends on your home equity, credit, and how you prefer to manage payments.
Dedicated Solar Loans
Solar loans are offered directly through installers or solar-focused lenders, typically 10–25 year terms at 4.99%–8.99% APR depending on credit. They're unsecured or secured by the solar equipment itself (not your home), and the application process is usually built into the installer's sales process.
HELOCs
A HELOC uses your home's equity as collateral, often at a lower interest rate than a solar loan, with flexible draw periods. It requires sufficient home equity and a separate application through your bank or credit union — slower to set up than an installer-arranged solar loan, but potentially cheaper if you qualify for a strong rate.
Which Should You Choose?
A HELOC tends to make sense if you have significant home equity and can secure a notably lower rate than available solar loans. A dedicated solar loan tends to make sense if you want a simpler, faster process bundled with your installation, or don't have enough home equity to qualify for a strong HELOC rate.
Frequently Asked Questions
Is a HELOC cheaper than a solar loan?
It can be, since HELOCs are secured by your home and often carry lower rates than unsecured solar loans — but the exact comparison depends on your credit, equity, and the specific offers available to you.
Does a solar loan use my house as collateral?
Most solar loans are either unsecured or secured by the solar equipment itself, not your home — unlike a HELOC, which is secured by your home's equity.
Can I switch from a solar loan to a HELOC later?
Yes — some homeowners pay off a solar loan early using a HELOC if they later qualify for a better rate, though it's worth checking your solar loan for any prepayment penalty first.