Best Financing Options for Solar & Battery Storage in 2025
Homeowners installing solar panels and batteries in 2025 are smart to try to get ahead of tariffs, utility rate increases, and the risk of the solar 30% Federal Investment Tax Credit going away early. However, they’re faced with interest rates that are significantly higher than they were just a short couple of years ago. These higher interest rates can slow down the return on investment in solar, but should homeowners wait?
Financing solar in 2025
In 2024, it was anticipated that the Federal Reserve would continue to ease the Federal Interest Rate (solar rates are typically tethered to the 7-year Treasury Bond market) as inflation was cooling. However, the latest Fed statements seem to indicate that there will only be a slight lowering of interest rates for the rest of 2025, with most pundits thinking a total drop of around .25%. Given macroeconomic uncertainty driven by policy changes, it’s hard to predict what interest rates will do in 2026 and beyond.
Given the relatively high interest rates, solar.com recommends homeowners pay for their solar investment in cash if they can. This will achieve the lowest value of solar power possible and is a safe place to invest money in an otherwise highly volatile market.
But, for homeowners who are looking to finance their solar, what are the best options? Read more about the different solar financing options available.
In 2025, solar.com Energy Advisors typically recommend using a solar loan to finance a solar system — if the homeowner can efficiently monetize the 30% federal tax credit. If they can’t, then a solar lease or PPA is the best option.
Solar Financing: Rate Buydown vs No Buydown
Although there are many different types of solar loans available, the key question homeowners should ask themselves is whether they want to “buy down” their rate or not.
Solar loans with buydowns
Solar loans that advertise low APRS, such as 2.99 or 3.99, typically come with a 30-40% premium to buy down the rate. So, the homeowner is effectively borrowing more money to get a lower interest rate. These products work well to help get the bill as low as possible on a monthly basis, but work against the homeowner if they want to pay the loan off early, either because they are in a position to do so, they’d like to refinance, or because they want to move.
Solar loans without buydowns
Seemingly higher interest rate loans, with a 7.99 – 8.99 APR, typically have very low or no rate buydowns. Although the APR seems significantly higher, the total balance of the loan is lower. These higher interest rate loans provide homeowners the greatest flexibility with their solar investment. They can refinance if rates drop in a few years, or pay off the principal balance at any time without leaving their rate buydown on the table.
In spring 2025. solar.com recommends solar loans with low or no rate buydowns as being the right product for most homeowners.
The bottom line
How you finance or pay for your solar investment is an important part of the process of going solar. Working with ethical sales consultants and companies that fully disclose all rates and fees allows homeowners to make the right choice for their individual situation and needs.
Ready to speak to a professional about what it means to go solar? Explore your solar financing options with an unbiased Energy Advisor on solar.com.
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