How can you finance the cost of your photovoltaic system?

When it comes to financing the of purchasing and installing your photovoltaic system, there are some special programs particular to financing and other investments. But most of the options will be familiar to you.

The best way to finance photovoltaic systems for homes is through a mortgage loan. Mortgage financing options include your primary mortgage; a second mortgage, such as a U.S. Department of Housing and Urban Development (HUD) Title 1 loan; or a home-equity loan that is secured by your property. There are two advantages to mortgage financing. First, mortgage financing usually provides longer terms and lower rates than other loans, such as conventional bank loans. Second, the interest paid on a mortgage loan is generally deductible on your federal taxes (subject to certain conditions). If you buy the photovoltaic system for your home at the same time that you build, buy, or refinance the home, adding the cost of the photovoltaic system to your mortgage loan is likely to be relatively simple. It is also one way to avoid additional loan application forms and fees.

If mortgage financing is not available, look for other sources of financing, such as conventional bank loans. Seek the best possible combination of low rate and long term. This allows you to amortize your photovoltaic system as inexpensively as possible. Because your photovoltaic system is a long term investment, the terms and conditions of your financing are likely to be the most important factor in determining the effective price of your PV-generated power.

PV systems for businesses are probably best financed through a company's existing sources of funds for capital purchases—such as Small Business Administration loans or conventional bank loans.