Reading your home equity vs solar loan result
Why home equity loans often win on rate
Because a home equity loan is secured by your house, lenders offer noticeably lower rates than unsecured solar loans, often 0.5 to 2 percentage points lower. On a $28,000 loan, a home equity loan at 6.49% over 15 years including $1,200 in closing costs totals about $45,076, against a dedicated solar loan at 6.99% over 20 years totaling about $52,060. That's roughly $6,984 in savings, even after accounting for closing costs. The CFPB's home equity loan explanation covers this rate advantage and its tradeoffs in more depth.
What closing costs actually cover
Home equity loan closing costs typically include an appraisal, title search, and origination fee, usually landing between $500 and $2,000 depending on your lender and loan size. A dedicated solar loan skips most of this, which is part of why it can still make sense even at a slightly higher rate. The CFPB's origination fee explanation covers one of these specific cost components in more detail.
How fast each option actually closes
A dedicated solar loan is often approved within days and sometimes bundled directly into the installer's paperwork, while a home equity loan usually takes two to six weeks due to the appraisal and underwriting process. If your installation is time-sensitive, that speed difference is worth factoring in alongside the cost. The loan payment calculator can give you a quick payment estimate for the dedicated solar loan option while you wait on a home equity quote. The cash vs loan savings comparison can help you weigh a third option, cash, against either financed path too.
What a HELOC changes about this comparison
A home equity line of credit works differently from a fixed home equity loan, offering a variable rate and flexible draw period rather than a fixed payment from day one. The HELOC for solar calculator handles that structure specifically, since a HELOC's payment can change over time in a way a fixed-rate loan's doesn't.
Whether the collateral tradeoff is worth it
Cost savings aside, a home equity loan ties your solar system's financing to your house in a way an unsecured solar loan doesn't. The secured vs unsecured solar loan comparison covers that risk tradeoff more broadly if you're weighing it against other secured options too. The combined roof and solar financing tool is worth checking too if a roof project might factor into your equity draw.