The Quick Read: It depends on what kind of solar obligation you have. A financed system can often be paid off inside a new cash-out loan, or in some cases left in place with the lien handled correctly. A tax-bill assessment (PACE) generally has to be paid off first. The deciding factors are the type of lien, how much equity is left after payoff, and whether the existing first mortgage has been in place long enough. Every program detail is subject to lender guidelines and full file review.
Why “Solar Loan” Is Not One Thing
A cash-out refinance replaces your current first mortgage with a larger one and pays out the difference. Solar changes the file because the panels may be tied to a lien. The first question an underwriter asks is what the obligation actually is, and the answer sorts into five common structures:
- Panels you own outright, paid in cash.
- A lease or power purchase agreement (PPA).
- A separate loan with a UCC fixture filing against the equipment.
- A recorded solar deed of trust.
- A PACE assessment repaid through your property tax bill.
Cash-out refinance estimate
The starting figures are an example value with a balance and a cash request in proportion. Replace them with yours.
Editable benchmark: 7.32% as of October 22, 2026 · Freddie Mac 30-year average via FRED®. A conventional market reference, not a cash-out refinance quote.
Illustrative starting assumptions: a $350,000 home value, a $193,000 current balance, the agency cap on a one-unit principal residence, a thirty-year term at the current Freddie Mac benchmark, and property taxes and insurance estimated at typical national rates. Every field is editable.
Illustrative estimate only — not a Loan Estimate, approval, quote, or commitment to lend. The rate field carries the weekly Freddie Mac thirty-year conventional benchmark, a market reference and not a cash-out refinance quote; a cash-out loan is priced by the lender at lock. The cash available is the loan the program cap allows less the balances paid off, before closing costs, which are not included. The HELOC line is the program’s combined loan-to-value ceiling applied to the same value and balance. Taxes and insurance are editable estimates. Licensed in sixteen states for consumer mortgages.
Each is handled differently. Fannie Mae’s Selling Guide puts the lender in charge of finding out who owns the panels and how they are financed, so the new mortgage keeps its first-lien position. Files go sideways when the borrower says “solar loan” and nobody has pulled the documents.
Lendmire’s cash-out refinance programs page covers the general program lanes. This article covers the solar-specific wrinkles.
How the File Is Underwritten, Step by Step
Across the wholesale programs placed through Lendmire’s network, a solar-balance cash-out follows a predictable order.
1. Identify the instrument. The loan officer asks for the solar contract, the note, and the security agreement. For PACE, the tax statement and a payoff statement. The lender may also read the credit report for solar-related debt.
2. Run the title search. A fixture filing recorded in county land records shows up on the title commitment. A plain UCC-1 may appear only in a state-level search, which is why the title company, not the borrower, should confirm what is actually recorded.
3. Underwrite the debt. If a financed system stays in place, its payment counts in the debt-to-income ratio and the balance counts toward combined loan-to-value. If it is paid off at closing, both effects go away, but the payoff comes out of the new loan.
4. Order the appraisal. Owned or financed panels that cannot be repossessed are generally considered by the appraiser. Leased panels and PPAs add no ownership value. Do not assume the appraiser will credit the full cost of the system.
5. Choose the resolution path. Pay it off at closing from the new loan, pay it off beforehand, get the solar creditor to subordinate, or (under one agency’s rules) use a title endorsement. PACE must be paid in full.
6. Close and clear the record. After payoff, a UCC-3 termination should be filed to release the filing. Filers can be slow. The title company should confirm it, not assume it.
What Decides the Outcome
Six things drive the result:
- The lien instrument and where it sits in priority.
- Whether the solar creditor will subordinate or release.
- Equity left after payoff.
- Debt-to-income, including any solar payment that stays.
- Seasoning of the existing first mortgage.
- Which loan type you have: conventional, FHA, or VA.
On a one-unit primary residence, a conventional cash-out refinance tops out at 80% loan-to-value, and 75% on two- to four-unit homes, per the Fannie Mae Eligibility Matrix. The solar payoff counts inside that ceiling. A larger payoff leaves less cash to you.
Seasoning matters too. The first mortgage being paid off must be at least 12 months old, measured note date to note date, and at least one borrower must have been on title for six months. There are exceptions for delayed financing, inheritance, and legal awards. A wholesale lane also reaches 89.99% loan-to-value with no mortgage insurance for borrowers with a 680 score and a 50% ratio on a thirty-year fixed primary residence at a conforming balance, with its own six months of seasoning. That lane is not written in Texas on the homestead.
Where the General Rule Breaks
PACE assessments
PACE is the hard case. Local programs run it, you repay it on your tax bill, and it typically takes priority over earlier mortgages. Under Fannie Mae’s PACE rules, a loan generally cannot be purchased with an outstanding PACE lien that has first-lien priority. A borrower with enough equity to pay it off is expected to do so, and the lender first tries to qualify the file as a refinance with the PACE paid off. If equity is too thin, one agency’s rules allow a limited cash-out with PACE left in place, flagged with a special feature code. Do not assume that exception carries over to other programs.
FHA went further. HUD’s Mortgagee Letter 2017-18 stopped FHA insurance on new mortgages for properties with PACE obligations, citing the priority lien and weaker consumer protections.
Financed panels with a fixture filing
For a separately financed system, the lien question is whether a fixture filing sits ahead of the new mortgage. If it is senior, it has to be subordinated. Freddie Mac now also allows a title policy solar-panel endorsement to confirm the filing does not hurt title, per its Guide bulletin. Whether that works depends on the title insurer, so the broker confirms it with title partners before promising anything.
A solar payoff that is not PACE
A non-PACE solar loan is generally not a purchase-money lien. That means paying it off does not fit a limited cash-out refinance, where cash back is capped. It pushes the file into cash-out territory, with the cash-out leverage and seasoning rules above. The PACE payoff carve-out does not extend to ordinary solar loans.
Government streamlines
An existing FHA or VA loan has its own streamline lane. The FHA Streamline and the VA IRRRL are built for lowering cost on an existing government loan, not for pulling cash. A VA IRRRL generally cannot deliver cash to you. If equity is the goal, the route is a fully underwritten cash-out.
Other occupancy
Cash-out leverage is lower on second homes and investment property than on a primary residence. If the home in question is not your primary residence, occupancy sets the ceiling, so the numbers above change.
A Worked Scenario (Percentages, Not Dollars)
Picture a homeowner whose home is worth a given appraised value. Their first mortgage is at about 55% of that value and a financed solar loan adds about 8%. Together that is 63%.
A cash-out at the 80% ceiling would pay off both and leave roughly 17% of value as net cash, before closing costs. Now say the appraiser assigns the panels little value and the figure comes in lower. The same 80% ceiling applies to a smaller number, and the cash shrinks. If the payoff had pushed total debt near the ceiling, the cash could vanish entirely.
This is the point most borrowers miss. The solar balance comes out of your equity before you see a dollar.
Costs, Term Reset, and the Hidden Balance
A new first mortgage resets the term. If you are several years into your current loan, folding in a solar balance means paying that balance over a new, longer schedule. A lower monthly outlay can still cost more over time.
Also check how big the solar balance really is. The CFPB’s solar financing report found some lenders build dealer fees into loan principal, pushing it 30 percent or more above the cash price, and that stated APRs often leave those fees out. Ask for an itemized payoff statement and compare it with what the system was quoted at. Payoff statements also expire, so ask how long yours stays valid.
Closing costs rise with the extra work, including title items, payoff statements, and any subordination request. Costs show on your Loan Estimate and Closing Disclosure. The main point is that “rolling it in” is not free. The costs are built into the balance.
Cash-Out vs. Other Routes
| Route | What changes | Fit |
|---|---|---|
| Cash-out refinance | Replaces first mortgage; pays solar | Equity is strong |
| Home equity loan or HELOC | Adds a second lien; first stays | You like your first mortgage |
| Keep the solar loan | No new lien work | Balance is small or terms are fair |
| Personal loan | Unsecured payoff | Little equity, good credit |
If your existing first mortgage is a good one, replacing it just to absorb a solar balance can be a poor trade. If your first mortgage is already due for a change, folding the solar balance in costs less extra effort. Converting an unsecured solar loan into mortgage debt also means the home secures it. Missed payments then put the house at risk, not just your credit.
Tax Note
Tax treatment can depend on your situation; borrowers should speak with a qualified tax professional before relying on any deduction or credit.
Mortgage Insurance and Credit
Conventional wholesale programs generally start at a 620 decision score, and the automated finding governs most files, with a total ratio ceiling of 50%. Mortgage insurance applies above 80% loan-to-value, but a cash-out is capped at 80% on a primary residence, so it rarely comes up here. The jumbo lanes above the conforming limit use a 660 decision score, leverage up to 90%, loans up to $5,000,000, and a 50% ratio ceiling on fixed lanes. All figures are subject to lender guidelines and full file review, and nothing here is a commitment to lend.
Key Terms Defined
Cash-out refinance: A new first mortgage larger than the old one, with the difference paid to you or to creditors at closing.
UCC fixture filing: A public notice recorded in land records that a creditor has a security interest in equipment attached to a home.
PACE: A local program that finances energy upgrades and is repaid through the property tax bill, usually with priority over the mortgage.
Subordination: A creditor’s agreement to rank behind the new mortgage.
Seasoning: The minimum time you must hold the current loan or title before cash-out is allowed.
Combined loan-to-value (CLTV): All loans secured by the home, divided by its appraised value.
Common Mistakes
- Assuming a solar loan always blocks a refinance. It changes lien handling. It does not end the file.
- Treating a UCC-1 as a mortgage. A plain UCC-1 is a notice about equipment. A fixture filing, solar deed of trust, or PACE assessment is more serious.
- Assuming the appraiser credits the whole system cost.
- Assuming the PACE payoff exception applies to other solar loans.
- Skipping the itemized payoff request.
For related reading, see Lendmire’s piece Can You Pay Off a Solar Panel Loan With a Cash-Out Refinance?.
What Your Decision Looks Like in Practice
Start with four questions. Which instrument do you have? What does an itemized payoff say? How much equity remains under the 80% ceiling after payoff? Is your current first mortgage at least 12 months old?
If the answers line up, a cash-out can retire the solar balance cleanly. If equity is thin, keeping the solar loan or using a second lien may be the better path. If it is PACE, plan on payoff.
If you are weighing a cash-out refinance against keeping the loan you have, Lendmire can help you compare the programs and the equity each one reaches.
Frequently Asked Questions
Can I roll my solar loan into my mortgage?
Often yes, if the new loan pays it off at closing and equity covers it under the 80% ceiling on a one-unit primary residence. PACE must generally be paid in full. The route depends on the lien type and the loan program.
Will the appraiser count my solar panels?
Owned or financed panels that cannot be repossessed are generally considered. Leased systems and PPAs add no ownership value. Expect the appraised credit to differ from what you paid.
Do I need the solar company’s approval?
If a fixture filing sits ahead of the new mortgage, the creditor may need to subordinate it. If you pay the loan off at closing, you need a payoff statement and a release afterward. The title company confirms what is recorded.
What if I owe more on solar than the system adds in value?
The payoff still comes out of your equity. The appraisal sets the value ceiling, so a large balance can shrink or erase your net cash. Check the payoff against the original cash price.
Does a solar loan affect an FHA or VA refinance?
PACE-encumbered properties became ineligible for new FHA insurance. VA streamlines generally do not deliver cash, so equity needs a separate cash-out. Confirm details with the lender.
For your own numbers, request a scenario review with Lendmire.
For current guidelines and terms, see Lendmire’s refinance programs page.
About Lendmire
Lendmire (NMLS# 2371349) is a mortgage brokerage serving homeowners and home buyers in 16 states. FHA, VA, conventional and jumbo purchase and refinance loans are arranged through wholesale lending channels; Lendmire brokers the financing and the lender underwrites each application. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. Fannie Mae Selling Guide: Special Property Eligibility Considerations
2. Fannie Mae Eligibility Matrix
3. Fannie Mae Selling Guide: PACE Loans
4. HUD Mortgagee Letter 2017-18
6. CFPB Issue Spotlight: Solar Financing
This article is part of Lendmire’s cash-out refinance program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Can You Pay Off a Solar Panel Loan With a Cash-Out Refinance? · Is a Cash-Out Refinance Smarter Than a Personal Loan for a Big Expense? · High-LTV Cash-Out Refinance vs Home Equity Loan on a Primary Home
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Required disclosures. Lendmire (NMLS# 2371349) operates as a licensed mortgage broker, not a direct lender or depository. The discussion in this article is general in nature and should not be relied upon as financial, legal, or tax advice — every investment scenario is unique and should be reviewed by a qualified professional. Any loan inquiry is subject to lender underwriting, and this article is not a commitment to lend or a guarantee of approval. Mortgage rates, loan terms, and program guidelines vary by borrower, property, and state, and may change without notice. Equal Housing Opportunity. Verify licensure at NMLS Consumer Access.