At a glance

Buying, whether in cash, with a loan or with PACE, means you own the system; the CPUC says that typically gives a greater return on investment. A lease or PPA means little or nothing up front, but a solar company owns the panels and you pay it for 20 years or more. Whatever you choose, a California contractor can't take more than $1,000 up front, and the median home system without a battery cost $18,989 in 2026 (see solar panel cost).

The $1,000 down payment cap

Down payment limit$1,000or 10% of the price, whichever is less

California's home improvement contract law requires this notice in every contract: "THE DOWNPAYMENT MAY NOT EXCEED $1,000 OR 10 PERCENT OF THE CONTRACT PRICE, WHICHEVER IS LESS." Any payments before the job is finished must follow a written schedule of progress payments.

On a $18,989 system, 10% would be $1,899, so the $1,000 limit applies. A contractor asking for more than that up front is a red flag.

Solar loans

With a loan you own the system and pay a lender each month. The CPUC's guide describes two kinds: secured loans, which use an asset, often the solar system itself, as collateral and typically have lower rates, and unsecured loans, which need no collateral. It also warns that some solar loans place a lien on your property: if you don't make the payments, that could lead to foreclosure or make it harder to sell or refinance.

The CPUC suggests comparing solar company lenders with banks and credit unions, and asking each lender:

  • What is the total cost of the loan over the whole contract?
  • What is the interest rate, and the annual percentage rate (APR)?
  • How much do I pay up front, how much over time, and for how long?
  • Will the loan make it harder to sell or refinance my home, and would I need to pay it off first?

As an owner you're usually responsible for repairs, so keep the equipment warranties, especially for the inverter.

PACE financing: what California requires

Property Assessed Clean Energy (PACE) pays for the system up front and you repay it as an assessment on your property tax bill. The CPUC notes it creates a first-priority lien on your home, your lender may require it paid off before you refinance, and missed payments can lead to foreclosure. If a payment is late, state law adds a 10% county penalty. California law sets these rules for PACE on homes of up to four units:

  1. Ability to pay

    The PACE administrator must find you can reasonably afford the yearly payments, from your income, assets and debts. The equity in your home doesn't count.

  2. Limits on the property

    Your property taxes must be current, with no more than one late payment in the last three years, and your yearly taxes and assessments can't pass 5% of the home's market value.

  3. A Financing Estimate and Disclosure

    A standard form with the costs and terms, delivered before you sign, printed unless you opt out in writing.

  4. A recorded phone call

    Before you sign, the administrator must go over the key terms with you on a recorded call: the lien, the yearly cost, that savings aren't guaranteed, and that you can prepay without penalty.

  5. Three business days to cancel

    Until midnight of the third business day after the latest of signing, getting the disclosure or getting the cancel notice. Five business days if you're 65 or older.

PACE has become rare for home solar: 1,598 PACE-financed systems were approved in 2020 and 54 in the first eight months of 2026. The CPUC lists free legal help for homeowners having trouble with PACE financing.

Drone view over a two-story home with solar panels on its roof, a wide road and a large suburb stretching to the hills

Leases and PPAs

With a lease or a PPA, a solar company owns the system and you pay it monthly, for the system or for its power, often with payments that rise each year. Nearly half of new home solar at PG&E, SCE and SDG&E in 2026 was set up this way. Our solar lease and PPA guide covers escalators, buyouts and what happens when you sell.

Tax credits in 2026

There's no federal credit to count on for a system finished in 2026: the IRS says the 30% Residential Clean Energy Credit isn't available for property placed in service after December 31, 2025. California's property tax exclusion still keeps a new system out of your assessment if it's finished before January 1, 2027. See California solar incentives.

Next step

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Common questions

How much down payment can a solar company ask for in California?

No more than $1,000 or 10% of the contract price, whichever is less. California's home improvement contract law requires that notice in the contract, and any other payments before completion must follow a schedule of progress payments.

What is PACE financing for solar?

Property Assessed Clean Energy: the system is paid for up front and you repay it through an assessment on your property tax bill. It puts a lien on your home, and California requires an ability-to-pay check, a Financing Estimate and Disclosure, a recorded call of the key terms and a right to cancel.

Can I cancel a PACE contract in California?

Yes, until midnight of the third business day after the latest of signing, receiving the Financing Estimate and Disclosure, or receiving the right-to-cancel notice. If you're 65 or older, it's the fifth business day.

Do solar loans put a lien on your house?

Some do. The CPUC says some solar loans place a lien on your property, which could lead to foreclosure if you don't pay and can make it harder to sell or refinance. Ask the lender before you sign.

Is it better to buy or lease solar in California?

The CPUC says buying typically gives a greater return on investment; a lease or PPA means little or no upfront cost, but the company keeps the incentives and payments often rise each year.

This page explains how the options and the rules work; it isn't financial or legal advice, and the terms of any loan, PACE assessment or lease are set by its contract. Sources: CPUC: Solar Consumer Protection Guide · Business and Professions Code 7159 · Streets and Highways Code 5898.16 · Streets and Highways Code 5913 · Financial Code 22687 · California DG Stats · IRS: Residential Clean Energy Credit. Reviewed October 2026.

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