Is a Mosaic solar loan the best option to finance solar panels?
If you’re considering installing solar panels on your home, you may be researching solar loans to finance the purchase. Solar loans are a popular way to finance the installation of solar panels for homes and businesses.
In this blog, we’ll discuss what a Mosaic loan covers, what makes it different from other financing options, and whether or not it’s right for you.
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What is a Mosaic solar loan?
Mosaic is the largest solar loan underwriter in the customer-owned residential solar market. In the first six months of 2018, it underwrote 29 percent of all solar loans in the U.S.
Mosaic has a broad network of solar contractors and local solar installers around the country offering their loans. Even large solar companies like Vivint offer Mosaic loan products.
Alongside their loan products for solar systems, Mosaic provides finance alternatives for other home improvements, such as energy efficiency improvements and home batteries. Upgrades they cover include:
- Electric car charging stations
- Energy efficient windows and doors
- Solar-plus-storage installations
What is the average loan amount for a Mosaic solar loan?
Mosaic provides loans between $10,001 and $100,000. This range can meet the needs of most home solar installations.
Each solar installation is unique, and Mosaic has loan products they can customize in most situations to fit your specific circumstances. Terms, loan amounts, interest rates, and monthly payments will vary depending upon your needs.
As of January 2020, the average cost of solar panels per watt in the US is $3.18/watt, according to data collected by SolarReviews. This makes a typical 6 kW solar system $19,080 before the federal solar credit; or $14,119 after claiming the credit.
What is the term length of a Mosaic solar loan?
Mosaic solar loans are long term; they range in length from 10 to 20 years. You can make loan payments in advance without incurring any prepayment penalties.
They also offer a special tax credit loan at a higher interest rate but a shorter term to cover the period until you are refunded the solar tax credit (worth 26% of solar system cost until 2023). This period is typically between 12-18 months, depending on what time of year you install your solar.
If you want this bridging loan it means there will be two solar loans: one short-term, and one-long term, to fund your project.
What is the interest rate on a Mosaic solar loan?
Interest rates on Mosaic loans vary depending on the packages that are offered by your solar installation company and which of those specific loan products you choose.
The interest rates range from 2.49 to 7.99 percent, although rates offered will change based on the marketplace. According to one installer offering the loans, Mosaic loans are available at an interest rate 3.49% (fixed) for a 10-year term and 3.99% (fixed) for 15 and 20-year terms — plus dealer fees.
For more information about finding the best rate, read our homeowner’s guide to finding the cheapest, best solar home loans.
Why do dealers fees matter if I’m not paying them?
Dealers fees are fees payable by your solar installation company to the solar financing company, in this case, Mosaic to originate the loan.
The reason they can get such cheap interest rates on such long-term loans is because Mosaic gets a chunk of the cost you pay for the solar system as an upfront origination fee.
The reason why dealers fees matter to you is because your solar company builds that into the price of their systems.
This is why it is better to be a cash buyer when it comes to solar. Hidden dealers fees on the solar loan are usually between 6% and 12% of the cost of the system.
So if you are a cash buyer, and you know this, you can ask the solar company to discount the solar system by this amount without the solar company needing to reduce their margin.
What are the credit score requirements to qualify for a Mosaic solar loan?
In general, your credit score may need to be 700 or higher for a solar loan from a traditional financial institution like a bank. However, specialized solar loan companies have more flexibility, especially because they know and understand the solar market.
They also know that financing includes necessary permits as well as the system installation. Mosaic says that they have progressively increased loan disbursements to customers with credit scores of under 700.
In fact, they claim to underwrite loans for borrowers with FICO credit scores as low as 640.
What are the benefits of a Mosaic no-money-down loan?
One popular option that Mosaic offers is their 20-year no-money-down loan. Repayments only start once the solar system has been installed.
The longer loan term means smaller monthly loan repayments; these are typically lower than the monthly electricity bill savings from your solar panels. This means that with this loan, you will be cash flow-positive from the very first month of your solar installation.
How is a Mosaic loan different from a traditional bank loan?
As the consumer, you have a variety of financing resources for your solar installation. The type of loan you opt for depends upon your circumstances and priorities.
Because solar energy is still considered a newer technology, some conventional financial institutions don’t eagerly seek out consumers in this loan sector. You will find that a specialized solar loan provider like Mosaic will likely be prepared to answer all your questions regarding solar loan products.
In addition, Mosaic has a much quicker approval process than a regular bank.
If you want to use your bank for a line of credit or home equity loan to finance the solar panel installation, you can expect to wait for several weeks until the loan closes. You will need to have considerable home equity and a favorable debt-to-income ratio as well.
With Mosaic, customers are frequently approved the same day, and Mosaic does not require your home as collateral. Another key difference between Mosaic and a traditional bank is Mosaic’s dedicated in-house customer service.
Is Mosaic the best loan option?
Mosaic Solar loans are not the only option on the market. We recommend doing some more research and finding the best loan that will provide flexible repayment options.
Unfortunately, there are many negative reviews for Mosaic Solar loans, ranging from people being signed up for Mosaic loans without knowing it, to getting liens placed on their property and unfairly high interest rates.
Loan customers also have reported poor experiences with Mosaic’s customer service department and have trouble selling their homes while locked into a solar contract.
Make sure to thoroughly read your loan contract so that you know you are subject to the best rate possible and that you are not signing anything you do not understand.
What other financing company could I use to finance a solar project?
The cheapest option to finance a solar power system for your home, if you don’t have available cash to buy one, is to speak to your bank about extending your home loan, either through a refinance of your existing mortgage or a HELOC loan.
A HELOC loan is a home equity line of credit and will typically be more than a 30-year mortgage rate but less than a specialist solar loan.
The downside of using your bank is that you have to organize the loan yourself, whereas with specialty loans for solar they are organized by the solar installation company you choose. This gives a nicer customer service experience, making it easier to organize the solar panels you need to cut your electricity bill.
What options are available to finance my solar energy system other than solar loans?
Another option you have to finance your panels is through a solar lease or power purchase agreement (PPA). Despite once being popular in the solar power industry, these options are quickly falling out of favor because they usually don’t offer the best financial savings.
Another issue with these financing methods is that the solar company retains ownership of your solar panels until the end of the term of the lease or PPA when you often have to pay them a balloon payment. This also means that the solar company retains the incentives the system is entitled to, such as the federal solar tax credit.
These reasons are why consumers are now turning away from these types of financing options.
If you want to maximize the financial benefits from your solar energy panels, then look at purchasing the system outright by either using a solar loan like Mosaic or by paying cash.
You can calculate how many solar panels you need for your home and see how much they will cost based on the prices of systems offered by solar companies in your city by using our solar calculator! We can also put you in touch with local solar panel companies that offer Mosaic solar loans.
Author: Andrew Sendy | Home Solar Journalist
Andy is deeply concerned about climate change but is also concerned about cost of living pressures on American families. He advocates for solar energy and solar battery storage only to the extent that they make financial sense for homeowners. He is not affiliated with any particular solar company in the United States.