A solar-style loan is the most common residential solar loan structure. It's designed around the homeowner's expected federal Investment Tax Credit (ITC) and is offered by lenders including Mosaic, Sunlight Financial, GoodLeap, and Dividend.
In this article, we’ll cover:
How solar-style loans work
Solar-style loans have two phases:
- Phase 1 (months 1–18, approximately): The homeowner makes reduced payments. Interest accrues on the full principal. Aurora models a default 1-month no-payment grace period at the start — matching standard lender practice — which you can adjust using the No-payment months field.
- Phase 2 (after ITC paydown): The homeowner applies their ITC refund as a lump-sum prepayment. Monthly payments are then recalculated on the reduced balance for the remaining term.
Note: If the homeowner does not make the expected ITC prepayment, their monthly payment increases automatically to ensure the loan is paid off by maturity. Aurora models both scenarios.
How to create a solar-style loan
- Go to Database > Financing products and click Add financing product.
- Enter a name (e.g., "Mosaic 25-Year 5.99%"), select a project type, and choose Loan as the financing type. Click Add.
- Click Add Loan.
- Set Loan type to Solar-Style.
Configure the following fields:
- Name — The loan label in Sales Mode. Include the lender name and key terms so reps can identify it quickly.
- Principal — Percentage of system cost financed. Typically 100% for solar-style loans.
- Flat fee — Optional fixed dollar amount added to the loan principal on top of the dealer fee.
- Dealer fee — Your lender's fee as a percentage of the financed cost. See Loan Dealer Fee for how this affects the principal.
- Incentives apply to dealer fee — Enable if the dealer fee should be included in the ITC and tax-basis calculations.
- Interest is tax deductible — Not typical for solar-style loans. Enable only if confirmed with your lender.
- Interest rate — The annual rate from your lender.
- Duration — Loan term in months (e.g., 300 for 25 years). Create a separate financing product for each term your lender offers.
- No-payment months — The grace period at the start of the loan during which no payment is due (interest still accrues). Defaults to 1 month, matching most lenders.
- Loan can have a prepayment — Toggle on to model the ITC paydown. Reveals two sub-fields: Amount (the percentage of the loan that will be paid off early, entered as % of financed amount) and Month (the month the prepayment is paid to the lender and the loan is reamortized, typically month 18).
- Click Save.