Can You Get a DSCR Loan on a Property With Solar Panels or a PACE Lien?

Three different solar setups, three different outcomes

Owned solar panels — meaning you (or the seller) paid cash or used an unsecured/personal loan — are generally treated like any other home improvement. They don't typically create a lien issue and don't usually complicate DSCR underwriting beyond a normal appraisal consideration of the improvement's value.

Leased solar is more complicated. If the panels are leased from a solar company, that lease is a separate financial obligation attached to the property, and lenders want clarity on it — whether it transfers to the new owner, what the monthly lease payment is, and whether it needs to be factored into the deal somehow. Some lenders will proceed with clear documentation; others get uncomfortable with the arrangement.

PACE liens (Property Assessed Clean Energy financing) are the hardest case. PACE debt is typically attached to the property tax bill and takes a senior lien position ahead of the mortgage in most states — which is exactly what mortgage lenders don't want, since it means the PACE lienholder gets paid before the mortgage in a default scenario. Most DSCR lenders (like most conventional lenders) require the PACE lien to be paid off at or before closing.

What to check before you write the offer

• Ask early, in writing, whether solar is owned outright, financed with a standard loan, leased, or attached to a PACE assessment — the seller's disclosure should cover this, but confirm directly.
• If there's a PACE lien, get the exact payoff amount and figure out in the purchase contract who's responsible for it — this is a negotiation point, not something to leave ambiguous.
• If solar is leased, get the lease terms and confirm the lender is comfortable with it before you're deep into underwriting, not after.
• For STR properties specifically, solar can be a genuine value-add for eco-conscious guest positioning — but get the underwriting question settled before marketing around it.