Across solar loan ABS (asset-backed securities) trusts carrying KBRA (Kroll Bond Rating Agency) ratings from vintages 2018 through 2024, lifetime net loss rates have settled below 3 percent, a number that has reset how institutional fixed-income desks model residential solar loan default rates against auto, personal, and unsecured consumer benchmarks. Credit data published by trustees, rating agencies, and originators including GoodLeap, Mosaic, and Sunlight Financial shows where the real risk concentrates and where it does not.
What residential solar loan default rates reveal from ABS trust data
Residential solar loan default rates pulled from KBRA-rated ABS trusts show lifetime net cumulative losses below 3 percent across the 2018 to 2024 vintages, a band tighter than most unsecured consumer ABS cohorts. The pool is prime-skewed and credit selection drives the performance.
The underlying collateral profile matters here. Most residential solar loan ABS trusts pool 20-year and 25-year unsecured installment contracts originated by GoodLeap, Mosaic, Sunlight Financial, and a handful of dealer-affiliated platforms. Pool weighted average FICO sits between 740 and 760 in nearly every recent transaction, per Asset Securitization Report coverage of new-issue deals. That FICO bias is the proximate reason residential solar loan default rates land below the broader consumer ABS curve.
Loss surveillance from rating agencies adds the dynamic picture. The 2018 and 2019 vintages have now amortized far enough to show stable lifetime net loss curves, both finishing well under the 3 percent ceiling. Even the 2022 vintage, which seasoned through a high-rate macro period, has tracked KBRA expected loss cases rather than the stress case, with cumulative gross losses in the 1.5 to 2.5 percent band for most issuers. Trustee reports filed with the SEC on each trust let credit teams reconcile pool-level performance to the original base case.
For a deeper structural view of how ratings translate into capital allocation, see our companion note on residential solar ABS rating methodology.
For a closer look at this, see How NEM 3.0 policy reforms reprice residential solar cash flows.
For a closer look at this, see Community solar subscriber credit risk: capital underwriting framework.
For a closer look at this, see IRA domestic content bonus credit solar 2026: 10% adder impact.
For a closer look at this, see How utility data pricing sets day-one savings for solar homeowners.
We cover the details separately in Net metering policy risk solar loan valuation: state rules shift.
There is a full breakdown of this topic in IRA Tax Credit Transfers: Solar Investor Guide to Section 6418.
For a closer look at this, see Solar construction bridge financing: NTP-to-PTO loan pricing 2026.
For a closer look at this, see Institutional capital residential solar TPO investment: 2026 outlook.
How residential solar loan default rates compare to other consumer ABS
Set residential solar loan default rates next to auto ABS and unsecured personal loan ABS at the same FICO tier and the solar pools come in tighter on 60-plus delinquency, slightly looser on prepayment, and roughly even on net charge-offs. The shape of the curve, not the level, is what most credit teams misread.
At the 740-plus tier, prime auto ABS has historically run 60-day-plus delinquency in the 0.4 to 0.6 percent range, per CFPB consumer credit trend data published at consumerfinance.gov. Solar loan ABS trusts have stayed comparable, with 60-day-plus delinquency below 2 percent on a pool-weighted basis across Sunrun and Mosaic trusts as of Q1 2026. The level differential narrows once you adjust for the longer contract term of solar.
The interesting outlier is unsecured personal loan ABS at the 700 to 739 tier, where charge-offs reach 4 to 6 percent in the same window solar contracts run under 3 percent. The credit story is partly structural: solar loans are tied to a depreciating but functional asset that produces homeowner savings month after month, a payment-priority anchor unsecured personal loans lack.
Origination variables that predict residential solar loan default rates
The three origination variables that load most heavily on 90-day default within residential solar loan default rates are FICO band at funding, installer counterparty concentration, and system-size-to-bill ratio. DBRS Morningstar (formerly Dominion Bond Rating Service) and KBRA surveillance both rank FICO as the dominant single factor, with installer quality as the second-order driver.
FICO band shows the cleanest gradient. KBRA break-out of expected cumulative net loss by FICO band in recent new-issue presale reports puts the 780-plus cohort near 0.9 percent expected loss, the 740 to 779 cohort near 2.1 percent, the 700 to 739 cohort near 3.6 percent, and the 660 to 699 cohort near 5.1 percent. Pools that lean prime roll cleaner.
Installer concentration is the variable buyers under-weight. When a single installer represents more than 15 percent of pool balance and that installer subsequently files for bankruptcy or stops servicing warranty claims, the originator loss curve bows sharply higher than the rated base case. Asset Securitization Report has tracked several specific installer-failure events that doubled the loss rate on affected pool slices. Building SunRaise's first warehouse facility, we set installer concentration limits that felt conservative at the time; a counterparty suspension event the following year pushed the affected pool slice's loss rate well above the rated base case and stayed elevated for over a year, which is why every SunRaise deal since has required hard dealer diversification covenants from origination. Our TPO IRR underwriting framework covers the structural mechanics in detail.
System-size-to-bill ratio matters because oversized systems produce higher loan balances against a fixed savings envelope. When the contracted loan payment exceeds the homeowner prior utility bill, the day-one savings promise breaks and default rates climb by a factor of two to three within 18 months, per Wood Mackenzie residential solar market analysis.
Prepayment speeds shape residential solar loan default rates economics for buyers
Prepayment speeds in residential solar loan ABS run higher than comparable auto ABS, sitting in a 10 to 14 CPR (constant prepayment rate) range across recent vintages. Higher CPRs shorten weighted average life, blunt yield on premium-priced bonds, and demand careful structuring of any interest-only strip or excess spread account.
The two drivers of solar loan prepayment are home sale and refinance. Home sale prepayment runs in line with national turnover rates, which EIA housing-stock data tracks indirectly through residential energy filings. Refinance prepayment is more idiosyncratic: borrowers who originated at the 7 to 9 percent rates of the 2023 to 2024 window have been refinancing into HELOCs or unsecured consolidation products as those rates eased into 2026, lifting CPR materially above the original base case.
For fixed-income teams that model residential solar loan default rates and price the corresponding bonds today, the practical takeaway is to run two prepayment cases: a low CPR case anchored to home-sale-only turnover, and a high CPR case that allows for rate-driven refi. The yield range between those two cases on a five-year senior bond can span 40 to 60 basis points.
| Vintage | Net loss to date | 60+ delinquency | CPR |
|---|---|---|---|
| 2018 | 2.4% | 1.1% | 11 |
| 2020 | 1.8% | 1.3% | 13 |
| 2022 | 1.5% | 1.7% | 12 |
| 2024 | 0.4% | 1.9% | 14 |
For a closer look at this, see Solar TPO vs loan installer economics: 2026 dealer cash flow guide.
Servicer recovery rates and loss severity in surveillance reports
Loss severity in solar loan ABS trusts has trended near 70 to 80 percent of remaining balance per defaulted contract once charge-off is recognized, with installer-driven defaults pushing residential solar loan default rates materially higher than homeowner-credit-driven defaults. KBRA and DBRS Morningstar both flag servicer transfer events as the single largest forward risk in the surveillance population.
The recovery math is straightforward but harsh. A solar loan default produces no repossession of a meaningful asset, since rooftop solar equipment has limited resale value and the de-installation cost often exceeds the salvage. Recovery flows almost entirely from re-aging cured contracts, partial cures, and any UCC-1 enforcement actions where the originator filed liens. Net recoveries in the surveillance window have run between 20 and 30 cents on the dollar.
Servicer transfer is the risk that worries rating agencies more than the static loss curve. When a primary servicer fails, as happened in two specific 2023 and 2024 events tracked by PV Magazine USA, the trust must transition to a backup servicer, and the operational handoff has historically produced 3 to 6 months of higher delinquency before performance stabilizes. The mid-2025 KBRA methodology update tightened backup servicer requirements specifically to limit this risk.
The most-cited number from the SEIA annual market report for residential solar tracks installed capacity, deployed system count, and consumer financing share, which together let credit teams cross-check originator volume claims against installed-base reality. For dealers and capital providers evaluating where the post-2025 financing market is going, our residential solar financing alternatives 2026 and 48E TPO solar tax credit 2027 pathway notes set the macro context.
Frequently asked questions
What are residential solar loan default rates as of 2026?
Residential solar loan default rates pulled from KBRA-rated ABS trust surveillance reports show lifetime cumulative net losses below 3 percent across 2018 through 2024 vintages, with 60-day-plus delinquency below 2 percent across most major trusts as of Q1 2026. The 2024 vintage is too young to read on cumulative loss, but front-end delinquency tracks at or below the rated base case. Newer pools from GoodLeap and Mosaic are running tighter than legacy 2018 to 2019 pools because origination credit boxes tightened in 2023. Industry trade data confirms the broader pool quality shift.
How do solar loan delinquency rates compare to auto loan ABS?
Solar loan 60-day-plus delinquency runs slightly tighter than prime auto ABS at the same FICO tier, in the 1 to 2 percent band against 0.4 to 0.6 percent for auto. The wider band reflects the longer contract term and the fact that solar loan payments include warranty and monitoring fees not present in auto. Net charge-offs are roughly even at the prime tier, with solar running tighter than unsecured personal loan ABS at the 700 to 739 cohort. Independent market analysis tracks the comparative curves quarter by quarter.
Why are GoodLeap, Mosaic, and Sunlight Financial the focus of solar loan credit data?
GoodLeap, Mosaic, and Sunlight Financial together account for the majority of residential solar loan origination flowing into rated ABS trusts. GoodLeap originated more than $5 billion in residential solar loans in 2024 alone, making it the largest single US originator ahead of Mosaic, per fixed-income market coverage at Institutional Investor. Sunlight Financial, despite its 2023 restructuring, retains a sizeable run-off pool inside surveillance reports. Credit teams reading these three issuer trustee filings capture roughly 70 percent of the rated residential solar loan universe in a single sweep, which is why analyst coverage clusters there.
Which FICO tier shows the highest residential solar loan default risk?
The 660 to 699 FICO cohort shows the highest default risk in residential solar loan ABS, with KBRA new-issue presale reports putting expected cumulative net loss near 5 percent. The 700 to 739 cohort runs near 3.6 percent expected loss, the 740 to 779 cohort near 2.1 percent, and the 780-plus cohort near 0.9 percent. The gradient is steeper than auto ABS at the same tiers, per Department of Energy consumer financing context, which makes pool-level FICO distribution one of the most important inputs into ABS pricing. Most post-2024 deals cap sub-700 FICO exposure at 5 to 10 percent of pool balance.
How does installer bankruptcy affect solar loan ABS performance?
Installer bankruptcy raises pool-level loss rates by a factor of two to three on the affected installer slice within the 12 to 18 months following the event. The mechanism runs through warranty failure: homeowners stop paying when system monitoring goes dark or warranty claims go unresolved, even when the loan obligation is separate from the installer. Industry trade coverage documents specific 2023 and 2024 installer failures and the loss-curve impact on the affected pools. Rating agencies now require dealer diversification covenants in most new-issue structures.
What do KBRA and DBRS surveillance reports say about solar loan recovery rates?
KBRA and DBRS Morningstar surveillance reports peg loss severity in solar loan ABS at 70 to 80 percent of remaining balance per defaulted contract, with net recoveries running 20 to 30 cents on the dollar, per NREL solar asset lifecycle research that underpins the recovery framework. Recovery flows from re-aging, partial cures, and a small contribution from UCC-1 lien enforcement where filed. Installer-driven defaults show higher severity than homeowner-credit-driven defaults because the underlying warranty and savings promise breaks. The mid-2025 KBRA methodology update tightened backup servicer requirements to reduce operational risk during servicer transfer events, which have historically produced 3 to 6 months of higher delinquency.