Green Mortgages Explained: How to Finance Solar with Canadian Banks
Written by Solenery
2 min read
Introduction
Dreaming of a greener home but unsure how to afford it? You’re not alone.
From solar panels to heat pumps, Canadians are increasingly embracing clean energy—but the upfront cost can be daunting. That’s where green mortgages come in.
These mortgage programs reward homeowners who make energy-efficient upgrades—with lower rates, cashback, or more borrowing power.
In this article, we’ll cover:
- How green mortgages work in Canada
- Who qualifies and how to apply
- Which banks offer them
- How to use one to finance solar systems and insulation upgrades
What is a Green Mortgage in Canada?
A green mortgage (or energy-efficient mortgage) is a type of home loan that includes financial incentives for upgrading your home with:
- Solar panels
- Heat pumps
- High-efficiency insulation or windows
- Net-zero renovations
Two Main Types:
- New Home Purchase: Buy an energy-efficient home and get a bonus or better rate
- Refinance or Re-amortize: Use the funds to upgrade your existing property
These programs reduce the financial barrier to clean energy by improving your loan terms or offering rebates on fees.
Government-Backed Option: CMHC’s Green Home Program
The Canada Mortgage and Housing Corporation (CMHC) offers a Green Home incentive through participating lenders.
| Feature | CMHC Green Home Program |
|---|---|
| Eligible Homes | ENERGY STAR®, R-2000, Net-Zero Ready, or LEED certified |
| Incentive | Up to 25% rebate on CMHC mortgage loan insurance premium |
| Used For | Buying, building, or renovating green homes |
| Availability | Nationwide via CMHC-approved lenders |
Example:
Buying a $600,000 home with less than 20% down?
Typical CMHC insurance = $16,200
With green certification = $4,050 rebate back
💡 Update: This program can be stacked with the Canada Greener Homes Loan (up to $40,000 interest-free) and the Clean Technology Investment Tax Credit (30% of solar-related costs).
Major Canadian Banks That Offer Green Mortgages
Several lenders offer green mortgage products with cash or rate incentives:
RBC Green Home Mortgage
- Up to $500 cashback for energy-efficient upgrades
- Applies to new purchases and existing homes
- Upgrades must be installed within 120 days
BMO Eco Smart Mortgage
- Discounted interest rate for ENERGY STAR® or R-2000 certified homes
Scotiabank EcoLiving Mortgage
- Up to 10% cashback (max $5,000) on qualifying upgrades
- Requires documentation of the improvements
Other Options:
- Vancity and Alterna credit unions offer green loans
- Homewise lets you bundle solar into your mortgage application
💡 Pro Tip: Ask your lender if they offer green mortgage perks—they’re often available but not well-publicized.
Can I Use a Green Mortgage for Solar Panels?
Yes—as long as solar is part of an approved home energy plan.
You may need:
- A pre- and post-installation energy audit
- Equipment specs and upgrade documentation
- ENERGY STAR®, R-2000, or Net-Zero Ready certification
Bonus: Some lenders allow you to borrow above appraised value if your upgrades reduce utility bills.
Provincial Solar Incentives You Can Stack:
| Province/Territory | Solar Rebate & Financing Programs |
|---|---|
| BC | Up to $5,000 in BC Hydro rebates + PST exemption on solar and batteries |
| Ontario | Up to 30% off via Save on Energy + HELP Loan (Toronto, up to $125,000) |
| Nova Scotia | $300/kW solar rebate (SolarHomes) + $2,500 battery rebate |
| Alberta | $0.50–$0.75/Watt in local rebates + CEIP tax financing |
| PEI | $1,000/kW rebate, up to $10,000 |
| Manitoba | $500/kW rebate (max $5,000) + Manitoba Hydro loan (up to $20,000) |
| Yukon | $0.80/Watt rebate (up to $5,000) |
| NWT | 50% rebate, up to $20,000 (off-grid eligible) |
| Nunavut | 50% rebate, up to $30,000 |
How Green Mortgages Compare to Other Financing Options
| Financing Option | Green Mortgage | Solar Loan | HELOC |
|---|---|---|---|
| Interest Rate | Discounted or CMHC-backed | Moderate (5–12%) | Low (Prime + 0.5%–2%) |
| Collateral | Yes (your home) | Sometimes unsecured | Yes (your home) |
| Best For | Buyers, refinancers, renovators | Homeowners without equity | Equity-rich homeowners |
| Bonus | Rebates, cashback, insurance | Fast approval | Flexible repayment options |
Green mortgages take more paperwork—but offer maximum value if you’re buying or renovating anyway.
Conclusion
Green mortgages are one of the most underrated financing tools in Canada’s clean energy future.
Whether you’re buying a home, refinancing, or planning a retrofit, a green mortgage can help you:
- Lower upfront costs for solar, heat pumps, and insulation
- Get cashback or rebates
- Qualify for better loan terms