Finance Energy-Saving Home Improvements

These loans may be used when purchasing a home, refinancing an existing mortgage, or renovating an existing property with qualifying energy-efficient upgrades.

Highlights of an Energy Efficient Mortgage

• Available to use with an FHA or VA home loans and as an enhancement option on specific conventional programs
• Energy efficient improvements may be used within renovation loan programs, such as FHA 203(k), depending on lender guidelines
• Finance energy efficient home improvements through your mortgage
• Available for 1- to 4-unit primary properties
• Borrowers are typically given a period after closing (often 90-180 days, depending on loan program) to complete improvements

How Does an Energy Efficient Mortgage Work?

Before obtaining an Energy Efficient Mortgage, you must complete a home energy assessment. This assessment is then used to generate a home energy report. A home energy report identifies potential energy-efficient improvements and evaluates their cost-effectiveness.

Based on the findings in the energy report, your lender can determine how much you may be allowed to borrow for your mortgage. Improvements must be deemed cost-effective, meaning the projected energy savings are expected to exceed the cost of the upgrades over time. The amount that can be financed for improvements is subject to program limits and lender guidelines.

Borrowers must meet all lender requirements, including credit score guidelines, documentation requirements, and verification that the proposed improvements are cost-effective.

Examples of Improvements Available Through an EEM:

Acceptable energy efficient improvements may include, but are not limited to:

• Improved insulation
• High-efficiency HVAC systems
• Energy-efficient windows and doors
• Weatherization improvements
• Energy-efficient water heaters
• Installation of active or passive solar technology

What are the Benefits of an Energy Efficient Mortgage?

Energy Efficient Mortgages may help borrowers reduce long-term energy costs by financing energy upgrades within the mortgage, rather than paid out of pocket.

An EEM may be a good option for borrowers who:

• Want to make energy-efficient improvements to their current home
• Are purchasing a home that could benefit from energy upgrades
• Want to reduce long-term household energy costs
• Are interested in making environmentally conscious home improvements

To learn more about EEMs, check out our blog: Understanding Energy Efficient Mortgages.