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    Energy Efficient Mortgages


The Energy Efficient Mortgage (EEM) recognizes that energy efficient homes cost homeowners less to operate on a monthly basis than standard homes because they use less energy. Home buyers who choose energy efficient homes can afford to spend more on their housing expenses because they will likely spend less on their energy costs. The EEM allows borrowers to qualify for a larger mortgage as a result of the energy savings.

There are two types of energy-efficient mortgages (EEMs): one for a new home and one for an existing home. You can purchase or refinance a home that is already energy efficient, or you can purchase or refinance a home that will become energy efficient after energy-saving improvements are made. 100% of energy improvements can be financed -- up to 15% of the value of the home for existing homes, and up to 5% of a new home's value.

Lenders can offer conventional, FHA, or VA EEMs. The following web sites offer detailed information on EEMs .

Financing an Energy-Efficient Home
This U. S. Department of Energy web page gives an overview of energy-efficient financing programs.

EEMs and Refinancing for Energy Efficiency Improvements
An Alliance to Save Energy web site.

EEMs Frequently Asked Questions
A Residential Energy Services Network web site.

FHA Energy Efficient Mortgages
A Federal Housing Administration (FHA) Housing and Urban Development (HUD) web site.
FHA's energy efficient mortgage program provides mortgage insurance for a person to purchase or refinance a principal residence and incorporate the cost of energy efficient improvements into the mortgage. The mortgage loan is funded by a lending institution, such as a mortgage company, bank, savings and loan association and the mortgage is insured by HUD. The site includes a list of mortgage companies that offer EEMs.

Does the FHA have mortgage limits?
Yes, and this FHA page allows you to look up the FHA mortgage limits for your area or several areas, and then list them by state and county.

Department of Veterans Affairs (VA)
The VA's energy efficiency mortgage is available to qualified military personnel, reservists and veterans for energy improvements when purchasing an existing home. The VA EEM caps energy improvements at $3,000–$6,000. Also see this VA PowerPoint presentation.

ENERGY STAR® & Energy Efficient Mortgages
The ENERGY STAR® Homes program promotes voluntary partnerships with home builders to construct new homes that are 30 percent more efficient than the guidelines established by the Model Energy Code - a model national standard for residential energy efficiency. The program also encourages lenders to provide EEMs for certified ENERGY STAR® homes.
ENERGY STAR Mortgages are competitive mortgages offered by both national and local lenders. They can offer a wide range of preferred terms, including paying for the home energy rating, cash back at closing, competitive interest rates, and the waiving of selected fees. As a lender, ENERGY STAR mortgages allow you to make larger loans, more loans, and safer loans. Use the New Homes Partner Locator to compile a list of participating lenders in your area.

Home Energy Raters

Most energy-efficient financing programs will encourage you to have an energy rating for your new or existing home, which will tell you and the lender how energy efficient it is. The type of energy efficiency mortgage depends upon the home energy rating to calculate potential savings from the home's energy efficiency features and utilities. A rating typically involves an inspection by a professional energy rater who is certified under a nationally or state accredited home energy rating system (HERS). The following links will help you to select a home energy rater in Texas:

Texas HERO
The Texas Home Energy Raters Organization (HERO) is a not-for-profit professional organization that promotes the benefits of energy conservation initiatives and monetary incentives to homeowners, homebuilders and businesses. Texas HERO consists of independent energy management professionals located throughout Texas. Many home energy raters work with small businesses as well.

ENERGY STAR - Find a Home Energy Rater in Texas
This ENERGY STAR database lists home energy raters who have qualified at least one ENERGY STAR new home in the last 12 months. Many home energy raters work with small businesses as well.

RESNET Home Energy Ratings
Residential Energy Services Network (RESNET) sets the standards for raters, rater trainers and energy auditing software that are used in the housing industry. A rating is required to qualify the home for an energy-efficient mortgage and for a home to be labeled as ENERGY STAR®. RESNET can help you find a rater near you. RESNET is a national network of mortgage companies, real estate brokerages, builders, appraisers, utilities and housing and energy professionals whose mission is to improve the energy efficiency of the nation's housing and to qualify more families for home ownership by expanding the national availability of mortgage financing options and home energy ratings.

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