Financing an Energy-Efficient New Home
Highlighted Resources
A Handy Guide to Energy-Efficient Financing
This fact sheet from the U.S. Department of Energy provides more information about types of energy-efficient loans and home energy reports.
State-by-State: Lenders and Home Energy Raters
Residential Energy Services Network (RESNET) offers homebuyers a directory of lenders and raters trained by RESNET.
How Does an Energy-Efficient Mortgage (EEM) Work?
An energy-efficient mortgage (EEM) is a type of loan that allows a homebuyer to borrow more money to help pay for energy efficiency improvements or upgrades. The cost of the improvements can be spread out over the period of the mortgage or loan. In some cases, energy-efficient loans can have a lower interest rate or lower down payment requirements!
Because an energy-efficient house will have lower monthly utility bills, many lending institutions are willing to stretch the buyer's qualifying ratio.
Typical energy efficiency improvements are:
- Upgraded heating and air-conditioning systems
- Duct sealing and repairs
- Ceiling, wall, floor and attic insulation
- Energy-efficient windows
- Energy-efficient water heaters
Who Qualifies for an EEM?
To qualify for an energy-efficient mortgage (EEM), a home should meet ENERGY STAR criteria, or demonstrate that it meets EEM requirements through an official Home Energy Rating System (HERS) report.
What is a HERS Report?
A Home Energy Rating System (HERS) report is a measurement of the relative efficiency of a house. The report takes into consideration the efficiency of the thermal envelope, windows, heating, ventilation, air conditioning as well as other components of the house.
The report is provided by a trained professional after performing an on-site inspection of the house and its systems. The report will give an estimate of the annual energy performance and costs of the house as well as suggestions for the most cost-effective energy efficiency improvements.
How do I Get a HERS Report?
A variety of home energy verification organizations are available in California to assist in verifying the energy performance of your home.
A good place to begin securing a HERS report is to contact California Home Energy Efficiency Rating System (CHEERS), a statewide nonprofit that connects consumers with certified Home Energy Rating System (HERS) raters. Call 800-424-3377 or go to www.cheers.org
Where Can I Find Energy-Efficient Mortgage Programs?
Ask your lender or visit the Residential Energy Services Network (RESNET) website to find lending institutions which offer energy-efficient mortgages. Most of them operate through one of the following programs:
