The Energy Efficient Mortgage

An Underutilized Financial Tool

The Energy Efficient Mortgage (EEM) has been around since the early '90s but has been used so infrequently that most lenders don't know anything about it. If you're building or buying a new home, however, it could be of great benefit to you to find a lender who's willing to work with you in attaining one. If you're buying an existing home, it's a no-brainer.

The EEM is offered by FHA (HUD), VA, and Fannie Mae, with FHA doing most of the business in this arena. When you decide to go with an EEM rather than a conventional mortgage, you benefit by:

  • Qualifying for a higher loan amount because of increased energy efficiency
  • No down payment for the home energy efficiency package
  • Getting a more comfortable and energy efficient home

The beauty of using an energy efficient mortgage is that you get a house with a higher up-front cost, but, because you're financing that cost and the operating expenses are lower, you end up saving money from the first month you're in the house.

The way that works is that when you look at the combination of the monthly mortgage payment and the energy bills, the total is lower with the energy efficient house than with the conventional house. See the example below. From the first month, you're saving money by having bought the "more expensive" house.


Standard vs. energy efficient home costs

To get an EEM, you have to get a home energy rating done for the home. If you're buying a new home that's already energy efficient, it should have already had a rating. If you're buying or refinancing an existing home, you'll need to make sure that you find a certified home energy rater. 

Energy Vanguard has a network of home energy raters as well as lenders who can help you get an EEM on your purchase or refinance. Fill out the form on the right, and we'll help you work through all the difficulties so you get the mortgage you deserve.