NSpects - Building Science Specialist

Energy Efficient Mortgages


Energy Efficient Mortgages (EEM's) and Energy Improvement Mortgages (EIM's)


  • What is an Energy Efficient or Improvement Mortgage?
  • Case Study
  • Which Buyers and Homes are Eligible

  • Available Energy Efficient Mortgages
    • FHA
    • 203(k) FHA Home Rehabilitation Loans
    • VA
    • Fannie Mae and Freddie Mac
  • Home Energy Ratings Required
  • Energy Efficient Mortgage Helpful Links

What is an Energy Efficient or Improvement Mortgage?

The Energy Efficient Mortgage is a type of mortgage that gives credits for the home’s energy efficiency. The financing is designed to factor the cost of energy improvements and the value of the energy savings into the loan calculations. The Energy Improvement Mortgage offers existing homeowners a way to finance the cost of energy improvements to there home.
In the end, the home buyer gets into a home worth more, because it was energy efficient. That could mean a home with more living space, better location, or in better overall condition. Ask your lender about an Energy Efficient Mortgage. If they are not knowledge able about the EEM/EIM, encourage them to learn about it, or find another lender.
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Case Study:*

First-time home buyers purchased their home in California. It was built in 1940, and sold for $150,000. They got an FHA loan for 95% of the value of the property. The lender saw an opportunity for them to improve on their investment and recommended an Energy Efficient Mortgage.

A HERS Rating on the home recommended $2,300 in energy improvements including ceiling, floor and furnace duct insulation, plus a setback thermostat. The lender set aside an extra $2,300 for the improvements, bringing the total loan amount from $142,500 to $144,800. The loan closed, the home buyers moved in, and the improvements were installed. The monthly mortgage payment increased by $17, but they are saving $45 each month through lower utility bills.

*(This case study is from the Energy Efficient Mortgage Home Owner Guide, available from the Consumer Information Center, Pueblo, Colorado).
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Which Buyers and Homes are Eligible?

All buyers who qualify for a home loan qualify for the EEM. The EEM is intended to give the buyer additional benefits on top of their usual mortgage. The lender will use the energy-efficiency of the house, as determined by a HERS rating, to determine what these benefits will be.
Energy Efficient Mortgages can be done on most homes. EEMs can be done on FHA, VA, Fannie MAE, Freddie MAC Loans. Your lender will help you choose which loan type is best for you.
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