Is My VA Lender's Energy Efficient Mortgage Program Right for Me?

Established nearly a quarter of a century ago, the Federal Housing Authority’s (FHA) Energy Efficient Mortgage program is the perfect vehicle for veteran borrowers who want to install money-saving “green” energy features on their property.

We all know that utility expenses can take a big bite out of your income from month to month if you’re not careful. That’s why the FHA’s Energy Efficient Mortgage program is such a lucrative opportunity for veteran homebuyers.

But what is the Energy Efficient Mortgage program, exactly?

And what restrictions and rules are there—if any—for those wishing to install eco-friendly energy features on their new property?

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What is the FHA’s Energy Efficient Mortgage program?

Basically, mortgages issued through this program allow qualified buyers to include the costs of (certain preapproved) green energy additions in their requested home loan amount.

Veterans usually add anywhere from $3,000 to $6,000 on top of their loan request to cover theses expenses; though, it should be noted, sums granted in the $6,000-dollar range are vanishingly rare and require special approval from both the VA and the lender in question.

What’s more, the energy improvements that the veteran wants to make to his or her property must generate enough in savings from utility payments to justify the addition to the loan.

Veterans are expected to furnish copies of documentation—bids, contracts, etc.—that will serve as evidence that the energy efficiency improvements were in fact made to the property in question.

What upgrades and additions can I make through the program?

There are a number of acceptable improvements and/or additions to an existing property that veteran homeowners are entitled to make under the FHA’s Energy Efficient Mortgage program.

These include, but are not limited to:

  • Heat pumps
  • Clock thermostats
  • Thermal windows and doors
  • Solar heating and cooling systems
  • Vapor barriers
  • Insulation for attics, ceilings, floors, walls, and water heaters

Permissible and impermissible additions to a property financed using an Energy Efficient Mortgage can vary from lender to lender, so check in with your financial institution to get the lowdown on what you can and cannot install on your property using those funds.