As a homeowner looking to renovate or remodel, you may have heard the term “Green” Or Energy Efficient remodeling. These options are a great method of improving your home, adding greater efficiency and productivity, but pricing can make it a daunting undertaking. Luckily, this is where Energy-Efficient Mortgages (EEMs) come in. These mortgages roll the expenses of green renovation directly into your mortgage cost, avoiding the need to acquire multiple loans. There are three “primary” forms of EEM to choose from, each offering slight advantages tailored to your needs and situation.

Note that the use of an Energy-Efficient Mortgage is likely to make the initial cost of your purchase higher, with the understanding that it will save you considerably more in the long run. This is fairly obvious, but it’s still useful to keep this knowledge in mind.


A Conventional EEM is your basic option, being the easiest to handle and most widely utilized. The option allows the lender to credit the borrower’s income equal to the estimations of energy saved by the planned upgrades.

Put simply, a buyer with an income of x who stands to save three thousand a year, can by use of a Conventional green mortgage have an effective income of x+3,000 in home or home renovation purchasing power.

Federal Housing Administration (FHA-EEM)

Buyers looking to purchase or refinance a home and roll the costs of energy-efficient additions may look to a FHA-EEM as a solution. With this option, the borrower may use one of two options (Whichever is the lesser):

  • The net cost of the renovation, including inspections
  • 5% of the total value of your property

To qualify, the total cost of your chosen improvements have to cost less than the estimated total savings of your planned improvements. Also, funds for the improvements are held in escrow until the loan closes.

VA EEMs (Veterans Administration)

An option specifically available to Veterans who qualify for financing through the Veterans Administration, these are simple loans generally capped between three and six thousand in most cases.