Energy Star Financing and Mortgages

Summary

An ENERGY STAR Mortgage combines the features of conventional or FHA energy-efficient mortgages with at least one additional feature designed to encourage borrowers to purchase ENERGY STAR qualified new homes. Common additional features include closing cost discounts, payments for home energy ratings, interest rate discounts, and fee waivers. "Energy Efficient Mortgages" (or EEMs) make it easier for borrowers to qualify for loans to purchase homes with specific energy-efficiency improvements. Lenders can offer conventional EEMs, FHA-insured EEMs (or VA EEMs), ENERGY STAR Mortgages, or loans that combine the features of these different mortgages. Conventional EEMs are offered by some lenders who sell their loans to Fannie Mae and Freddie Mac. These EEMs increase the purchasing power of the borrower by allowing the lender to increase the maximum Principal, Interest, Taxes and Insurance (PITI) amount by a dollar amount equal to the estimated energy savings. Loan officers are required to submit a HERS report or an Energy Addendum (Form 1004A or Form 70A) to verify the expected energy savings. For more information on how a home qualifies for the ENERGY STAR label and for a list of lenders offering ENERGY STAR mortgages, visit www.energystar.gov.