Mortgage Resource Center

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Mar 11, 2019
Energy-Efficient Mortgage (EEM) Benefits

Energy-Efficient Mortgage (EEM) Benefits

An EEM is designed to make it financially possible for you to have a more environmentally friendly home. When purchasing a new home or refinancing your current home, you can apply for an EEM in order to be able to afford green upgrades to your home or to be able to afford to buy an environmentally friendly home. These types of upgrades often have high costs upfront but will save you money over the time in lower energy bills and reduced maintenance costs. It also makes your home a better investment. These home improvements will not only improve your carbon footprint, but they will benefit your bank account as well. 

An EEM is a separate loan that is combined with your mortgage. This low down payment loan option is backed by the FHA, the VA, and Fannie Mae or Freddy Mac. This loan allows you to save money and live in a more comfortable home. The interest on this type of loan is tax deductible. If you're buying a home with this loan, it allows you to start saving money on your energy bills right away.


Types of green home improvements: 

  • Updated insulation
  • High efficiency furnace or air conditioning
  • Energy efficiency kitchen appliances
  • Double paned windows
  • Tankless water heaters 
  • Air duct repairs


Energy Efficient Mortgage Eligibility

In order to borrow money for an EEM, you will need to have a home inspection from an approved auditor. This assessment will help you identify home improvements, estimate the savings associated with the projects or the Energy Savings Value, and identify the associated costs. Your home will then be given a score on a scale from 0 to 150. You'll want to have this inspection happen early on in the process while your loan is being processed. If you have qualified for a loan, you also qualify for an EEM. 

It's important to know that on this type of mortgage, the lender uses your home as collateral and has the possiblity of repossessing your home. This also means, however, that the bank is assuming less risk and therefore may be able to provide you with a lower interest rate than you may find with a different type of loan.

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