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Financing An Energy-Efficient Home

Financing is available for homeowners who plan to add insulation, high-efficiency heating and cooling systems, and energy-efficient windows to make their home more energy-efficient. These changes can make a home more comfortable and can lower the utility bill by 10 to 50 percent, which is a substantial savings for the average homeowner who spends approximately $1,300 a year on utility bills. Energy efficiency financing allows a homeowner to use the money saved from reduced monthly utilities to pay for energy improvements.

For those looking to buy a new home, energy-efficient mortgages provide the homebuyer a larger loan to make energy saving upgrades or to buy an already energy-efficient home. The costs savings offset the higher mortgage payment. Similar loans are available for those refinancing or remodeling a home. Several government insured and conventional loan programs offer energy-efficient financing through local lenders.

Federal Housing Administration (FHA) Energy Efficient Mortgages Borrowers can use a FHA-insured purchase or refinanced mortgage to finance the cost of energy-efficient home improvements.

U.S. Department of Veterans Affairs Guaranteed Mortgages Qualified veterans can use an energy-efficient mortgage to purchase or refinance a home and make energy saving upgrades.

ENERGY STAR Mortgage The ENERGY STAR program, which is sponsored by the U.S. Department of Energy and the Environmental Protection Agency, encourages lenders to provide mortgages to borrowers buying certified ENERGY STAR homes. Mortgages may include lower interest rates or a discount on closing costs.

Fannie Mae and Freddie Mac Energy Efficient Financing Both secondary mortgage lenders support programs that encourage lenders to finance energy-efficient home improvements.

Talk to your lender to obtain an energy-efficient mortgage or search the Alliance to Save Energy's Energy-Efficient Mortgages Database ( to locate area lenders offering energy-efficient financing.

Home Energy Rating

Most lenders require that prospective homebuyers and homeowners interested in energy-efficient financing obtain a home energy rating. The rating is performed by a professional energy rater who inspects the home s energy features, suggests ways to improve the home s energy-efficiency, and calculates overall energy savings from proposed improvements. To find a professional residential energy rater, visit the Residential Energy Services Network's (RESNET) national directory of accredited home energy rating organizations (

For more information on energy efficiency financing, consult these Web sites:

Alliance to Save Energy, Energy-Efficient Mortgages Database (
Energy Efficient Mortgage Homeowner Guide (
Home Energy Consumer Information (
Homebuyers Energy Information Center (
Home Energy Savers (
Residential Energy Services Network (
U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy Financing an Energy-Efficient Home (

Content updated on 5/28/2004

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