New Mortgage Programs Allow Homeowners To Finance Energy Improvements

June 16, 2016

HomeStyle Energy Mortgage is a new program from Fannie Mae that allows homeowners to finance energy improvements on their homes with similar interest rates as those of a regular home loan while also being able to keep the 30 percent federal investment tax credit available to owners who buy solar panels, a tax credit that isn’t available to homeowners who are leasing solar panels.

But, as The Washington Post reports, the mortgage can be used for more than just solar panels. Energy-saving renovations such as the addition of extra insulation, installing water conserving toilets, replacing an outdated HVAC system, and replacing old, drafty windows and doors with new ones can be rolled into the mortgage. The loans can also be used to pay off existing energy-related debts.

This isn’t just some big money lending free-for-all, though. There are requirements and limitations. For example, owners can borrow no more than 15 percent of the home’s appraised value for the energy upgrades, the portion of the loan amount designated for the improvements must be placed in an escrow account overseen by the lender, and for upgrades totaling more than $3,500, an energy efficiency analysis is required.

These loans can be helpful for anyone looking to ease their utility bills through energy retrofits. And the energy-efficient additions don’t need to be as grand as putting 15 solar panels on your roof, either. Even small adjustments can cause visible changes in monthly utility costs.

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