Energy Efficient Mortgages

(Lender’s Handbook, Chapter 7, Topic 3)

Energy Efficient Mortgages are loans for:

• The acquisition of an existing dwelling, and the cost of making energy efficiency improvements to the dwelling,
• Refinancing an existing VA loan with an IRRRL and including efficiency improvements,
• Energy efficiency improvements to a dwelling already owned and occupied by a veteran.

The mortgage may be increased by:

• up to $3,000 based solely on the documented costs of the energy improvements; OR
• up to $6,000 provided the increase in the monthly mortgage payment does not exceed the likely reduction in monthly utility costs; OR
• more than $6,000 subject to a value determination by VA.

VA will guarantee an energy efficient mortgage in the same proportion as a loan not including energy efficiency improvements. However, the charge to the veteran’s entitlement will be based upon the loan amount before adding the cost of energy efficiency improvements.

The funding fee must be calculated on the full loan amount, including the cost of the energy efficiency improvements.