Let’s start out here by stating the play on words: there is no such thing as an energy efficient veteran loan. Loans are paper and money etc. not some thing that can be more energy efficient.
OK, now that we have that play out of the way, there is such a thing called the EEI or Energy Efficient Improvement Loan. EEI’s are loans that completely cover or partially cover the expenses of making energy efficient improvements to your home.
For most veteran loan types (purchase, refinance or streamline refinance) you add the energy efficiency improvement costs to the top of the mortgage balance as long as a few criteria are met.
EEI Veteran Loan Criteria:
1. If the cost of the energy improvements do not exceed $3,000 the costs must be documented and can just be added to the mortgage amount.
2. If the cost of the energy improvement exceeds $3,000 up to $6,000, then the amount can be added to the mortgage amount as long as the energy reduction in monthly utility cost savings exceeds the increased mortgage payment increase due to the increased mortgage amount. In other words – up to $6000 can be added to the mortgage amount as long as the costs are documented and the reduction in monthly utility costs due to the energy improvements exceeds the mortgage payment increase due to the increased mortgage balance as a result of the energy improvements.
3. If the energy improvements cost more than $6,000 then the VA will have to perform a value determination in order to justify the increased mortgage amount.
Examples of Energy Efficient Improvements:
- Solar Hot Water Heater Installation
- Upgrade heater to modern heating unit
- New or more ceiling, wall, floor and attic insulation
- Installation of energy efficient storm windows, doors and or vapor barriers
- Installation of a heat pump
- Installation of a clock thermostat
If you are considering making energy efficient improvements to your home either when you purchase it, or while your refinance, talk to your veteran loan loan officer to find out exactly how you can take advantage of this great opportunity.
