VA Energy Efficient Mortgage Program (EEM)
Energy efficiency isn’t just a buzzword—it’s a practical way to lower utility costs, increase property value, and reduce your environmental footprint.
For veterans and active-duty service members, the VA Energy Efficient Mortgage (EEM) program offers a unique opportunity to incorporate energy-saving upgrades into a home loan.
This guide will walk you through everything you need to know about the VA EEM, including its benefits, eligibility requirements, and how to make the most of this program.
What is the VA Energy Efficient Mortgage Program?
The VA Energy Efficient Mortgage program allows qualified borrowers to finance energy-efficient improvements as part of their VA home loan. Unlike traditional home improvement loans, an EEM rolls the cost of these upgrades into your mortgage, eliminating the need for separate financing.
EEMs can be used for various energy-saving enhancements, from installing solar panels to upgrading HVAC systems. This program is designed to help homeowners reduce energy consumption and save money over time.
Key Benefits of the VA EEM Program
The VA EEM offers several advantages that make it a standout choice for eligible homeowners:
- Reduced Utility Bills: Energy-efficient upgrades can lower monthly utility costs by up to 25%.
- Long-Term Savings: Investing in energy efficiency increases the home’s value while cutting down on recurring expenses.
- Easy Financing: Costs for approved upgrades are rolled into the mortgage, avoiding the need for separate loans.
- Environmental Impact: Reducing energy consumption benefits the planet by lowering greenhouse gas emissions.
“Energy efficiency isn’t just about savings—it’s about creating a more sustainable future for veterans and their families,” says Mike Carter, a Green Energy Loan Specialist at Veteran Mortgage Solutions.
Eligibility Requirements
The VA EEM program is accessible to veterans, active-duty service members, and eligible surviving spouses who meet standard VA loan requirements. Here’s what you need to qualify:
- VA Loan Eligibility: A valid Certificate of Eligibility (COE) is required.
- Primary Residence: The home must be your primary residence.
- Energy Improvements: Upgrades must be pre-approved and focus on energy efficiency.
- Loan Limits: Costs for improvements are typically capped at $6,000.
Borrowers must also demonstrate that the planned upgrades will result in a measurable reduction in energy consumption. This is often verified through a home energy audit.
How the VA EEM Program Works
Applying for a VA Energy Efficient Mortgage is straightforward and can be done alongside your VA home loan or refinance. Here’s how the process unfolds:
- Obtain a VA Loan: Start by securing a VA loan for your home purchase or refinance.
- Conduct an Energy Audit: A professional energy audit assesses the home’s current efficiency and identifies potential upgrades.
- Submit Upgrade Plans: Provide the lender with detailed plans and cost estimates for the energy-efficient improvements.
- Loan Approval: Once approved, the additional funds are rolled into your mortgage.
- Complete Upgrades: After closing, you’ll use the funds to complete the improvements within the agreed timeline.
Common Energy-Saving Upgrades
The VA EEM program supports a range of energy-efficient enhancements, including:
- Solar Panels: Harness renewable energy to power your home.
- Energy-Efficient Windows: Reduce heat loss and improve insulation.
- HVAC Upgrades: Install high-efficiency heating and cooling systems.
- Insulation: Enhance wall, attic, and floor insulation to conserve energy.
- Smart Home Technology: Add programmable thermostats and energy-monitoring devices.
Typical Energy-Saving Upgrades and Costs
| Upgrade Type | Average Cost | Potential Savings (Annual) |
|---|---|---|
| Solar Panels | $10,000-$25,000 | $1,000-$2,000 |
| Energy-Efficient Windows | $7,000-$10,000 | $300-$500 |
| High-Efficiency HVAC | $5,000-$10,000 | $500-$1,200 |
| Improved Insulation | $2,000-$5,000 | $200-$400 |
The Financial Impact of Energy Efficiency
Energy-efficient upgrades aren’t just an environmental choice—they’re a financial one. Homeowners who invest in these improvements often see immediate and long-term savings. According to the U.S. Department of Energy, energy-efficient homes can save homeowners an average of $1,500 annually on utility bills.
Additionally, energy-efficient features boost home resale value. A study by the National Association of Home Builders found that buyers are willing to pay an average of $8,728 more for a home with energy-saving features.
“Adding energy-efficient upgrades through a VA EEM can result in measurable savings, making it a smart financial move for veterans looking to reduce costs,” notes Sarah Hill, Mortgage Consultant at Green Path Loans.
Average Resale Value Increase from Energy-Efficient Homes
| Energy Upgrade | Resale Value Increase |
|---|---|
| Solar Panels | $10,000-$15,000 |
| Energy-Efficient Windows | $5,000-$8,000 |
| High-Efficiency HVAC | $3,000-$5,000 |
The Role of Current Market Trends
In 2024, the housing market has seen a surge in interest for energy-efficient homes. Rising utility costs and increasing awareness of climate change have driven demand for properties with lower operational expenses.
Additionally, with federal incentives for renewable energy still in place, now is an excellent time to consider upgrades. Programs like the federal solar tax credit, which offers up to 30% savings on installation costs, can be used alongside VA EEM benefits.
Benefits and Drawbacks of the VA EEM Program
Benefits:
- Cost Savings: Lower utility bills and increased resale value.
- Environmental Impact: Reduced carbon footprint.
- Convenient Financing: Costs rolled into your mortgage.
- Flexible Upgrades: Wide range of eligible improvements.
Drawbacks:
- Loan Limitations: Maximum financing of $6,000 may not cover all desired upgrades.
- Appraisal Requirements: Some upgrades may require additional appraisals, extending the timeline.
- Strict Guidelines: Upgrades must be pre-approved and energy-focused.
“While the VA EEM program has its limitations, the long-term savings often outweigh the initial hurdles,” says Mark Peterson, a VA Loan Specialist at Veterans Mortgage Group.
Frequently Asked Questions
What is the maximum amount I can finance with a VA EEM?
Most lenders allow up to $6,000 for energy-efficient upgrades, but some may approve higher amounts depending on your home’s value.
Do I need an energy audit to qualify?
Yes, an energy audit is typically required to verify the potential savings of your planned upgrades.
Can I add energy-efficient upgrades to an existing VA loan?
Yes, you can use a VA EEM with a VA refinance, such as an Interest Rate Reduction Refinance Loan (IRRRL).
Are solar panels covered under the VA EEM?
Yes, solar panels are one of the most popular upgrades financed through the VA EEM program.
What if my upgrades exceed $6,000?
You may need to cover additional costs out of pocket or explore other financing options, such as a home equity loan.
How long do I have to complete the upgrades?
Upgrades must typically be completed within 90 days of loan closing, though timelines may vary by lender.
Do energy-efficient upgrades increase my home’s value?
Yes, most upgrades, like solar panels and energy-efficient windows, can significantly boost resale value.
Are there any federal incentives for energy-efficient improvements?
Yes, federal programs like the solar tax credit can provide additional savings on top of VA EEM benefits.
The Bottom Line
The VA Energy Efficient Mortgage program is an invaluable tool for veterans looking to enhance their homes while saving on utility costs.
By offering convenient financing for energy-efficient upgrades, this program empowers homeowners to invest in their future while contributing to a sustainable environment.
If you’re considering energy-saving improvements, consult with a VA-approved lender to explore your options and make the most of this beneficial program.