Double Prizes: An Energy Efficient Mortgage Can Get You a Good Deal And Energy Efficiency

energy efficient mortgage

When you are shopping for a new home—or actually making the big move into that new house—keeping your expenses at a minimum is key. This poses a sort of catch22 situation: invest in energy efficiency upgrades when building or purchasing a new home (and enjoy those savings for years to come), or forego these improvements and be steadily bled by higher energy costs?

Luckily, energy efficient mortgages are an incredibly helpful alternative that can get you a good deal on your mortgage while also making it easier to afford those energy efficient upgrades now, allowing you to save for years and years to come!

What Are Energy Efficient Mortgages?

An energy efficient mortgage (EEM) is a mortgage that factors a home’s energy efficiency into the mortgage itself. These mortgages give borrowers the opportunity to finance cost-effective, energy-saving measures as part of a single mortgage and stretch debt-to-income qualifying ratios on loans at the same time, thereby allowing them to qualify for a larger loan amount and a better, more energy-efficient home. It’s a win-win situation!

Why Should You Get One?

Aside from the fact that you could get a better deal on your mortgage, why would you want to choose an EEM? Here are a few statistics that demonstrate just how lucrative energy efficiency can be in your home:

  • Heating and cooling costs account for 50—70% of total energy costs in the average American home. So there are tons of opportunities for savings.
  • About 60% of existing homes don’t have proper insulation. Upgrading your insulation can save you a lot of energy, so it is a great place to start your home improvements!
  • Programmable thermostats can save about 2% on heating bills and more than 3% on cooling bills. That translates to roughly $180 a year!


In 1992, the Department of Housing and Urban Development initiated the Energy Efficient Mortgages (EEMs) as a pilot demonstration in five states. Then in 1995, the program was expanded to a national program.

Under the EEM program, the Federal Housing Administration insures a borrower’s mortgage used to purchase or refinance their home, and the cost of energy efficiency improvements to be made to their home. Click here to learn more about energy efficient mortgages!

Check out the rest of our Bright Insights blog for more information on renewable energy and energy efficiency advice!