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Green Home Financing Options
By Vlera Bajraktari, Sustainability writer for Realty Sage
You may think that you have to spend a lot of money upfront to live in a green home. But what you may not know, is that you can have a green home and start saving money as soon as you buy it! There are various financing options available at any point in your home ownership, whether you’ve just purchased a green home, or you want to make green improvements further down the line.
WHEN YOU BUY A HOME
Green mortgages, or Energy Efficient Mortgages (EEMs), are federally-recognized financial tools designed to provide benefits to homebuyers who purchase or refinance a home that is deemed energy efficient or to finance the cost to make energy efficient home improvements. If you want to buy a home that’s already eco-friendly, a green mortgage can be added to your primary mortgage with no additional down payment, so you can purchase a more valuable property. EEMs are sponsored by federally insured mortgage programs - Federal Housing Administration and Veterans Administration - and conventional lenders. Here is a detailed guide to green mortgages.
AFTER YOU BUY A HOME
GreenCHOICE Mortgage by Freddie Mac - Mortgage that allows you to make green improvements to your home that will conserve energy or reduce your environmental impact. It offers financing for a variety of energy and water efficiency improvements such as programmable thermostats, adding insulation, solar water heaters, replacement of windows and doors etc. The maximum available financing is 15% of the "as completed" value of the property.
HomeStyle Renovation Loan by Fannie Mae - Mortgages that finance home renovations and improvements in a purchase or refinance transaction on existing homes. You can combine this with other Fannie Mae offerings such as HomeStyle Energy or HomeReady Mortgage. The maximum allowable LTV is 97 percent for a one-unit primary residence unless combined with HomeReady.
Property Assessed Clean Energy (PACE) - Innovative mechanism for financing energy efficiency and renewable energy improvements on private property.
Utility and/or Renewable Energy
Low Income Home Energy Assistance Program (LIHEAP) - It helps households with low incomes meet their home energy needs. They provide federally funded assistance in managing costs associated with home energy bills, energy crises, weatherization and energy-related minor home repairs.
Renewable Energy Tax Credits - Under the Consolidated Appropriations Act of 2021, the renewable energy tax credits for fuel cells, small wind turbines, and geothermal heat pumps now feature a gradual step down in the credit value, the same as those for solar energy systems.
Database of State Incentives for Renewables & Efficiency - Find incentives and policies that support renewable energy and energy efficiency in the United States.
Weatherization Assistance Program - The program’s primary purpose is “to increase the energy efficiency of dwellings owned or occupied by low-income persons, reduce their total residential energy expenditures, and improve their health and safety, especially low-income persons who are particularly vulnerable, such as the elderly, the disabled, and children.”
Energy Star appliances
Rebates on Energy Star Certified Products - Find rebates and special offers near you on Energy Star certified products. Products that earn the Energy Star label meet strict energy-efficiency specifications set by the U.S. EPA helping you save energy and money while protecting the environment.
Federal Tax Credits for New All-Electric and Plug-in Hybrid Vehicles - All-electric and plug-in hybrid cars purchased new in or after 2010 may be eligible for a federal income tax credit of up to $7,500. The credit amount will vary based on the capacity of the battery used to power the vehicle. State and/or local incentives may also apply.
SO MANY OPTIONS!
As you can see there are endless programs for green financial assistance! You just need to check which suits you best, and whether you meet the eligibility criteria. Sometimes an energy audit is essential to check whether your house meets the requirements to get the financial assistance, or just to help you make the best decision on green improvements. Realty Sage Pros can also make your home buying journey easier by matching you with local knowledgeable real estate agents based on your buying or selling needs.
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