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VA Energy Efficient Mortgage

Learn about the VA Energy Efficient Mortgage and how you can finance energy-efficient home improvements into your VA Home Loan.

Published on January 7, 2021

Many Veterans who use the VA loan program wish to make home improvements. The VA Energy Efficient Mortgage (EEM) helps with just that.

The VA EEM allows VA homebuyers to utilize their $0 benefit while financing the cost of energy-efficient improvements. Improvement costs are added to the loan balance and repaid as part of your monthly mortgage payment.

Homebuyers can utilize a VA EEM with both VA purchase and refinance loans.

How Much Can I Borrow?

There are three cost tiers for VA EEMs, each with varying degrees of difficulty for approval.

The easiest tier for approval are improvements that don't exceed $3,000. In this tier, you'll need an itemized quote from the contractor with detailed information of each product purchased.

The next tier encompasses improvements between $3,001 and $6,000. This tier becomes a bit more complicated, as you will have to show your mortgage company that the money you will save in utility bills offsets the additional cost. For documentation, you'll need to conduct an energy audit and be able to prove improvements significantly improve utility costs.

The final and most challenging tier is improvements over $6,000. In this tier, you'll need the previous and approval from the lender and VA.

Allowed VA EEM Improvements

The VA allows you to finance energy-efficient home improvements into your new mortgage as long as the money goes toward approved renovations.

Acceptable energy efficiency improvements include, but are not limited to:

  • Solar heating systems, such as active solar heating, which uses solar energy to heat a fluid or air that transfer directly to the interior space.
  • Water heater insulation that protects heat from dissipating from the water heater.
  • Caulking and weather-stripping of doors, windows and air gaps.
  • New or additional ceiling, attic, wall and floor insulation.
  • Vapor barriers to prevent moisture intrusion.
  • Heat pumps.
  • Storm windows and doors.
  • Furnace efficiency modifications are allowed but limited to replacement burners, boilers or furnaces designed to reduce the firing rate and reduce fuel consumption.

Talk to a VA lender to determine if a potential energy-efficient improvement is eligible.

The VA EEM Timeline

Timelines vary, but lenders typically like to see EEM improvements made within six months after closing. Depending on the timeline, your lender may set up an escrow account to hold EEM funds for when you utilize them.

Contact a lender early on in the process to ensure you qualify for whichever energy-efficient improvements you plan to make.

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