Smart Financing: Energy Efficient Mortgages

Energy Efficient Mortgages (EEMs) and Energy Improvement Mortgages (EIMs) help new homebuyers afford or create a more efficient and comfortable home that costs less to operate.


  • If you’re considering moving into a new home, ask local lenders if they offer Energy Efficient Mortgages.
    Photo By Andrey Armyagov/Courtesy Fotolia

Although you might have heard the term Energy Efficient Mortgages (EEMs), many of us don’t know what they are. That’s unfortunate, because these programs could help many new homebuyers afford or create a more efficient and comfortable home that costs less to operate.

Energy Efficient Mortgage (EEM)

An EEM is a mortgage that credits an energy-efficient home’s energy savings into the mortgage itself. In qualifying homes, borrowers can increase their debt-to-income ratio because the mortgage lender takes reduced utility costs into account.

Energy Improvement Mortgage (EIM)

An EIM allows borrowers to fold the cost of energy-efficiency improvements into the mortgage—without increasing the down payment. Borrowers can use the money they will save in utility bills to finance energy improvements.

Both EEMs and EIMs typically require a home energy rating to provide the lender with the estimated energy savings and the value of the energy-efficiency improvements—known as the Energy Savings Value. EEMs and EIMs are sponsored by federally insured mortgage programs such as the Federal Housing Administration (FHA) and Veterans Affairs (VA), as well as the conventional secondary mortgage market (Fannie Mae and Freddie Mac).



If you’re considering moving into a new home, ask local lenders if they offer EEMs. To learn more, check out the following links: 

• Energy Star’s page on Energy Efficient Mortgages 



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