A VA loan can finance various energy-efficient improvements, including:
- Heating and cooling systems, including solar powered systems.
- Insulation and caulking
- Storm windows and doors
- Energy-efficient thermostats.
- Other energy-efficient renovations on which the buyer and the lender agree upon
Veterans are permitted to borrow up to $6,000 without an assessment of the home's worth. Veterans who borrow $3,000 or less need only provide the mortgage lender with receipts for the renovation costs. However, veterans who borrow $3,000 or more are required to prove that the renovation costs will significantly reduce their monthly utility bills. The theory behind an energy-efficient home improvement loan is that the money the homeowner will save on utility bills will be applied to their additional monthly loan payment. In other words, the financial burden of the loan will be offset by lower energy bills.
Eligible candidates should decide which energy-efficient improvements they would like to make to their home, and contact their local utility company to see which renovations would benefit their home the most. The borrower should then provide this information to their lender.
The Mortgage Mentor
Updated: October 6, 2010
VA Energy Efficient Mortgage (VA EEM)
