What is an ENERGY STAR Mortgage

Date: Feb. 8th, 2010

ENERGY STAR mortgages encourage comprehensive energy efficiency improvements to new and existing homes by increasing the affordability and availability of energy efficiency mortgages for homeowners and homebuyers. This innovative mortgage pilot program offers borrowers an opportunity to lower their energy consumption while making significant, affordable improvements to their homes. These improvements will also lead to a reduction in the overall carbon emissions associated with the energy used in homes.

These mortgages include the cost of energy efficiency investments in the loans themselves so that borrowers can pay for those investments over the life of their loans, as well as deduct the interest from their federal and state income taxes. One of the key benefits of an ENERGY STAR mortgage is that a borrower can finance energy-saving improvements to their homes without paying more than they would for a typical mortgage.

Participating lenders also offer borrowers an additional financial benefit above and beyond the value of the home energy savings, such as discounted mortgage rates, reduced loan fees, assistance with closing costs, or another benefit that reduces the cost of the mortgage compared with financing that would otherwise be available to the borrower.

The pilot program is already underway in Maine and Colorado . Work is underway to bring the pilot program to Massachusetts, New York, New Jersey, Pennsylvania, and the District of Columbia.

Is an ENERGY STAR mortgage the same as an Energy Efficient Mortgage (EEM) or an Energy Improvement Mortgage (EIM)?
While an ENERGY STAR mortgage, an EEM and an EIM all take into account the savings associated with reduced energy use, the ENERGY STAR mortgage pilot program has requirements that are different than those of the EEM and EIM programs offered through Fannie Mae, Freddie Mac, FHA, and VA, although borrowers could apply for a mortgage that qualifies as an ENERGY STAR mortgage and an EEM or EIM. For example, a borrower could receive the financial benefit provided by a participating lender for an ENERGY STAR mortgage and also qualify for an EEM, thus taking advantage of the EEM's benefit of permitting the use of higher expense to income and debt to income ratios.

What homes can qualify for an ENERGY STAR mortgage?
To qualify, a home being financed must either be ENERGY STAR qualified, undergo a Home Performance with ENERGY STAR assessment and improvement process that yields at least a 20% total energy savings, or achieve at least 20% total energy savings via participation in a Weatherization Assistance Program. The home must also be single-family (1-4 families) and owner-occupied.

How can lenders participate in the ENERGY STAR mortgage pilot program?
The pilot program is already underway in Maine and Colorado . Work is underway to bring the pilot program to Massachusetts, New York, New Jersey, Pennsylvania, and the District of Columbia. To participate in the pilot, lenders must be operating in at least one of the pilot states, be an ENERGY STAR lender partner, and undergo a review, approval, and oversight process administered by Energy Programs Consortium. For more information, contact the Energy Programs Consortium .

Who is involved in the pilot program?
The ENERGY STAR mortgage pilot program is a collaborative effort between the U.S. Environmental Protection Agency, the U.S. Department of Energy, the Energy Programs Consortium (EPC), state energy and housing agencies, as well as the Ford Foundation and the Surdna Foundation. EPC is acting as the administrator for the pilot program in partnership with the organizations listed above.

What is the goal of the pilot?
The pilot program is intended to demonstrate that financing can be a successful tool for lenders and borrowers to promote whole-house energy-efficiency improvements, and that utilizing qualified contractors and energy auditors is key to achieving real-world energy savings.

During the pilot program EPA, along with others involved in the pilot, will evaluate whether program goals are being met. If it is determined that there is enough evidence demonstrating that there would be value in moving beyond a pilot phase, EPA would take steps to formalize and publicize program policies and requirements as well as the roles and responsibilities of organizations involved in program implementation and oversight.

Who can I contact for more information?
For information about ENERGY STAR and its lender partnership contact Brian Ng at

For information about lender requirements under the ENERGY STAR mortgage pilot program contact Howard Banker at

Energy efficient homes that earn the ENERGY STAR are good for lenders, builders, homeowners and the environment. As a lender, you have the opportunity to see immediate benefits by writing more loans for more money, with less risk. You can also team with local builders and utilities to become leaders in the community and promote better products and a cleaner environment. Become an ENERGY STAR Lender, and realize the advantages of selling energy efficiency.