Summary: The National Association of Realtors® has produced an online Field Guide to Green Homes and Green Mortgages. This Web digest of published articles covers a variety of topics, including how to finance a green home, incorporating green home elements such as solar power and ENERGY STAR™ appliances, and environmentally friendly building materials.

The Field Guide is a primer for both home buyers curious about the costs and benefits of green building and for architects who would want to make the case to clients and developers. The Field Guide provides Green Homes and Mortgages articles on:

• Going green
• Demand for energy-efficient homes
• Green mortgages
• Selling green
• Web sites and other resources.

Green mortgages
So-called “green mortgages,” according to one of the CNN/Money articles linked to the Field Guide Web site, “are based on the premise that a more energy-efficient home will result in lower monthly utility bills. Since a person will be paying less in utility bills, those savings translates into income, allowing a homebuyer to qualify to buy a more expensive home.”

Energy Efficient Mortgages (EEM), according to government Web sites, are easy to use and federally recognized. EEMs provide the borrower with special benefits when purchasing a home that is energy efficient, or can be made efficient through the installation of energy-saving improvements.

There are two options with the Energy Efficient Mortgage.

Financing energy improvements

• Cost-effective energy-saving measures may be financed as part of the mortgage.
• Make an older, less efficient home more comfortable and affordable.

Increasing buying power

• Stretch debt-to-income qualifying ratios on loans for energy-efficient homes
• Qualify for a larger loan amount; buy a better, more energy efficient home

Types of EEMs
According to the EPA’s ENERGY STAR Web site, lenders can offer several types of EEMs.

Conventional energy-efficient mortgages can be offered by lenders who sell their loans to Fannie Mae and Freddie Mac. Conventional EEMs increase the purchasing power of buying an energy-efficient home by allowing the lender to increase the borrower’s income by a dollar amount equal to the estimated energy savings. The Fannie Mae loan also adjusts the value of the home to reflect the value of the energy-efficiency measures.
FHA energy-efficient mortgages allow lenders to add 100 percent of the additional cost of cost-effective energy efficiency improvements to an already approved mortgage loan (as long as the additional costs do not exceed $4,000 or 5 percent of the value of the home, up to a maximum of $8,000, whichever is greater). No additional down payment is required, and the FHA loan limits won’t interfere with the process of obtaining the EEM.
VA energy-efficient mortgages are available to qualified military personnel, reservists, and veterans for energy improvements when purchasing an existing home. The VA EEM caps energy improvements at $3,000–$6,000.

—Tracy Ostroff