What is an Energy Efficient Mortgage (Green Mortgage)?
If you are looking to buy a home or upgrade your current property in St. Louis, MO, you might want to consider an energy efficient mortgage. Also known as a Green Mortgage, this unique financing option allows homebuyers and homeowners to roll the cost of energy-saving improvements into their primary home loan. Instead of taking out a high-interest personal loan or draining your savings to pay for solar panels, upgraded HVAC systems, or new insulation, an energy efficient mortgage lets you finance these upgrades over the life of your loan.
Because energy-efficient homes have lower utility bills, lenders recognize that you will have more disposable income each month. This extra breathing room can actually help you qualify for a larger loan amount. Whether you are battling the humid St. Louis summers or freezing winters, a Green Mortgage ensures your home stays comfortable while saving you money and reducing your carbon footprint.
Understanding FHA EEM, VA EEM, and Conventional EEM Options
There are three primary paths to securing a green home loan, and choosing the right one depends on your financial background and military status. Here is a comprehensive look at your options:
- FHA EEM: Backed by the Federal Housing Administration, an FHA EEM is ideal for buyers who might have lower credit scores or smaller down payments. You can add the cost of energy improvements to your loan without needing to qualify for the additional debt. For more details on FHA guidelines, explore our FHA purchase loan resources.
- VA EEM: Available exclusively to eligible veterans, active-duty service members, and surviving spouses. The VA Energy Efficient Mortgage allows you to add up to $6,000 to your loan for qualified improvements without needing an additional appraisal.
- Conventional EEM: Fannie Mae and Freddie Mac offer green financing options like the HomeStyle Energy mortgage. This is a fantastic route if you have a stronger credit profile and want higher loan limits. Learn more about standard conventional requirements on our conventional fixed-rate mortgage page.
Navigating these programs can feel overwhelming, but you do not have to do it alone. We are experts at providing second opinions on energy-efficient mortgages. If another lender has given you a quote, let our team review it to ensure you are getting the absolute best terms for your specific situation.
| Mortgage Type | Best For | Improvement Limit | Down Payment Needed |
|---|---|---|---|
| FHA EEM | First-time buyers or lower credit scores | Up to 5% of the property value | As low as 3.5% |
| VA EEM | Veterans and active military | Up to $6,000 without extra appraisal | 0% in most cases |
| Conventional EEM | Buyers with strong credit profiles | Up to 15% of the as-completed value | As low as 3% |
Why Choose Better Rate Mortgage for Your Green Home Loan?
At Better Rate Mortgage, we know that everyone in St. Louis promises a great rate, but what you really need is a better mortgage experience. Led by Sean Zalmanoff, our team provides personalized service that big box banks simply cannot match. We take the time to understand your homeownership goals and match you with the perfect energy efficient mortgage.
When you work with us, your preapproved offer is backed by our $5,000 guarantee. If your financing falls through, we pay the seller $5,000. This powerful guarantee reassures sellers that your offer is rock solid, putting you ahead in a competitive market. Whether you are buying a newly retrofitted home or planning to install energy-efficient upgrades after closing, we will guide you through the required energy assessments and paperwork. Do not forget, we are experts at providing second opinions on energy-efficient mortgages, so call us at (314) 361-9979 to verify you are getting the best deal possible.
Q1: What types of home upgrades qualify for an energy efficient mortgage?
Qualifying upgrades typically include solar panel installation, high-efficiency HVAC systems, double-pane windows, improved insulation, and weatherstripping. The improvements must be proven to be cost-effective by a qualified energy assessor.
Q2: Do I need a special home inspection to get an EEM?
Yes, you will need a Home Energy Assessment or a Home Energy Rating System (HERS) report. A qualified energy rater will inspect the property to determine its current energy efficiency and estimate the savings the proposed upgrades will generate.
Q3: Can I use an energy efficient mortgage to refinance my current home?
Absolutely. You can use an EEM to refinance your existing mortgage and roll the costs of new energy-saving improvements into your new loan balance, often resulting in a lower overall monthly expense when factoring in utility savings.
Q4: Are green mortgages only available for newly built homes?
No, energy efficient mortgages are actually very popular for older homes that need modernizing. You can use an EEM to purchase an older, less efficient home in St. Louis and finance the necessary upgrades to bring it up to modern energy standards.
Q5: Why should I get a second opinion on my energy efficient mortgage quote?
EEM guidelines can be complex, and not all lenders structure them the same way. Getting a second opinion from our experts ensures you are not paying unnecessary fees, that you are in the right program (FHA, VA, or Conventional), and that you are maximizing your borrowing power.
