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  • Category:
    Energy Efficiency
  • Published:
    July 26, 2012
  • Updated:
    May 5, 2021

Financing a Green Lifestyle: Energy efficiency mortgage and home-improvement loans

If you’re in the market for an energy-efficient home or want to transform your existing abode into an energy-efficient oasis, there are options.

You’ve probably heard the old adage: If you snooze, you lose. If you were thinking about scrapping your old appliances for more efficient models, particularly those qualified under the U.S. government’s trusted Energy Star label, you missed the chance to finance those purchases through the $300-million rebate program funded under the American Recovery and Reinvestment Act (ARRA) of 2009.

As of February 17, 2012, the Energy Star rebate program funded under the ARRA officially closed after dispensing a total of 1.7-million consumer rebates, valued at $258 million. The energy savings resulting from the purchase of the rebated products are estimated at 1.7 trillion Btu, the majority coming from new household appliances, the Department of Energy (DOE) says.

But you still may be in luck, particularly if you’re in the market for an energy-efficient home or want to transform your existing abode into an energy-efficient oasis.

According to the EnergySavers ( website, homeowners can avail themselves of two different types of mortgages, which are available through a government-insured or conventional loan program:

— Energy-efficient mortgages are geared to those buying new, already-efficient homes. They allow homebuyers to finance and include cost-effective energy saving measures as part of their mortgage. By stretching debt-to-income ratios on loans, this type of mortgage allows borrowers to qualify for larger loan amounts and perhaps a more efficient house.

— Energy-improvement mortgages, on the other hand, are designed for those who want to buy or refinance a home that isn’t energy efficient, but will be once improvements are made. The costs of the improvements are factored into the mortgage. The lender repays the improvement expenses to the borrower from an escrow account. Although borrowers likely will carry a slightly higher mortgage payment, the additional cost may be balanced out or even erased by lower ongoing energy costs.

Energy Rating

To take advantage of these financing programs, however, you will need to have an energy rating performed on your new or existing home.

A rating analyzes how energy efficient your home is when compared with similar homes. A certified professional will look at insulation levels, window efficiency, heating and cooling systems, and air leakage — findings are then described in a report along with an energy rating and estimates of annual energy use and costs. Some reports also provide recommendations on energy improvements, if needed, their costs, and the potential annual savings and eventual payback on the improvements.

Other Programs

This is just a snapshot of the possibilities. Your state and local government or your utility company may offer other incentive programs.

To find out what’s available in your community, visit the Database of State Incentives for Renewables and Efficiency website he: http://

Above all else, remember resources are available. It might take a little homework, but in the end, it could be worth it — through reduced energy bills and a home with greater resale value.

Editor’s Note: Constellation prepared the “Financing a Green Lifestyle” series in the spirit of helping our residential customers better manage their energy use. This installment focuses on mortgage and home-improvement financing programs that can help offset the costs of going green.

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Comments ( 1 )

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Ryan - 7/30/2012

Michael, thank you for posting this informative article. It’s a shame to hear that the ARRA rebates are no longer available for energy efficient appliances. A lot of people were also disappointed when the $1,500 Energy Star tax credit for replacement windows, doors, and skylights expired at the end of 2010. The two mortgage options you mentioned seem like great ways to keep an emphasis on the importance of energy efficiency. I think it’s also important for people to realize that even if they missed out on the tax credits, improving the energy efficiency of your home is still a worthwhile task. Purchasing Energy Star labeled appliances will still help homeowners to conserve energy, even without the rebates. Energy efficient replacement windows, such as Triple Pane windows, will still help reduce your heating and cooling bills, even though the tax credits have long expired. So it’s definitely never too late to improve the energy efficiency of your home. Thanks again for this well-written and interesting post!

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