Fannie Mae recently introduced the HomeStyle Energy mortgage, a new option for financing energy-efficiency home improvements such as windows or doors.
Borrowers who are buying a home and want to improve its energy efficiency can now get up to 15 percent of the as-completed appraised value of the home to use for the upgrades. An energy report is required, and the lender must place these funds in an escrow account. Borrowers can finance up to $3,500 in weatherization or water-efficiency upgrades without having to obtain an energy report.
The Window & Door Manufacturers Association (WDMA) is applauding Fannie Mae for introducing the HomeStyle Energy mortgage.
“WDMA has long advocated for better loan options for energy efficiency home improvements,” said Michael O’Brien, WDMA president and CEO. “The HomeStyle Energy mortgage will be particularly helpful to borrowers who want energy efficient windows, doors and skylights for their new home or remodeling/replacement project. This is another step toward making a dent in the replacement of the nearly billion single-pane windows still in use today.”
Borrowers with an existing, higher-interest energy improvement loan can more easily roll that loan into a new mortgage or into a refinance of an existing mortgage. In addition, borrowers will have options to finance new energy upgrades when purchasing or refinancing a home. HomeStyle Energy mortgage can be used on 1-4 unit properties, including condominium units, and is available for all approved Fannie Mae lenders.
“The National Association of Home Builders has found that energy-efficient features are highly desired by homeowners, and we are committed to helping lenders serve these customers,” said Carlos Perez, Fannie Mae’s senior vice president and chief credit officer for single-family. “HomeStyle Energy mortgage will be particularly helpful to borrowers who want to pay off debt for existing energy improvements. It will also benefit homeowners who want to make their home more comfortable and efficient.”
HomeStyle Energy mortgages can simplify the financing of energy-efficient improvements. This financing is likely more affordable than a subordinate lien, home equity line of credit, or unsecured loan, or loan from an HVAC vendor. In addition, most PACE loans are not eligible for Fannie Mae–backed mortgages, but can be paid off with this option.