There are two types of mortgages that encourage Energy Efficiency:

1. EE mortgages that allow buyers to obtain a better rate for Certified Energy Efficient Houses

2. EE mortgages or EE refinancing options to home owners to get additional financing that is rolled into a mortgage in order to cover the cost of new energy improvements.
These types of mortgages allow property owners to finance energy-saving measures as part of the mortgage. Repayment can occur between 15 to 30 years, allowing for amortization of costs. EEMs are possible when purchasing a home or refinancing an existing mortgage.

Types of Green Mortgages

arrow FHA Green Mortgage: This mortgage allows for additional borrowing on the assumption that the homeowner will have additional income available to them due to the energy savings

arrow Programs that insert capital into mortgage products that are used to buy down the interest rate as an incentive

arrow The assumption that energy savings and reduced energy costs in turn would reduce the risk profile of the loan and therefore lead to better performance

Advantages / Disadvantages

Advantages Disadvantages
Possibility to combine with an existing home purchase or home refinance
Requires lender adoption of the program
Low Monthly repayments
Home Owners have other priorities at the time of sale and are not really thinking about energy savings
Interest costs are tax deductible in most cases for borrowers^
Cost of mortgage financing and the amount of paperwork involved may not be suitable for small projects

^ MBE Services, Inc. and/or RGE360 are not tax advisors and is not offering any tax advise. Please consult proper tax advisors

* Please note that MBE Services, Inc., and/or RGE360, its principals, members, officers, attorneys, managers, operating managers and directors (collectively referred to as "RGE") are not licensed mortgage brokers