Finance Your Home + Green Improvements in One Loan
FHA Energy-Efficient Mortgages let you borrow up to 15% extra for solar panels, insulation, HVAC, and windows. Combine with NJ Clean Energy incentives worth up to $4,000.
Why Choose Energy-Efficient Mortgages?
Borrow Up to 15% Extra
$700K home = $105K available for energy improvements. $500K home = $75K available. Finance solar, HVAC, insulation at your low mortgage rate.
No Extra Down Payment
Down payment calculated on base home price only. $700K home + $70K improvements = Still only 3.5% down on $700K ($24,500).
Stack with NJ Incentives
Combine with $4,000 NJ Clean Energy rebates + 30% solar tax credit. $70K improvements → $12K back → $58K effective cost.
Increase Home Value
Energy improvements recover 70-100% at resale. Solar panels add 4-6% to home value. Efficient HVAC and insulation attract buyers.
Eligible Energy Improvements
Solar & Renewables
- • Photovoltaic solar panels
- • Solar water heaters
- • Battery storage systems
- • Geothermal heat pumps
HVAC & Heating
- • High-efficiency furnaces (95%+ AFUE)
- • Heat pumps (SEER 16+)
- • Central AC upgrades
- • Ductless mini-splits
Insulation & Sealing
- • Attic insulation (R-49+)
- • Wall & basement insulation
- • Air sealing & weather stripping
- • Vapor barriers
Windows, Doors & More
- • ENERGY STAR windows & doors
- • Tankless water heaters
- • LED lighting retrofits
- • Cool/reflective roofing
Requirements
Borrower Requirements
- •Credit Score: 580+ for 3.5% down (500-579 for 10% down)
- •DTI Ratio: 43-50% maximum
- •Down Payment: 3.5% of base home price (not including improvements)
- •Primary Residence: Must occupy as primary home
Improvement Requirements
- •Cost-Effective: Energy savings must justify improvement costs
- •Energy Audit: Required for improvements over $6,000 ($400-$800 cost)
- •Permanently Affixed: Must be attached to property, not portable
- •Licensed Contractors: Work performed by licensed professionals
Ready to Finance Green Improvements?
I help Northern NJ homebuyers maximize FHA EEM benefits and stack NJ Clean Energy incentives for maximum savings on energy-efficient home improvements.
Frequently Asked Questions
What is an energy-efficient mortgage (EEM)?
An energy-efficient mortgage allows you to finance cost-effective energy improvements as part of your home purchase or refinance without increasing the down payment requirement. FHA EEM lets you borrow up to 15% of the as-improved home value for upgrades like solar panels, insulation, HVAC, windows, and doors.
How much can I borrow for energy improvements?
FHA EEM allows you to borrow the lesser of: 15% of the as-improved home value (with energy assessment), OR the actual cost of improvements, OR 5% of property value up to $6,000 (without formal assessment). Example: $700,000 home can finance up to $105,000 in energy improvements.
What improvements are eligible?
Eligible improvements include: Solar panels, high-efficiency HVAC systems, insulation (attic, wall, basement), ENERGY STAR windows and doors, tankless water heaters, air sealing, LED lighting, cool roofing. Improvements must be cost-effective and permanently affixed to the property.
What NJ incentives are available?
NJ Clean Energy offers: Up to $4,000 per home for comprehensive upgrades (Home Performance with ENERGY STAR), 30% federal Solar Investment Tax Credit for solar panels, $500-$1,500 HVAC rebates, $300-$750 water heater rebates, $100-$300 per unit for windows/doors. These incentives can be combined with FHA EEM financing.
Do I need an energy audit?
For improvements over $6,000, yes. A RESNET-certified HERS rater or BPI-certified Building Analyst must provide an energy assessment ($400-$800) showing improvements are cost-effective. For improvements under $3,500, no formal audit required. The audit cost can be rolled into your FHA EEM loan.
What is the down payment requirement?
Down payment is calculated on the BASE home price only, not including improvements. FHA requires 3.5% down with 580+ credit score, or 10% down with 500-579 credit. Example: $700K home + $70K improvements = $770K total loan, but you only need 3.5% of $700K = $24,500 down payment.
Can I refinance with FHA EEM to add improvements?
Yes, FHA EEM refinances allow you to add energy improvements to your existing mortgage. You can lower your rate AND finance up to 15% in energy improvements without cash out-of-pocket. Example: Refinance $650K at 7% into $700K at 6.25% (including $50K solar/HVAC improvements).
How do improvements affect my monthly payment?
Energy improvements increase your loan balance but reduce utility costs. Example: $70K financed at 6.5% = $442/month higher payment, but $200-$300/month energy savings = $142-$242 net increase. Plus: $12K in upfront incentives, $50K-$70K added home value at resale, and long-term energy savings.