Real Estate Insights

In an effort to support energy efficiency in residential housing, Fannie Mae recently announced that they are now offering borrowers the ability to finance the cost of adding energy improvements to their homes limited to 10% of the “as completed” appraised value of the subject property.

This new energy improvement feature will be available to borrowers through all lenders selling mortgages to Fannie Mae. Eligible transactions include purchases and refinances (where the borrower receives limit proceeds) on residential 1-4 unit properties of all occupancy.

In order to take advantage of this feature, borrowers must obtain an energy report prepared by a Home Energy Rating Systems (HERS) energy rater which identifies the recommended energy improvements and their potential costs. At the closing of the new loan, the borrower will receive a credit by their lender (passed down by Fannie Mae) towards the cost of the report.

Although the ability to finance home energy improvements is not new, by combining this feature with traditional purchase and refinance mortgages Fannie Mae hopes to encourage more borrowers to increase the energy efficiencies of their homes.