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General FAQFinancial
Many homes qualify for energy upgrades.
This home qualified for $4,816 in upgrades. With the EEM, lenders recognize the savings the upgrades will bring. Borrowers may use these potential savings like extra cash, and add the cost of upgrades into the mortgage, paying them off easily as part of the monthly mortgage payment. Once the upgrades are installed the potential savings turn into real savings.
The other EEM option is for the lender to stretch debt-to-income qualifying ratios to allow a larger loan for a house that is already energy efficient. A debt-to-income ratio "stretch" means that a larger percentage of the borrower's monthly income can be applied to the monthly mortgage payment. That means the buyer has more borrowing power based up on the same income.
What the EEM Does for a Buyer's Borrowing Power
| For a standard home without energy improvements: | ||
| Buyer's Total Monthly Income | $3,000 | $5,000 |
| Maximum Allowable Monthly Payment 28% Debt-to-Income Ratio |
$840 | $1,400 |
| Maximum Mortgage at 90% of Appraised Home Value |
$132,900 | $221,500 |
| For An Energy-Efficient Home: | ||
| Buyer's Total Monthly Income | $3,000 | $5,000 |
| Maximum Allowable Monthly Payment 30% Debt-to-Income Ratio |
$900 | $1,500 |
| Maximum Mortgage at | $142,400 | $237,300 |
| 90% of Appraised Home Value | ||
| Added Borrowing Power Due to the Energy Efficient Mortgage |
$9,500 | $15,800 |
Mortgage Rate of 7.5% • Down Payment of 10% • 30 Year Term Principal & Interest Only tax & insurance not factored |
||
This buyer got into a home worth thousands of dollars more, just because it was energy efficient. That could bean a home with more living space, in a better location, or in better overall condition.
Which Buyers and Homes are Eligible?
All buyers who qualify for a home loan qualify for the EEM. The EEM is intended to give the buyer additional benefits on top of their usual mortgage deal. The lender will use the energy-efficiency of the house, as determined by a HERS rating, to determine what these benefits will be.
Energy Efficient Mortgages can be done on most homes. Availability is not limited by location, home price or utility company. EEMs can be done on government (FHA and VA) conventional, Portfolio and Jumbo Loans. Your lender will help you choose which loan type is best for you.
Get an EEM on:
- Older homes qualifying for upgrades
- New or old homes not requiring upgrades
- New construction
Valyceum Estates
Office: 585-777-4116 | Fax: 585-777-4108
250 Mill Street, Suite 500
Rochester, NY 14614
contact@valyceum.com
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