Think the Home Energy Score is just a guide to making improvements? It’s so much more! You can literally take a Home Energy Score to the bank and use it to get special financing, either to purchase a home or refinance your current one. Here are the major programs serving owners, or future owners, of energy-efficient (or future energy-efficient!) homes in the Portland area.
Fannie Mae HomeStyle Energy Loan: From Soup to Nuts
This loan program offers refinancing and mortgages for homes needing energy efficiency upgrades. Borrowers can do up to $3,500 of improvements without obtaining a Home Energy Score, however, Fannie Mae recommends getting the Score report first because it will help with project prioritization — plus, it’s required for budgets beyond $3,500. Once a HomeStyle Energy Loan is obtained, funds can be used toward every improvement a Home Energy Score assessor might recommend, including air sealing, insulation (attic, floors, walls, basement), duct sealing and even replacing windows and doors. That’s not all — these loans will also cover renewable energy upgrades like solar panels, water efficiency upgrades, in addition to natural disaster resiliency measures. Read more at FannieMae.com
FHA Energy Efficient Homes Policy: Stretchy!
Under this policy, those seeking to borrow funds to buy or refinance a home through the Federal Housing Administration can receive a 2% “stretch” on their debt-to-income ratio for energy efficient homes. Let’s break that down a little: Debt-to-Income ratio (DTI) normally needs to be under 43% to qualify for an FHA loan, meaning the borrower’s monthly debt payment should be 43% or less of their monthly income after the new mortgage payment is figured in. Under this policy, borrowers can raise their DTI by 2% and still qualify for a loan, but only if the home they’re buying is energy efficient. How is the energy efficiency measured? You guessed it — a Home Energy Score. If the home scores a 6 or greater, or if the Score can be raised to a 6 by making improvements listed on the Score report, borrowers qualify for the 2% DTI “stretch”. Find out more about the policy here.
Local Lender offers Home Energy Score-backed Construction Loans
Umpqua Bank is leading the way in incorporating Home Energy Scores into its construction loan policy. They encourage you to talk to a banker to learn the specifics, but, similar to FHA loans, funds from this local Portland bank can be used to either refinance and pay for energy efficiency upgrades, or borrow money toward doing construction on a newly purchased home. Get started on their website.
Even for home sellers eager to move on from their current home, a Home Energy Score anywhere in the Portland area can offer major appeal to home buyers on a budget. Not only does it clearly show what it costs to heat and cool the home, but buyers might be taking advantage of one of these special financing arrangements. Schedule a Home Energy Score today!