The best kept secret in the world of VA financing is the Energy Efficient Mortgage (EEM) program. This will allow veterans to purchase a home and make improvements to enhance the home’s energy efficiency. The EEM program can also be used in conjunction with a VA refinance.
This can be a mega-savings for veterans over time. Reducing the costs of heating, cooling, and other energy costs can help veterans build their savings or pay their homes off faster.
With an Energy Efficient Mortgage the veteran can add $3,000 to the loan amount to cover the cost of improvements. The veteran will be required to provide bids and/or invoices from contractors for the project.
Veterans whose energy improvement costs will exceed $3,000 but not $6,000 will be able to proceed as long as the increase in the mortgage payment does not exceed the projected energy savings. If the improvements will exceed $6,000 the lender must insure the veteran’s income is enough to support the increased mortgage payment. In addition, they may be subject to a value determination by the VA.
Below is a list of improvements that may qualify for an EEM:
• Solar Heating systems
• Solar Cooling systems
• Caulking and weatherstripping
• Furnace efficiency modifications
• Clock thermostats
• Additional insulation in floors, walls, or attic space
• Water heater insulation
• Storm windows and/or doors
• Heat pumps
• Vapor barriers
Ask your lender about the EEM program. If they don’t know what you’re talking about, find a lender that truly knows the VA program.

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