Fannie Mae offers expanded options for green improvements

A new renovation mortgage from Fannie Mae gives borrowers enhanced options to improve their homes’ energy efficiency

Fannie Mae offers expanded options for green improvements
Renovation loans can be a great asset to any originator’s toolbox – but it’s important to know about all the options out there. Fannie Mae has introduced a new renovation loan that gives homeowners more options for financing energy efficiency improvements in their homes.

Fannie Mae’s HomeStyle Energy mortgage gives borrowers an enhanced option for financing both energy and water efficiency improvements. And borrowers with existing, high-interest energy improvement loans can easily roll those loans into a new mortgage or a refinance of an existing mortgage, according to Fannie. The loan also gives borrowers the option to finance new energy upgrades when purchasing or refinancing a home.

HomeStyle Energy loans can be used on one- to four-unit properties, including condominiums, and are available for all approved Fannie Mae Lenders.

“The National Association of Home Builders has found that energy efficient features are highly desired by homeowners, and we are committed to helping lenders serve these customers,” said Carlos Perez, senior vice president and chief credit officer for single-family at Fannie Mae.  “HomeStyle Energy mortgage will be particularly helpful to borrowers who want to pay off debt for existing energy improvements.  It will also benefit homeowners who want to make their home more comfortable and efficient.”

Borrowers who want to improve the energy efficiency of a home they’re purchasing can receive up to 15% of the home’s as-completed appraisal value to use for upgrades, according to Fannie Mae. An energy report is required, an the lender must place the funds in an escrow account – but borrowers can finance up to $3,500 in weatherization or water efficiency upgrades without getting an energy report.

“HomeStyle Energy mortgages can simplify the financing of energy-efficient improvements,” Fannie Mae stated in a release. “This financing is likely more affordable than a subordinate lien, home equity line of credit, or unsecured loan, or loan from an HVAC vendor. In addition, most PACE loans are not eligible for Fannie Mae-backed mortgages, but can be paid off with this option.”

For more information about HomeStyle Energy loans, click here.