A Brooklyn homeowner asked, "What are the best financing options for building green?"on the Green Home Guide.
I answered (with more detailed information italicized):
There are a few programs you might consider for financing an energy
efficient home (this is for renovations or purchasing and
upgrading/retrofitting and existing home) :
1- FHA 203-k renovation loan:
Maximum mortgage amount to be the purchase price plus to cost of the approved upgrades OR 110% of the after-improvement value of the home, overlaid by the 96.5% loan-to-value of the after-improvement value.
2- FHA 203-k streamiline renovation loan (allows for up to $35,000 in financed improvements)
Subject to the same limitations of the traditional FHA 203-k loan but with a $35,000 project cap.
3- FHA EEM (Energy Efficient Mortgage) allows you to finance up to 5% or $4,000 (whichever is greater but no larger than $8,000) of the purchase price, added onto the normal mortgage balance, to finance energy efficient improvements.
All improvements must be completed within 90 days of loan funding. Any unused portion of the improvement part of the loan must be applied to the loan balance.
4- FNMA EEM allows for a 15% upgrade.
All improvements must be completed prior to close of escrow.
5- VA Energy Efficient Mortgage
All improvements must be completed prior to close of escrow and are limited to $6,000 above the allowable mortgage amount.
