Fannie Mae has released a new program that will enable more Americans to invest in energy efficiency, which includes solar. The HomeStyle Energy Program is a new mortgage option that gives borrowers the ability to complete clean energy upgrades up to 15% of the as-completed appraised property value of the home.
Borrowers are able to finance energy-efficient upgrades when purchasing or refinancing a home, eliminating the need for a subordinate lien, home equity line of credit, Property Assessed Clean Energy (PACE) loan, or unsecured loan.
For homeowners with existing, higher-interest unsecured loans, or PACE loans for energy improvements, this mortgage allows borrowers to refinance or roll the loan into a new, potentially lower-cost mortgage.
An energy report is required to prove that the improvements are cost-effective. Either a Home Energy Score report developed by an independent third-party energy rater, a Home Energy Rating Systems report completed by an accredited HERS rater, or an equivalent rating report completed by an independent third-party auditor that is permitted by state or local programs is allowed. The energy improvement costs must be less than the present value of the energy savings over its useful life.
The SunShot Initiative-funded PV Value® tool may potentially be used to help independent raters develop the present value of the energy saved.
- The new mortgage product is available for use in small multi-unit properties such as condos, in addition to single family homes.
- HomeStyle mortgages can also finance up to $3,500 in water-efficiency upgrades without a report.
- The program is available to all approved Fannie Mae lenders.
The HomeStyle Energy Program builds upon (and replaces) the current energy improvement offerings by Fannie Mae.