Can I do an Energy Efficient Mortgage with a VA Loan?

Yes, On a VA Energy Efficient Mortgage the maximum loan amount is the lower of the appraised value or purchase price minus the down payment, if any. You then add in the cost of the Energy Improvements based on the HERS report plus the funding fee. Your base mortgage amount may be increased by:

less than or equal to $3,000 with the copy of the bids / contract itemizing the improvements and their costs.

greater than $3,000 to $6,000 – same documentation as above with determination that monthly mortgage payment increase does not exceed the reduction in monthly utility costs. Documented determination made by municipalities, utility companies, state agencies or other reliable sources.

Greater than $6,000 – Discretion must be exercised. Including the above requirements consider whether veteran’s income will cover the higher monthly payment. Subject to value determination by VA.

The Funding Fee will be calculated based on the costs of the Energy Efficient Improvements and the full loan amount. Entitlement and Guaranty: Entitlement used will be based on the loan amount before adding the cost of Energy Efficient Improvements. The 25% required guarantee will be based on the total loan amount including improvements.

If the improvements are not completed prior to closing….an escrow account may be set up and the loan closed. The following will apply:

• Only the amount needed to complete the improvements may be withheld.
• Check the appropriate block on VA Form-26-1820. Item 23. Report and Certification of Loan Disbursement
• Improvements should be completed within (6) six months form loan closing VA Home Loans

If you have any questions regarding this program, please call 602 993-0000 or email sunnations@cox.net