A Beginner’s Guide to a Green Energy Loan: What It Is and Available Options – C-PACE

Did you know you are likely to spend $3,100 on water and energy bills each year? Yes, this is the average number of U.S. families spending on main utility bills. It goes without saying that the amount takes up a huge portion of your savings. Even if we keep aside our monthly expenses, climate change is the biggest threat this planet is facing now. Unfortunately, regular households are responsible for 20% of greenhouse gas emissions. If you choose energy-efficient improvements, you can save natural resources and money at the same time. Of course, home upgrades may not exactly seem cheap.

However, you can afford energy-efficient home improvements with a green energy loan. This financing option is used for upgrading your already-existing regular home to make it eco-friendlier. In addition to the context, you can make a green home greener.

Without further ado, we dive into what we understand by green energy loans. We will also give an insight into why you need to use the mortgage for your project.

A Basic Understanding of Green Loans

As the name suggests, a green loan is a financing option that you take to upgrade an already existing home for energy-saving features. Or, you can use the loan to find a new home featuring environment-friendly fixtures. You can also use regular personal loans or Energy Efficient Mortgages to finance the project.

The main reason for using green loans is to make climate-friendly home improvement projects. Instead of going for retrofit all the way, you can add more insulation or install solar panels to the property.

Furthermore, green home loans or mortgages are linked to making the house more energy efficient. Green mortgages are easier to find than true green loans. The Federal Housing Administration and the U.S. Department of Veteran Affairs offer green energy loans. Also, it is possible to get a conventional EEM if you reach out to a local lender.

Energy-efficient Mortgage by FHA

FHA’s EEM paves an affordable way to ensure energy-efficient improvements to your new home or an already-existing building. For the loan, borrowers need to be approved for the mortgage amount required to use for the home improvements.

For instance, when the home is worth $200,000 and you have to spend $10,000 on eco-friendly upgrades, you will have to qualify for a loan worth $200,000. The down payment remains the same. Similar to basic FHA loans, the government insures the energy-efficient mortgage that offers competitive rates and small down payments.

For the Energy Efficient Mortgage, anyone can apply for it. There is no need to be a first-time homeowner to get the loan; anyone is eligible for the mortgage. However, the home needs to be inspected before the bank approves the financing option. You will have to hire a professional energy specialist to confirm that you need the money for energy improvements. Make sure you at least have a credit score of 580 and are a U.S. citizen. FHA’s EEM also allows borrowers whose credit scores are between 500 and 579.


Green energy loans work in a different way than regular mortgages. The interest rates may be the same; however, you will have to keep making monthly payments. The high loan limits are a huge benefit because you can borrow more than the purchase amount. Basically, a green energy loan helps you reduce utility bills.

So, do you want to learn about green loans? You can contact CRE financing for a complete rundown. For more information, please visit https://c-pace.com/ today!

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