Learn All About the EEM Loan

VA Energy Efficient Mortgage Loan

Your home is getting older, and the windows have been letting the cold air seep in, taxing your poor heating system, and raising your energy costs. It can be expensive to upgrade your home to make it more energy-efficient, but if you are a veteran, you may be able to obtain the VA Energy Efficient Mortgage, which allows you to add the cost of VA approved energy-efficient improvements into your purchase or refinance VA loan.

Using the EEM Loan


  • Buying an older home that needs energy-efficient improvements. ·
  • Buying a home that is already energy efficient to help boost the amount of money you can get in your mortgage loan.
  • Refinancing your current mortgage to upgrade the energy efficiency of the home.

How Much You Can Borrow


It is usually easy to get a loan of up to $3,000 approved, you just need to provide your VA lender with either an itemized quote from the contractor or the contractor’s bid, along with manufacturer information for every item. To obtain a loan between $3,001 and $6,000, you will also need to provide an energy audit that shows the average utility costs for a year in the home. The lender will then decide if the improvements in the proposal will make a significant enough impact on the home’s utilities. An appraisal that lists how the improvements will increase the value of the home can help you obtain an EEM for over $6,000. It is difficult to get a loan over $6,000 for this, and both the VA and your lender have to approve it. Your lender will also determine if the increase in your mortgage from this is going to offset the monthly savings in energy reduction.

What Improvements Are Eligible


Some of the things you can get your EEM approved for include:
  • Windows and doors
  • Insulation
  • Water heaters
  • Clock thermostats
  • Solar heating and cooling systems
  • Furnace modifications
  • Heat pumps
  • Vapor barriers, storm windows/doors
  • Caulking and weather-stripping
  • Permanent air conditioning units
There are also some upgrades that the loan will not cover:
  • Appliances
  • New roofs
  • Window air conditioning units
  • Vinyl siding

Unique Aspect of the EEM


If you are rolling your VA EEM Loan into a mortgage to purchase or refinance a home, you can actually begin working on those improvements before closing. If they are completed before closing, you have to provide receipts for the work, and you can only include work completed within the last 90 days. If your improvements are not finished by closing day, or you have chosen to wait until after closing day to begin, your lender will place the cash needed for your improvements into escrow, and you will be reimbursed for the funds once they are completed. You have six months to complete the projects and must provide your lender with proof of competition. If you are unable to complete the improvements within six months, the unused funds will be applied to the principal balance of your loan.