Fannie Mae is working to help lenders and real estate professionals have 

the information they need to help their customers make energy efficiency 

improvements — and show how it can be a benefit for everyone.

How homebuyers and 

homeowners can make their 

home more energy-efficient 
Executive summary 

• Energy-efficient homes can make homeownership

more affordable and sustainable for low- to moderateincome families.

• Energy efficiency is desired by the majority of low- to

moderate-income homeowners and buyers, but it is

seen as cost-prohibitive.

• There are financing solutions available through many

government, state and private organizations.

• A HomeStyle® Energy loan can help borrowers finance

upgrades to reduce utility costs and improve the

comfort and safety of their homes as part of their

purchase or refinance mortgage.

• Lenders and real estate professionals can help

consumers know their options.

HomeStyle® is a registered trademark of Fannie Mae®
3 © 2021. Fannie Mae 

The need for energy-efficient homeownership 

For all homeowners, but especially low- to moderate-income families, energy-efficient homes are 

about much more than the environment. They can help create financial stability, housing 

sustainability and may even impact the overall health of their family. 

The average percentage amount spent on energy costs by low-income families is more than triple 

the percentage of the amount spent by higher-income households.1 Efficiency improvements that 

bring low-income housing to the level of the average U.S. home could reduce their energy burden by as 

much as 35%.1

And with lower, more predictable utility bills, homeowners can better budget and make their monthly 

mortgage payments with greater ease — leading to increased housing stability. 

Current energy costs can strain budgets

A household’s energy burden is 

the percentage of income spent 

on home energy bills. The 

median low-income (≤200% of 

the federal poverty level [FPL]) 

energy burden is 8.1%.2 

$115.49/MONTH ELECTRIC BILL on average2

$104/MONTH WATER BILL on average2

1. NRDC | "Study Highlights Energy Burden for Households and How Energy Efficiency Can Help"

2. ACEEE | ”National and Regional Energy Burdens”
4 © 2021. Fannie Mae 

Why energy efficiency matters for homeowner 

health 

Energy-efficient homes can have a positive impact on a family’s health, helping to improve 

indoor air quality and keeping outdoor pollutants out. This can be especially important for people 

with respiratory problems, allergies and weakened immune systems. 

In fact, after making some basic weatherization and energy efficiency improvements to their homes, 

many people reported a number of notable health benefits,

4

including:

22

hours spent 

indoors3

90% 

of time breathing 

indoor air3

2 to 5 

times higher pollutant concentration 

when compared to the outdoors3 

• Improvements in overall health.

• Improvements in mental health.

• Fewer headaches and less fatigue.

• Fewer respiratory symptoms.

• Improvements in blood pressure or other cardiovascular issues.

It’s easy to imagine how reduced symptoms can lead to fewer missed work or school days, 

fewer doctor visits — and reduced medical costs.

5

Three ways to improve energy efficiency and air quality 

1

2

3

Securing your home against outside elements

Example: Weather stripping and caulking.

Improving your ventilation

Example: Using HEPA filters, proper venting and ventilation systems.

Managing moisture

Example: Installing insulation with moisture management capabilities.

3. EPA.gov | Indoor Air Quality: What Are the Trends in Indoor Air Quality and Their Effects on Human Health?"

4. Energy.gov | “Home RX: The Health Benefits of Home Performance”

5. Fannie Mae | "Six Ways to Start Saving on Energy Costs"
Our financing helps make home improvements possible.

Providing energy and water 

efficiency financing options is 

a primary focus 
DOE Home Energy Score 

HERS Index 

6 © 2021. Fannie Mae 

When it comes to energy-efficient solutions: 

While 74% of homeowners in the low- to moderate-income range are interested in energyefficient solutions, interest drops off significantly as the cost of those improvements increases.6 And 

given that their planned projects are typically smaller and less expensive than energy improvement 

projects of homebuyers and owners in higher income brackets, low- to moderate-income families 

might feel the return on investment won’t be worth it.

6. Fannie Mae, "Energy Efficiency," Single-Family Strategy & Insights, unpublished research, December 2020

74% 

47%

57% 

66% 

The #1 barrier to energy efficiency is cost 

Only 1 in 4 homeowners have used an online energy assessment6

Resources for your borrowers:

• energy.gov/energysaver

• Many local utility providers offer virtual

energy audits.

• Most utilities offer free or low-cost

energy reports. Contact your local

utility, or look at the inserts in your

monthly bill to explore your options.

Energy reports can tell your borrowers how 

efficient their home is, and some even recommend 

improvements tailored to your borrower's home.

of homeowners are interested6

see it as cost-prohibitive6

would roll costs into their mortgage6

plan to DIY (or get help from friends and family)6 
And we want homebuyers to know more about their financing options.

Even with so many homebuyers 

interested in energy efficiency, 

most use credit cards or pay outof-pocket6

6. Fannie Mae, "Energy Efficiency," Single-Family Strategy & Insights, unpublished research, December 2020
8 © 2021. Fannie Mae 

When it comes to efficiency upgrades, the number one financing method used by low- to moderateincome homeowners and buyers is personal credit or cash on-hand.6 Self-financing can limit the scope of 

a home project, which may have a long-term impact on a family’s wealth, health and livelihood. 

Reduced-cost and no-cost improvements are 

available to income-qualified borrowers 

The U.S. Department of Energy Weatherization Assistance 

Program reduces energy costs for low-income households: 

• Increasing the energy efficiency of their homes while

ensuring their health and safety.

• Providing weatherization services to approximately 35,000

homes every year using DOE funds.

• These households save on average $283 or more every year.

• Send your borrowers to https://www.energy.gov/

eere/wap/how-apply-weatherization-assistance

The American Council 

for an Energy-Efficient 

Economy has made a list 

of guidelines by state at:

database.aceee.org/stat

e/guidelines-lowincome-programs

Rebates on ENERGY STAR® products can be found here:

• energystar.gov/rebate-finder

Rebates, incentives and tax credits also exist 

Utilities, states and municipalities offer rebates and incentives:

• Borrowers should contact their utility company to learn about available rebates and incentives.

• Have your borrowers/homeowners go to state energy offices for more information.

https://www.naseo.org/members-states

There’s even a residential energy-efficient property tax credit offered by the IRS:

• Borrowers should use Form 5695 to figure out their residential energy credits. Suggest

they consult a tax professional if they have questions about this form.

How can you help? Ask if they’d like to finance any energy efficient improvements as a 

part of their loan.

• Borrowers who are refinancing have lived in the home for some time and often know what they

need to do to reduce their energy bills — they can roll those energy improvements into their

refinance loan.

• Bundling energy upgrades into a mortgage loan allows homebuyers to spread the cost out over

time — and move their family into a healthier home sooner.

Or, they can roll the cost into their mortgage

6. Fannie Mae, "Energy Efficiency," Single-Family Strategy & Insights, unpublished research, December 2020
9 © 2021. Fannie Mae 

Fannie Mae HomeStyle® Energy loan

What is it? 

• A long-term mortgage that can help your borrowers finance upgrades to reduce utility costs and

improve the comfort and safety of their homes

• Can be combined with other loan products, like HomeReady®, for more flexibility and savings

• May be used for upgrades to energy and water systems, including solar, property improvements for

better resilience to natural disasters, new windows and doors, and to pay off other energy-related debt

Who’s eligible?

• Buyers and refinancing-owners of one-to-four-unit properties, including manufactured housing

(no structural damage)

• All occupancy types permitted

• Standard LTV, CLTV and HCLTV ratios apply

Great candidate for HomeStyle® Energy:

Jasmine is a retired elementary school teacher on a fixed income and is looking 

for a new home that has lower, more predictable utility bills than she currently 

pays. However, none of the homes in her price range are energy-efficient.

Eligible HomeStyle® Energy improvements:

• Weatherization improvements

• Air sealing

• Insulation (attic, floors, walls, basement, duct)

• Smart thermostats and equipment controls

• New windows and doors

• Upgraded equipment and appliances

• Water heater

• Air conditioning

• Furnace

• Installation of alternative energy sources, such

as solar or geothermal

• Low-flow toilets and faucets

No energy report is required for:

• Basic weatherization and water-efficient

items up to $3,500

• Water efficiency devices

• Renewable energy sources, including

solar panels, wind power devices and

geothermal systems

• Environmental hazard damage repairs

or resiliency improvements

• Radon remediation
10 © 2021. Fannie Mae 

In addition to energy and water efficiency improvements, a HomeStyle® Energy loan can be used to 

repair homes damaged in a natural disaster, or by an environmental hazard, and to install resiliency or 

preventative improvements, including the following:

• Storm surge barriers.

• Foundation retrofitting for earthquakes.

• Hazardous brush and tree removal in fire zones.

• Retaining walls to address mud or water flows.

• Installation of radon remediation systems.

Great candidate for HomeStyle® Energy:

Milo and Kevin live along the coast of Louisiana. They want to make their 

home resilient to the increasingly frequent tropical storms and hurricanes. 

They've decided to invest in storm surge barriers as well as a sump pump in 

their ground floor, which is prone to flooding. 

Great candidate for HomeStyle® Energy: 

Don and Maya are looking to buy their first home. Their first choice is an 

older home that needs some minor renovations. It has drafty windows and 

doors, poor insulation and an inefficient air conditioner. They are looking for a 

way to finance some energy-efficient upgrades to save on monthly utility bills. 
11 © 2021. Fannie Mae 

How to spot the ideal HomeStyle® Energy loan 

borrower:

• Those looking to improve a home’s resiliency against natural disasters or pay off existing energyrelated debt.

• Borrowers who are refinancing often do not know they can add energy improvements to their 

loan — ask these borrowers if they have thought about adding solar panels or insulating the 

home to reduce their energy costs.

• Low- to moderate-income borrowers who are looking to save money on energy bills.

Great candidate for HomeStyle® Energy:

Amy and Javier have owned their home in a suburb of Austin, Texas, for six years. 

In that time, they’ve done what they could to make their 1960’s ranch more 

energy-efficient — from ENERGY STAR® appliances to efficient lightbulbs to 

upgrading their windows. They know that their older HVAC needs to be replaced to 

lower their bills, but the upfront costs are too high for them. 

Plus, HomeStyle® Energy loans qualify lenders for a $500 

loan-level pricing adjustment (LLPA) credit.
12 © 2021. Fannie Mae 

Fannie Mae is committed to offering financing 

options for energy and water efficiency 

• Expanding market awareness and understanding of energy and water efficiency improvements 

and financing through industry outreach and research.

• Helping to reduce homeowner utility costs through loan product enhancements that allow 

homeowners to finance or refinance energy and water improvements.

• Increasing the purchase of mortgage loans that finance energy and water improvements or 

refinance existing energy debt, like PACE loans. 

We’re working on expanding our efforts to provide liquidity, resources, leadership and partnership 

to support the energy efficiency segments of the single-family housing market. 

What we’re doing:

What you can do:

Let your homeowners and borrowers know that there are energy efficiency options to help them get 

a comfortable, efficient and resilient home.

Useful links:

HomeStyle Energy Mortgage

Fannie Mae’s Duty to Serve

Have questions? 

Click here to have a Fannie Mae representative contact you.