Cut Utility Costs With an Energy Efficient Mortgage

After your mortgage, utility bills are often the biggest monthly hit. But here's what most people don't realize: that number has been climbing fast.

Average monthly energy bills rose from $196 to $265 between 2022 and mid-2025, according to The Century Foundation. That’s a 35 percent jump that outpaced overall inflation by nearly three times.

And when you add electricity, gas, water, and other services together, the average American household is paying around $610 a month in total utility costs.

So, what if some of that money stayed in your pocket instead?

Enter Energy Efficient Mortgages

An Energy Efficient Mortgage (EEM) helps you finance upgrades that lower energy use, reduce monthly bills, and can even boost your home's value. Whether you're improving your current home or buying one that needs updates, you can roll the cost of energy-saving improvements into your loan instead of paying out of pocket.

That last part matters a whole lot more than it might sound.

Most homeowners who want to upgrade insulation, swap out an aging HVAC system, or add energy-efficient windows end up paying in cash or taking out a separate loan at a higher rate.

Expert Tip

An EEM lets you fold those costs directly into your mortgage, spread over the life of the loan. The monthly savings on your utility bills often offset the slightly higher payment.

And the upside does not stop at lower bills. According to research published by Freddie Mac, better-rated homes sold for 3 to 5 percent more than comparable homes with lower energy ratings. That’s money back in your pocket when it comes time to sell.

Energy Efficient Mortgage Financing Options

Conventional

Finance up to 15% of the completed home value for improvements. Up to $3,500 for weatherization or water-efficient upgrades may not require an energy report. Available for primary homes, second homes, and investment properties.

FHA

The mortgage loan amount for a Federal Housing Administration (FHA) EEM can be increased by the cost of effective energy improvements. The maximum amount of the energy improvement portion is the lesser of 5% of the property value, 115% of the median area price of a single-family dwelling, or 150% of the conforming Freddie Mac limit.

Expert Tip

One added perk: when buying an already energy-efficient home, the FHA allows lenders to stretch your qualifying ratios by 2 percentage points above standard limits, which can help you qualify for a larger loan.

VA

Veterans can add up to $3,000 with a contractor bid, or between $3,001 and $6,000 with an energy audit. You've already earned it.

What the Process Actually Looks Like

And getting started is simpler than most people expect.

You'll want to connect with a Mortgage Banker who is familiar with EEM guidelines, since not every lender works with them regularly. And hey! We do here at Atlantic Bay! 👋👋👋

Depending on the loan type, you may need an energy audit from a certified rater who can identify which upgrades qualify and estimate the savings. That report becomes the foundation of your loan package.

From there, it works like any other mortgage, just with a lower utility bill on the other side of closing.