VA Energy-Efficient Mortgage (EEM): Save Money on Utilities & Your Mortgage
What Is a VA Energy-Efficient Mortgage?
A VA Energy-Efficient Mortgage (EEM) lets you add up to $6,000 to your VA home loan to finance energy-efficient improvements — without a new appraisal, without additional qualification, and without a separate loan. It’s one of the least-known benefits in the VA loan program, and it can save you hundreds of dollars per year in utility costs while increasing your home’s value.
The EEM isn’t a standalone loan — it’s an add-on to a VA purchase loan or VA refinance. You simply roll the cost of eligible energy upgrades into your existing VA mortgage, and the improvements pay for themselves through lower monthly utility bills.
How It Works
The VA allows your loan amount to exceed the standard limit by up to $6,000 specifically for energy-efficient improvements. The program has two tiers:
| Improvement Cost | Requirement |
|---|---|
| Under $3,000 | The VA assumes the cost is offset by lower utility bills. No additional documentation needed. DIY is allowed. |
| $3,000–$6,000 | The lender must determine the cost is reasonable and that you have enough income to cover the slightly higher mortgage payment. Energy audit or utility savings estimate may be requested. |
Eligible Energy Improvements
- Solar heating and cooling systems (including solar panels)
- Insulation — attic, wall, and crawl space
- Storm windows and doors
- Heat pump installation
- Furnace modifications or replacement with high-efficiency units
- Water heater insulation or tankless water heater upgrade
- Weatherstripping and caulking
- Programmable thermostats
- Energy-efficient HVAC ductwork
- Double-pane or low-E windows
Real-World Example
$400,000 VA Purchase with $5,000 EEM Add-On
Base VA loan amount: $400,000
EEM for insulation + heat pump: $5,000
Total loan amount: $405,000
Additional monthly payment: approximately $30/month
Estimated monthly utility savings: $80–$150/month
Net monthly savings: $50–$120/month from day one
The improvement pays for itself immediately and continues saving money for the life of the loan.
EEM vs. VA Renovation Loan vs. VA Supplemental Loan
| Feature | VA EEM | VA Renovation | VA Supplemental |
|---|---|---|---|
| Max amount | $6,000 | ~$50,000 | Varies by entitlement |
| Purpose | Energy upgrades only | Any livability/safety repair | Repairs on existing VA mortgage |
| Additional appraisal | Not required | Required (as-completed value) | May be required |
| Licensed contractor required | No (under $3K) | Yes — VA-registered | Yes |
| Standalone loan | No — add-on to purchase/refi | Bundled with purchase/refi | Separate from first mortgage |
| DIY allowed | Yes (under $3K) | No | No |
Why Most Veterans Don’t Know About This
The VA EEM is one of the program’s best-kept secrets. Most lenders don’t mention it, most real estate agents don’t know it exists, and it rarely comes up in the standard VA loan process. But for Veterans buying an older home or one with outdated HVAC, poor insulation, or single-pane windows, it’s essentially free money to reduce your ongoing costs — financed at your VA mortgage rate (typically the lowest rate available) instead of a credit card or personal loan.
Ask your loan officer about the EEM when you apply. If they don’t know what it is, that’s a sign you may want to work with a more VA-experienced lender.
Want to Add Energy Upgrades to Your VA Loan?
A licensed VA Loan Specialist can explain how to add up to $6,000 in energy improvements to your purchase or refinance. No hard credit check. No obligation.
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