Florida Energy Efficient Mortgage: Finance Solar, Impact Windows & HVAC Into Your Purchase Loan
An Energy Efficient Mortgage (EEM) lets Florida home buyers finance the cost of energy-efficient improvements — solar panels, impact windows, high-efficiency HVAC — directly into their home purchase loan. Instead of paying out of pocket after closing or taking a separate improvement loan, the upgrades are folded into the original mortgage. For Florida buyers facing high utility bills, hurricane risk, and expensive insurance, EEMs offer a way to make a home more efficient and resilient from day one without depleting cash reserves.
FHA Energy Efficient Mortgage (EEM)
The FHA EEM is available to any FHA-eligible borrower buying or refinancing a primary residence. Key features:
- Loan amount increase: The EEM allows you to borrow the cost of qualified energy improvements on top of the purchase price — up to the lesser of 5% of the property's value, 115% of the median area home price, or 150% of the conforming loan limit
- No additional down payment: The energy improvement amount is added to the base loan; the 3.5% FHA down payment is calculated on the purchase price only
- Energy audit required: A HUD-approved energy rater must perform a Home Energy Rating System (HERS) assessment identifying qualifying improvements and projected energy savings
- Improvements must be cost-effective: The projected energy savings over the loan term must exceed the cost of the improvement
- Escrow holdback: Improvement funds are held in escrow and disbursed to contractors upon completion — not paid in advance
VA Energy Efficient Mortgage (EEM)
For eligible veterans and active military, the VA EEM allows financing of energy-efficient improvements up to $6,000 without additional underwriting. For improvements between $6,001 and $10,000, the VA must determine that the increase in monthly mortgage payment is offset by the projected energy savings. Above $10,000 requires full VA approval and justification.
- Available for VA purchase loans and VA IRRRL (Interest Rate Reduction Refinance Loans)
- No additional down payment required
- Does not count against the VA's purchase loan limits for eligible veterans with full entitlement
- Eligible improvements must be energy-related — not general renovations
Fannie Mae HomeStyle Energy Loan
Conventional buyers (not using FHA/VA) can access energy improvement financing through the Fannie Mae HomeStyle Energy option, which allows up to 15% of the as-completed appraised value for energy improvements. Unlike FHA EEM, this doesn't require an energy audit for improvements under a certain threshold — making it somewhat easier to process for straightforward upgrades like solar or HVAC.
Eligible Energy Improvements in Florida
| Improvement | FL Relevance | Typical Cost | EEM Eligible |
|---|---|---|---|
| Solar PV panels | Very high (sun exposure, FPL net metering) | $15,000–$35,000 | Yes (FHA, VA, Fannie) |
| Impact windows & doors | Very high (hurricane + insurance discount) | $8,000–$25,000 | Yes |
| High-efficiency HVAC (SEER 16+) | Very high (FL HVAC runs year-round) | $5,000–$12,000 | Yes |
| Insulation upgrade | High (poorly insulated FL attics common) | $1,500–$5,000 | Yes |
| Solar water heater | High | $3,000–$6,000 | Yes |
| Battery storage (paired with solar) | High (grid resilience during storms) | $8,000–$15,000 | Yes with solar |
| General renovation (kitchen, baths) | N/A | Any | No — use 203k or HomeStyle |
EEM vs. PACE Loan for Florida Energy Upgrades
| Feature | EEM | PACE Loan |
|---|---|---|
| Lien type | First mortgage (standard) | Tax lien (super-priority) |
| Financing source | Mortgage lender | PACE provider → county |
| Interest rate | Mortgage rates (currently 6.5%–7.5%) | 5%–10% (fixed) |
| Repaid through | Monthly mortgage payment | Property tax bill |
| Transfers on sale | No — paid off with mortgage | Yes — attaches to property |
| Lender approval needed | Yes — part of mortgage underwriting | No — independent of mortgage |
| Impact on resale | None (doesn't transfer) | Can block conventional financing |
For most Florida buyers using agency financing (FHA/VA/conventional), an EEM is preferable to a PACE loan because it doesn't create a lien that could complicate future refinancing or resale. PACE is only worth considering if the buyer doesn't need future conventional refinancing and the lien won't impair sale.
How to Use a Florida EEM: Step by Step
- Tell your loan officer you're interested in an EEM when you start the pre-approval process
- For FHA EEM: schedule a HERS rating with a certified FL energy rater before or during the contract period
- Get contractor quotes for the identified improvements
- The lender adds the improvement costs to your loan amount and orders a new appraisal reflecting the improvements
- Improvement funds go into escrow at closing
- Contractors complete work after closing — funds released upon completion and inspection
Buying a Florida Home and Want to Go Green?
Our First-Time Home Buyer Toolkit covers FHA, VA, loan types, and every FL closing step — 21 pages from a licensed FL real estate professional.
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