b. Requirements (continued)

A loan for existing property may be increased by up to $6,000 for energy efficiency improvements at the option of the lender and veteran at any time up to loan closing without VA’s prior approval.

The lender must determine that the proposed weatherization and/or energy conservation improvements are reasonable for the particular property.

The lender must evaluate the veteran’s ability to pay the increased loan payments caused by addition of energy efficiency improvements.

For energy efficiency improvements that will increase a loan amount by more than $6,000, the amount of the increase must be supported by an increased valuation in an equal amount.

c. Borrower Notice on the [ ] NOV

Information on EEMs is provided to a veteran who applies for a loan which requires a [ ] NOV (that is, a loan for a home purchase or cash-out refinance).  The [ ] NOV includes the following notice to the veteran:

“The buyer may wish to contact a qualified person/firm for a home energy audit to identify needed energy efficiency improvements to the property.  In some localities, the utility company may perform this service.  The mortgage amount may be increased as a result of making energy efficiency improvements such as:  Solar or conventional heating/cooling systems, water heaters, insulation, weather-stripping/caulking, and storm windows/doors.  Other energy related improvements may also be considered. 

The mortgage may be increased by

·   up to $3,000 based solely on the documented costs

·   up to $6,000 provided the increase in monthly mortgage payment does not exceed the likely reduction in monthly utility costs, or

·   more than $6,000 subject to a value determination by VA.