What Is A Home Energy Rating?

Home energy ratings indicate the energy efficiency of a new or existing home on a scale from 500 to 0, where a lower number indicates greater energy efficiency. A home with a zero rating indicates an extremely energy efficient home featuring zero net energy consumption from nonrenewable resources.  A home with a 500 rating would be considered extremely energy inefficient. A home that meets the 2006 International Energy Conservation Code (IECC) standard would achieve a 100 rating.

The chart below shows the scoring range of the Home Energy Rating System (HERS). A rating of 4 stars or greater qualifies a home for an energy efficient mortgage (EEM). There are many companies and non-profit organizations who can provide this service throughout Michigan. A list of Michigan Home Energy Raters  is available.

A Home Energy Rating will help a home buyer 1) identify energy efficient homes for purchase, 2) understand the energy costs associated with their most valuable asset - their home, and 3) qualify a home for an energy efficient mortgage. Home Energy Ratings show the cost/benefit advantages of energy efficient construction.

The climate zones in Michigan vary for Energy Star rating qualifications.  ( View the map of climate zones  in Michigan.)  The Upper Peninsula and most of the northern Lower Peninsula are in Climate Zone 6-8 which requires a HERS index of 80 or better. The southern Lower Peninsula is in Climate Zone 1-5 and requires a HERS index of 85 or better for the Energy Star designation.

A more thorough breakdown of the recent changesto the HERS index and Energy Star designations is available online. These new standards went into effect on July 1 2006.

What is an energy efficient mortgage?

An energy efficient mortgage allows the buyer to get an "income stretch," i.e. the lender can increase the debt-to-income ratio by as much as 2% or more from a typical ratio of 28%. With an energy efficient mortgage, the home buyer is able to buy "more house," while having lower payments because the energy cost savings are greater than the increases in the mortgage payment. Energy efficient mortgages are sponsored by the Federal Housing Administration, the Veterans Administration, Fannie Mae and Freddie Mac.

An energy improvement mortgage is a type of energy efficient mortgage that finances cost-effective improvements in an existing home. The total expended is rolled into the mortgage loan.

More house and lower overall payments are possible!

In this example, the EEM provides $6,500 in extra buying power while reducing the monthly payments for the mortgage and energy by $10.

How to Get Help

• How Can I Get A Home Energy Rating?
• How Can I Get An Energy Efficient Mortgage?
• How Can I Find A Builder to Build A Five Star Home?