How to Buy and Finance a Net Zero Home

How to Buy and Finance a Net Zero Home

Looking to buy a net zero home?

You’re making a good decision. Zero energy ready homes are the future. After all, there are many benefits of zero energy ready homes, from greater durability and comfort to savings on utilities and a higher resale value.

So, how can you buy and finance a net zero home? In this article, we’ll cover all you need to know.

Where can I buy a net zero home?

In short, you’ll find net zero homes for sale across America. As of 2019, the U.S. had an estimated 5,000 net zero homes. Though that’s not a high number (yet), the amount of net zero homes will rise dramatically in the coming years. Specifically, states that receive lots of sunshine and offer builders and buyers incentives will see the biggest increases.

For instance, net zero home builders in Florida have been quite active as they take advantage of the state’s incentives and the 237+ days of sunshine. It is the Sunshine State!

In California, the Energy Commission adopted new standards in 2018, requiring all new homes to have solar panels. Thanks to such legislation, California could add 100,000 net zero homes per year in the 2020s, according to a CNBC report,

With large states like California and Florida leading the way, the rest of the nation will follow. And eventually, zero energy ready homes will become the norm.

That’s good news for you–a net zero homebuyer.

Who builds net zero homes?

In total, the United States has more than 500 zero energy home builders, according to listings with the U.S. Department of Energy (DOE) and other data. Within a few years, we expect there will be more than 1,000.

That can make finding the right green energy builder difficult. Search Google for zero energy home builders in your state or city, and you’ll get dozens of results. How do you narrow down the list and buy from a quality builder?

To ensure you choose a reputable zero energy home builder, we recommend visiting the U.S. Department of Energy’s website. There, you can quickly search for builders in your state. These builders have already met DOE requirements for the Zero Energy Ready Home program.

Here’s a quick tutorial on how to do this: Let’s say you live in Washington. Click on the state and then click “View all WA Partners.” On the next page, you’ll see a list of zero home energy builders in Washington, as well as verifiers, architects and designers, training partners, and innovation partners.

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To get an idea of what net zero homes look like and the attributes they have, visit the builder’s website.

For example, if you’re shopping for zero energy ready homes in Florida, explore our properties at Brite Homes. We’re a leading net zero home builder in the state, with houses starting from the low $200,000s. In addition to solar-powered energy, our homes feature smart home automation, high-performance windows, LED lighting, and high-quality HVAC systems for maximum comfort and efficiency.

Beautiful outside photo of a Brite home

How can I pay for a net zero home?

You may ask yourself: How much does a zero energy ready home cost?

The initial investment is a bit higher. The cost to build a net zero home is 5-10% higher than a traditional home. But don’t get alarmed! You’ll make up your investment quickly with energy savings.

According to the Rocky Mountain Institute, it takes 7-14 years for energy savings to cover the extra initial costs. And that doesn’t even account for potential higher resale value!

Mortgages for energy-efficient homes function similar to mortgages for traditional homes. As a guide in NerdWallet states, lenders will look at the following:

  • the loan-to-value (LTV) ratio
  • your income and expenses
  • your credit history
  • your existing debt payments
  • any collateral you have
  • your employment history
  • liquid assets you have, such as savings and stocks

In general, your downpayment must be 20% or more if you want to avoid private mortgage insurance (PMI). PMI is an extra payment you make to offset the risk for lenders (which is higher if your downpayment is lower).

In addition to a regular mortgage, you can use the Federal Housing Administration (FHA) or Veterans Affairs (VA) loans to finance a net zero home. FHA loans and VA loans enable you to make a lower downpayment while still getting competitive interest rates and terms.

Now, the traditional mortgage options don’t offer any special benefits for financing a net zero home. If you want to get the best possible rates and terms, we advise working with lenders and appraisers that recognize how greater energy efficiency benefits a homeowner’s bottom line. A lender who understands the net zero home market will account for utility savings, less maintenance, and better resale value during the underwriting process. How can I pay for a net zero home?

What is an Energy Efficiency Mortgage (EEM)?

There is one special kind of loan for zero energy ready homes: the Energy Efficiency Mortgage. When you buy an energy-efficient home, or upgrade your existing residence’s energy efficiency, you can apply for an EEM.

A federally recognized mortgage, the primary advantage of an EEM is that underwriters factor in your energy savings as part of the mortgage offer. Since you’ll spend less on utilities with a net zero home, you have more money in your pocket each month. That means you could get approved for a larger loan if you qualify for an EEM.

To qualify for an EEM, you must obtain a home energy assessment from a certified energy rater. If a home falls short of requirements, they’ll make recommendations for energy-saving improvements. You can even include those improvements as part of your loan.

If you plan to buy a net zero home, definitely consider the Energy Efficient Mortgage. It could allow you to buy a bigger, more comfortable home, and you may get better loan rates and terms than you expected.

Do buyers get incentives when purchasing a net zero home?

Yes! Along with federal incentives, most states offer incentives for buying a net zero home or upgrading your residence’s energy efficiency.

To find what your state and local government offers, search the Database of State Incentives for Renewables and Efficiency in your area. Common incentives include income tax rebates, utility rebates, and even low-interest loans

For example, if you buy a zero energy ready home in Florida, incentives go well over $10,000 in terms of dollar value. Currently, Florida offers a 100% property tax exemption for eligible green energy homes for a period of time.

Certain benefits apply to everyone in America. When you buy and install renewable energy systems, for instance, you get a 30% tax credit for qualified expenditures. If you install solar panels on your roof, that can save you thousands.

Furthermore, you can’t forget about the other benefits of a zero energy ready home. Thanks to high-quality construction, you don’t have to perform home maintenance and repairs as often as you would with a traditional home. And as home appraisers begin to include energy efficiency when calculating a home’s value, you’ll see a great return on your investment.

“Home appraisal experts tell us the appraised value difference between non-efficient and efficient homes could be 10-15%. For a home valued at $300,000, that’s nearly $30-$45,000,” Robert Kociecki, President of Brite Homes.

Ready to buy a net zero home?

Most homebuyers are new to the net zero market. As one of the leading zero energy home builders, we’re here to help you navigate the purchasing process at Brite Homes.

If you have any questions as you shop for a net zero home, feel free to contact us at (833) 922-7483 or click the link below.

Help Me Find a Net Zero Home