HERS RATINGS for EEMS

What is a HERS Rating?

Home Energy Rating System HERS Rating

A HERS Rating, as seen on the right, is a rating system developed by the Residential Energy Services Network for the mortgage industry to rate the energy efficiency of residential buildings. The rating scale uses a complex formula which takes into account building features from insulation levels, framing construction, HVAC equipment size, type and efficiency, to the inclusion of renewable energy sources like solar water heaters, PV arrays, and geothermal heat pumps.

The rating begins with an inspection of the home by a certified rater who inspects all of the building features and conducts an envelope leakage (blower door) test and duct leakage test. The results of this inspection are input into a computer program which generates a model of the home and determines how much energy it will use each year for heating, cooling, lighting, cooking, etc. and uses this information to generate the HERS Rating Score.

Like a golf score, a lower HERS Rating score means the home is more efficient. A HERS Rating of zero (0) is a net-zero home, meaning all of the energy used in the home is off set by energy created using renewable energy sources. The rating scale is such that a home built to the 2004 IRC building codes will acheive a HERS score of 100. Each 1 point on the scale is equivalent to a 1% increase or reduction in energy usage as compared to this base. So an ENERGY STARŽ home which is 15% more efficient than a code built home acheives a ranking of 85. Each rating score is adjusted for the size of the home and thus any two rating scores can be compared. For example, a 3000ft˛ house with a HERS Rating of 65 is more efficient than a 2000ft˛ home with a HERS Rating of 115.

What is an Energy Efficient Mortage?

Energy Efficient Mortgages EEMs

Energy Efficient Mortgages, or EEMs, are lending programs which were developed and are administered by the Federal Housing Administration (FHA), the Veterans Administration (VA) and Freddie Mac, each of which have different requirements and finance limits.

There are two general categories of of EEMS:

  1. To Finance Energy Improvements (Originally called Energy Improvement Mortgages or EIMs)
  2. To Finance the purchase of energy efficient homes

To Finance Energy Improvments

An EEM can be used when purchasing a new home to provide finacing for improvements which will increase the energy efficiency of the home. Some improvements that are eligible for financing are for:

  • Installing Energy Efficient Windows and Doors
  • Upgrading Insulation in Attics, walls, or crawl spaces
  • Replacing outdated Furnacnes and Air Conditioners with Energy Efficient Models
  • Performing Air Sealing Work to Prevent Air Infiltration
  • Performing Duct Sealing Work

The financing for the energy improvements is derived from the monthly energy savings that will be realized by making the improvement. For example, if replacing an old furance will reduce annual utility bill by $1000 each year for 15 years, then the homeowner is eligble for an increased mortgage value equal to the present value of the $1000 annuity over 15 years up to the programs limits to finance the replacement of the furnace. All of the energy savings must be determined through a third party HERS Rater.

What is the Process for Obtaining an EEM?

The Energy Efficient Mortgage process for energy improvements is centered around the HERS Rating and has 5 general steps:

Step 1 - HERS Inspection:

The HERS inspection includes a thourough review of all the home's systems, a blower door test, and a duct leakage test. During the inspection, the rater identifies the most cost effective energy improvements to recommend to the prospective homeowner.

Step 2 - Review of the Findings:

Following the inspection, the rater generates a HERS report which details how much energy the home uses currently, the current HERS Rating score, potential improvements and their potential annual energy savings. The homeowner reviews this information and identifys the improvements that they would like to finance with the EEM.

Step 3 - Quotes from Contractors:

The homeowner must next identify a contractor who will complete the energy improvement work and obtain a quote. This quote is forwarded to the rater who will use it to determine the payback period of the improvements and generate documentation required by the mortgage lender.

Step 4 - Loan Underwriting/Closing:

Using the information generated by the HERS Rater and Contractors, the loan officer sends the mortage to underwriting and sets a date for closing. After closing on the loan, the bank generally holds the funds allocated to pay the contractor for the energy improvement in an escrow account until the work is completed.

Step 5 - Energy Improvement Contracting:

After the mortgage is closed, the contractor completes the energy improvement work. A bank representative or the HERS rater then visits the home to verify the work has been completed and releases the funds to the contractor.

Schedule a HERS Rating

Atlas Home Energy Solutions provides all HERS Rating and inspection services required throughout the EEM process. We also provide a list of recommended lenders, mortgage agents, appraisers, and contractors who have worked through the process in the past.

For more information on EEM's visit RESNET or ENERGY STAR.

"The (Atlas Home Energy) auditor found energy problems in areas of my home that I didn't know we even had! After the inspection they took the time to meet with my husband for over an hour to show us how to fix all of the problems. Throughout the whole process I felt like they truly cared about our home!"

Frank, Martinsburg