Guest Post: Funding a Greener Home by author Jonah Trenton (via http://greenbuildingelements.com
Improving a home’s energy efficiency or adding alternative green energy sources is a smart way to help the environment, reduce monthly utility expenses and enhance occupant health and comfort. However, the initial cost of “going green” can put a financial strain on the homeowner, especially in a down economy. How can individuals fund their “green” home improvement projects? Consider the following tips.
Apply for a Grant
Homeowners do not directly receive federal assistance for green home improvement projects. However, the United States government allocates grant money through the U.S. Department of Energy, the U.S. Department of Housing and Urban Development, the Veterans’ Affairs Agency and the U.S. Department of Agriculture’s Rural Development. These organizations make the funds available through grants distributed by state organizations to qualifying homeowners.
Depending on the particular grant, funding may cover all or part of the green project. Qualifications vary depending on the organization. Common parameters include low to moderate income, age, veteran’s status, disability status or family dynamic, such as being a single mother. The Municipal Research and Services Center of Washington maintains a list of all grant opportunities, including government and private resources. Grants.gov is another valuable resource to see what grants you may qualify to receive.
Ask Your Utility Company
On a local level, many utility companies partner with local governments to provide grants that encourage customers to utilize greener resources weatherize their homes or install energy efficient appliances. Power companies may also use grant money to provide energy audits and education for customers. Homeowners can check the website of their local municipality or utility company to see what opportunities are available in their area.
Get Help from Private Organizations
Many foundations and nonprofit organizations give back to the community by offering green grants. The Home Depot Foundation funds nonprofit organizations that provide green assistance to low to moderate income families. United Way also offers funding based on household income. Check with housing organizations in your area to find out what is offered.
Apply for an Energy Efficient Mortgage
Banks have made it easier for borrowers to include the cost of energy efficiency in their mortgage as opposed to having large out-of-pocket expenses after the purchase of a home. Energy Efficient Mortgages are typically used for new homes. The buyer is credited for the home’s energy efficiency, allowing the bank to be flexible regarding the debt-to-income qualifying ratio. Thus, the buyer is able to qualify for a larger loan and purchase a more energy-efficient home. Similarly, Energy Improvement Mortgages are used when purchasing a pre-existing home that needs green improvements. Buyers are able to borrow a larger amount without increasing their down payment.
Utilize Income Tax Credits
Homeowners that install qualifying renewable energy or energy efficient systems in their home are able to deduct a certain amount from their income tax. Tax-payers can claim 30 percent of the cost of labor and installation and up to $1,500 spent on equipment, including energy efficient air conditioners, furnaces, water heaters or construction materials.
Research Local Tax Credits
Many states and municipalities offer incentives to encourage homeowners to upgrade to renewable energy sources. For example, California will allow individuals to deduct the entire cost of installing a solar energy system from their property taxes. Dual-use systems receive a 75 percent deduction.
Making a home greener is an ecologically smart choice. Taking the time to research available funding sources for your demographic can make it a financially smart choice as well.
Other options
If none of the above options work out, there’s still an abundance of home improvement or renovation loans, taking out equity in your house or various other mortgage types that might work for you even if they aren’t directly catered to greener living. Speak with your mortgage professional to find a solution created to fit your particular situation.