Location-Efficient and Energy-Efficient Mortgages

Communities and local banks can work together to develop creative mortgage programs to make homeownership more affordable, while addressing energy conservation, nodal development and transit issues. Location-efficient mortgages reward homebuyers and businesses for purchasing property in pedestrian-oriented, mixed-use developments (or near central business districts) on the premise that they will not have the expense of vehicle ownership, and will thus qualify for larger loans at better terms. These mortgages can attract residents and businesses to mixed-use areas, while promoting walkability, transit use, and downtown revitalization.

Energy-efficient mortgages allow homeowners to finance the cost of adding energy-efficiency features to their home, so that they can pay for the weatherization improvements over time, but start to see lower energy costs right away. This can result in more homeownership, better property maintenance (since less money will be going to monthly energy costs), and less pollution due to energy generation.

One example of an efficient mortgage program is the U.S. Department of Housing and Urban Development's Energy Efficient Mortgage Program, which encourages lenders to make mortgage credit available to borrowers who would not otherwise qualify for conventional loans on affordable terms (such as first-time homebuyers) and to residents of disadvantaged neighborhoods (where mortgages may be hard to get).