VA Loan Requirements for Solar Panels

Solar panels are a cost-effective investment that can reduce your electricity bills, increase property value, and give you access to attractive tax incentives. If you’re a military borrower, you may be wondering if you can use VA financing to purchase solar panels for your home. Below, we’ve discussed VA loan requirements surrounding this matter in detail.

Can I Use a VA Loan to Buy Solar Panels?

We want to be clear: the VA will not pay for you to purchase solar panels alone. However, you can apply for a VA EEM (Energy Efficient Mortgage) which you can use to make energy-efficient upgrades such as solar panels. This is a loan taken out in conjunction with a VA purchase loan for an existing home or VA Refinance Loan.

Here are some common types of improvements that can be financed through a VA EEM:

Solar heating and cooling systems installation
Energy-efficient HVAC system upgrades
Water heater replacement with energy-efficient models
Energy-efficient windows and doors replacement
Adding or upgrading home insulation
Weatherization through sealing leaks and drafts
Purchasing energy-efficient appliances
Switching to energy-efficient lighting
Installing programmable or smart thermostats
Installing cool roofs to reflect sunlight and reduce heat absorption

Applying for a VA EEM

Applying for a VA Energy Efficient Mortgage (EEM) involves steps similar to any basic VA loan application, with the addition of energy efficiency considerations. Here’s a more detailed look at the process and VA loan requirements:

Verify Income and Employment: Provide a copy of your W-2 statements, pay stubs, and employment history for the last two years to verify your income and job status.
Credit Review: Undergo a review of your credit score and history to assess your creditworthiness.
Energy Audit Requirement: Obtain a Home Energy Rating System (HERS) report. This can be done through utility companies or private auditors. The purpose of a HERS report is to show potential energy consumption reduction and monthly savings from the improvements you’ll be making, such as adding solar panels.
Document Improvement Costs: Document the expense of planned improvements, either through formal contractor bids or a personal worksheet listing the improvements and their costs.
Submit Loan Application: Include the standard VA loan application materials along with your energy audit report and documented improvement costs.
Application Review: The total cost of your energy efficiency projects will be considered during the review process to evaluate the loan’s feasibility and the impact of the improvements.