Home Energy Ratings: A Primer

Energy is a vital issue in terms of affordable housing. Heating and cooling a home is the largest cost of housing after the monthly rent or mortgage payment. Lower income Americans spend a disproportionate share of their incomes on energy. Not only do they have less disposable income to spend, their energy costs are all too often multiplied by their substandard housing which is cold, drafty and expensive to heat.

Making the nation’s housing stock more energy efficient has many potential benefits: safe, healthy, comfortable, and affordable housing for all Americans; reduction of the nation’s dependence on imported oil; and decreased production of carbon emissions aiding the environment. In the past few years, cost-effective, energy efficiency technologies have made dramatic progress. In a recent report, the Congressional Office of Technology Assessment estimated that the growing consumption of energy nationwide could be reduced by a third just by using commercially available, cost-effective technologies. The annual savings for consumers? More than $34 billion!

Despite this dramatic potential, energy efficiency programs across the nation are being scaled down, a result of state and federal government budget constraints and the competitive cost-cutting by utilities. However, the mortgage mortgage industry is very interested in developing financing packages which allow buyers to upgrade the energy efficiency of their homes through their mortgage loans. For these programs to succeed, however, a standardized system of measuring the relative energy efficiency of a home and quantitative means of recommending energy improvements is needed -- a home energy rating, to be precise.

This primer, developed by the Residential Energy Services Network (RESNET) with funding from the U.S. Department of Energy, is written as a guide to understanding home energy rating systems and energy mortgages, as well as, their potential uses.

RESNET is a network of mortgage lenders and other housing and residential energy efficiency professionals. RESNET’s mission is to qualify more families for home ownership and improve the energy efficiency of the nation’s housing stock through expanding the availability of mortgage finance options and home energy ratings. RESNET is working with the mortgage industry to develop a national market for home energy ratings and energy mortgages.