Energy efficient improvements and stronger home features can lower operating expenses for homeowners.
When one of Don Worthington’s neighbors nearly lost her home because of the pressure financing her solar panels put on her budget, her situation sparked more than sympathy. Worthington, division president of Primary Residential Mortgage and Lowtility in Layton, Utah, looked for a solution that combined renewable energy financing and utility costs into a mortgage approval equation.
“Instead of just looking at the amount borrowed, the rate and the loan payments, lenders should be looking at the cost to live somewhere to determine affordability,” Worthington says. “If you have a monthly $3,000 budget all-in for your housing costs, then we should reverse engineer that with your utility costs, renewable energy financing and home insurance payments and figure out your borrowing ability from there.”
The cost of installing green energy-related products such as solar panels, a battery storage unit and triple-pane windows can be offset by the resulting reductions in homeonwer's insurance and utility bills. Credit: iStock/imaginima
When property taxes, utility bills, and homeowner insurance premiums increase, every homeowner is hit regardless of whether they are first-time buyers or have owned their house for decades. Government and nonprofit groups can provide down payment and closing cost assistance to buyers to help them manage the upfront impediments to buying a home. But consumers today also recognize that the long-term operating costs of homeownership are a better measure of affordability than the initial cost to buy.
Those costs include mortgage principal and interest, property taxes, homeowner’s insurance and, for buyers who make a down payment of less than 20 percent, private mortgage insurance (PMI). Other costs include utility bills, maintenance and repairs. In addition, many homeowners pay homeowner association dues.
During the first quarter of 2025, the average list price for a home was $413,700, according to NerdWallet, a personal finance site. With a down payment of 9 percent, which was the average for first-time homebuyers last year, buyers would pay approximately $3,240 annually for their mortgage, insurance, property taxes, and PMI.
But homebuyers who purchase a new energy-efficient home or invest in retrofits that improve a house’s resilience to damage from natural disasters and power outages may be able to lower costs such as utility bills and homeowner’s insurance premiums.
COGNITION Smart Data surveys also found that buyers were willing to invest upfront in multiple features to improve their homes in ways that would generate long-term savings and resilience. The top four features that buyers would pay more for include energy efficiency, electrification, water conservation, and solar power and storage.
Builders, lenders and organizations that provide certifications for homeowners and industry professionals are investing in measures that match the desire for sustainability and resilience to financial advantages.
ENERGY STAR-certified appliances can help overcome higher utility bills. Even a small increase—3 percent—can still greatly impact a household's budget. Credit: iStock/Andresr
Renewable Energy Financing, Long-Term Benefits
Worthington sees renewable energy as a solution that benefits homeowners, their communities and even the banking industry.
“Mortgage servicing companies need to get their borrowers to make on-time payments,” Worthington says. “This is where energy bills intersect with the mortgage industry, because homes with energy-efficient features, solar power and storage, and lower utility bills tend to have better loan performance.”
When utility bills increased by a mere 3 percent, lenders and homeowners often ignored the impact of that increase on homeowner’s budgets, Worthington says. But now that rates are up 18 percent to 35 percent annually, the impact is more visible.
Typically, homeowners get their power through their local utility company or lease solar equipment through a finance company, Worthington says.
"They’ll put a lien on your house, and they have to approve a new borrower if you want to sell the house,” he says. “We lend borrowers money to add solar to their homes as part of their mortgage instead of leasing them. The mortgage payment is a little higher to include the solar costs, but their utility bills will be reduced to balance that out.”
For example, the monthly mortgage payment may go up $100 to cover the solar installation, but the utility bill could drop from $300 to $100 per month for an overall savings of $200. Reducing a monthly utility bill by that amount allows homebuyers or refinancing homeowners to increase their borrowing power by $40,000 to $50,000, Worthington says.
Aside from solar panels and storage, the Lowtility loan program can be used for other energy efficiency improvements, such as a new HVAC system, insulation, ENERGY STAR appliances or geothermal heating systems.
“We’re one of a handful of lenders to include utility costs and the impact of upgrades in our loan underwriting, but we hope others will start to adapt our approach,” Worthington says. “From a long-term usage perspective, these improvements reduce the cost of ownership and make housing more affordable.” Another facet of renewable energy financing that needs improvement is the home appraisal process, Worthington says.
“In August 2024, Fannie Mae and Freddie Mac changed the guidelines so that only solar panels that are owned—not leased—can be considered in the value of the property,” Worthington says. “Appraisers and agents don’t always understand the value of solar power and batteries or other energy efficient features. The value should be based on lower energy bills.”
"Appraisers and agents don't always understand the value of solar power and batteries or other energy efficient features. The value should be based on lower energy bills." - Don Worthington, Division President, Primary Residential Mortgage
Resiliency Enters the Insurance Equation
Insurance companies focus on risk assessments when determining whether they will insure a home, and the premiums they will charge.
“We’ve seen a dramatic change among insurance companies over the past 18 months or so,” says Marshall Gobuty, founder and president of Pearl Homes, a sustainable home developer in Sarasota, Florida. “Some insurance companies used to say they wouldn’t cover solar systems because they might cause roof damage. But we clip our solar panels onto a standing seam roof. Our homes in Florida have been through four major hurricanes now without losing a single solar panel. Insurance companies who understand this are offering lower rates.”
Today, owners of Pearl Homes pay just $1,500 to $1,700 in flood insurance and another $4,500 for general homeowner’s insurance for a $1.5 million home—a very low amount given Florida’s high-risk climate, Gobuty says.
Pearl Homes incorporates numerous resilient and sustainable features in their homes, such as taller footings and more fill to raise homes above the flood zone, additional insulation with 2-by-6 framing and spray foam throughout the floors and walls, and roof strapping that is three times the code requirement. The net zero homes have solar with battery storage, so homeowners kept their lights through back-to-back hurricanes in the fall of 2024.
“We’re getting a patent for the technology we use in our homes. Hopefully, we will see homes built this way across the entire country,” Gobuty says. “The infrastructure of a home is an important piece of this, especially in areas prone to floods where you need to raise the fill and garage, or areas with high winds where you need to provide extra strapping on the roof.”
Insurance companies need to be educated about these resilience features, he notes.
“In Florida, it’s pretty easy to see the black and white of what happens when you harden homes and elevate them, so insurance companies are more willing to give discounts to homeowners based on those features,” Gobuty says. “It’s the role of builders to demonstrate and explain to insurance companies what they’re doing and how their homes have performed during natural disasters to help them see the risk reduction benefits and lower costs for buyers.”
In addition, Gobuty says that builders need to educate consumers, appraisers and lenders about the impact of resilient features, as well as the reduction in utility costs associated with homes with a lower HERS rating.
A program like one from Global Network for Zero calls for an assessment of a building and then provides an outline of how the structure can be improved. Credit: iStock/thankyouforyourassistant
Certification to Simplify Data Collection
While builders have an array of green certifications and ratings systems such as HERS and Energy Star to prove to insurance companies, lenders and appraisers about the existence and value of sustainable and resilient features, until recently it was harder for homeowners to access data and details on retrofits.
“When we first started, Pearl was focused on the problem that people were making considerable investments in their house, for efficiency, for renewables, and potentially for resilience, and they weren’t seeing any benefit from that in the form of an increased equity value,” says Cynthia Adams, CEO and co-founder of Pearl, a home performance rating organization. “The reason was that most of the things that they were doing were kind of invisible. It wasn’t about aesthetics such as granite counters as much as it was about performance and durability.”
Pearl’s first product was a certification system with a score that focused on energy efficiency and solar power. Now, Pearl’s score considers wellness, with the acronym SCORE for safety, comfort, operations, resilience and energy.
“Our SCORE is applicable for existing homes and new construction,” Adams says. “If you score above a certain amount, we can document the features that you have in your home and you can earn a certification. We want to embed the Pearl SCORE into the resale transaction to provide greater transparency for buyers.”
SCORE can serve as a blueprint for home improvement, to help buyers make cost effective improvements that benefit their family’s quality of life in multiple dimensions. Pearl is developing a database of 88 million homes for a robust system to check on the improvements of existing homes.
“We also have an app that consumers can interact with and upload photos and documents that verify their improvements and update their score,” Adams says. “This keeps homeowners in control and eliminates the need to hire a separate contractor to verify their improvements.”
Homeowners can issue a home performance report with features, model numbers and performance characteristics that can be given to an appraiser to demonstrate contributions to home values, Adams says.
“We’ve done studies that show a 3 to 5.5 percent price premium for high performance homes,” Adams says.
Adams hopes that Pearl’s registry and Pearl SCOREs will eventually be used by insurance companies to document reduced claims on homes that have resilient improvements.
“They already recognize the value of leak detectors and provide discounts, so we expect them to see the importance of de-risking homes in other ways,” Adams says. “Homeowners can document steps they take such as adding gutter guards that stop debris that could cause other damage, for example. On the flip side, insurance companies can also penalize homeowners with higher rates who don’t take steps to mitigate risk.”
Resilient and sustainable features such as taller footings and more fill to raise homes above the flood zone—found in dwellings built by Pearl Homes—can reduce home and flood insurance costs. Credit: Pearl Homes
Retrofitting for Resilience and Affordability
The National Institute of Building Sciences estimates that every $1 invested in private sector building mitigation retrofits could reduce the cost of future losses by $4. But homeowners who make improvements for resiliency and sustainability don’t always see the return on their investment in appraised value and insurance discounts. The Global Network for Zero generated a certification for residential buildings that applies to existing homes.
“There’s been a big focus on new construction and commercial buildings in terms of getting to net zero, but the lack of initial focus on existing residential buildings was a missed opportunity,” says Mahesh Ramanujam, CEO and co-founder of Global Network for Zero, and former president and CEO of the U.S. Green Building Council. “We’re highly focused now on net zero energy, net zero emissions, net zero water and net zero waste for existing homes.”
The Global Network for Zero’s program starts with an assessment of a building and outlines a plan of how a building can be improved.
“It’s like looking at a credit report and coming up with a two-to-five-year improvement plan,” Ramanujam says. “Then, we want to make sure that people get credit for whatever progress they make.”
Since lenders often own 80 percent of a home, Ramanujam believes they should offer incentives for homeowners to make progress towards achieving net zero. “Lenders could offer a reduction in interest rates to compensate for the upfront costs of retrofits,” Ramanujam says. “Insurance companies could offer discounts, and I think governments could offer property tax breaks to homeowners who have invested in retrofits since everyone benefits from them."
“Everybody wants to do green,” Ramanujam adds. “We just need to show them they can all save money. We need to show them the green.”
Efficient, Strong Homes: A Question of Cost
Energy efficient improvements and stronger home features can lower operating expenses for homeowners.
When one of Don Worthington’s neighbors nearly lost her home because of the pressure financing her solar panels put on her budget, her situation sparked more than sympathy. Worthington, division president of Primary Residential Mortgage and Lowtility in Layton, Utah, looked for a solution that combined renewable energy financing and utility costs into a mortgage approval equation.
“Instead of just looking at the amount borrowed, the rate and the loan payments, lenders should be looking at the cost to live somewhere to determine affordability,” Worthington says. “If you have a monthly $3,000 budget all-in for your housing costs, then we should reverse engineer that with your utility costs, renewable energy financing and home insurance payments and figure out your borrowing ability from there.”
The cost of installing green energy-related products such as solar panels, a battery storage unit and triple-pane windows can be offset by the resulting reductions in homeonwer's insurance and utility bills. Credit: iStock/imaginima
When property taxes, utility bills, and homeowner insurance premiums increase, every homeowner is hit regardless of whether they are first-time buyers or have owned their house for decades. Government and nonprofit groups can provide down payment and closing cost assistance to buyers to help them manage the upfront impediments to buying a home. But consumers today also recognize that the long-term operating costs of homeownership are a better measure of affordability than the initial cost to buy.
Those costs include mortgage principal and interest, property taxes, homeowner’s insurance and, for buyers who make a down payment of less than 20 percent, private mortgage insurance (PMI). Other costs include utility bills, maintenance and repairs. In addition, many homeowners pay homeowner association dues.
During the first quarter of 2025, the average list price for a home was $413,700, according to NerdWallet, a personal finance site. With a down payment of 9 percent, which was the average for first-time homebuyers last year, buyers would pay approximately $3,240 annually for their mortgage, insurance, property taxes, and PMI.
But homebuyers who purchase a new energy-efficient home or invest in retrofits that improve a house’s resilience to damage from natural disasters and power outages may be able to lower costs such as utility bills and homeowner’s insurance premiums.
A recent Green Builder Media COGNITION Smart Data survey found that across all generations, homebuyers are now more focused on long-term operating costs than they are on upfront cost to buy a home.
COGNITION Smart Data surveys also found that buyers were willing to invest upfront in multiple features to improve their homes in ways that would generate long-term savings and resilience. The top four features that buyers would pay more for include energy efficiency, electrification, water conservation, and solar power and storage.
Builders, lenders and organizations that provide certifications for homeowners and industry professionals are investing in measures that match the desire for sustainability and resilience to financial advantages.
ENERGY STAR-certified appliances can help overcome higher utility bills. Even a small increase—3 percent—can still greatly impact a household's budget. Credit: iStock/Andresr
Renewable Energy Financing, Long-Term Benefits
Worthington sees renewable energy as a solution that benefits homeowners, their communities and even the banking industry.
“Mortgage servicing companies need to get their borrowers to make on-time payments,” Worthington says. “This is where energy bills intersect with the mortgage industry, because homes with energy-efficient features, solar power and storage, and lower utility bills tend to have better loan performance.”
When utility bills increased by a mere 3 percent, lenders and homeowners often ignored the impact of that increase on homeowner’s budgets, Worthington says. But now that rates are up 18 percent to 35 percent annually, the impact is more visible.
Typically, homeowners get their power through their local utility company or lease solar equipment through a finance company, Worthington says.
"They’ll put a lien on your house, and they have to approve a new borrower if you want to sell the house,” he says. “We lend borrowers money to add solar to their homes as part of their mortgage instead of leasing them. The mortgage payment is a little higher to include the solar costs, but their utility bills will be reduced to balance that out.”
For example, the monthly mortgage payment may go up $100 to cover the solar installation, but the utility bill could drop from $300 to $100 per month for an overall savings of $200. Reducing a monthly utility bill by that amount allows homebuyers or refinancing homeowners to increase their borrowing power by $40,000 to $50,000, Worthington says.
Aside from solar panels and storage, the Lowtility loan program can be used for other energy efficiency improvements, such as a new HVAC system, insulation, ENERGY STAR appliances or geothermal heating systems.
“We’re one of a handful of lenders to include utility costs and the impact of upgrades in our loan underwriting, but we hope others will start to adapt our approach,” Worthington says. “From a long-term usage perspective, these improvements reduce the cost of ownership and make housing more affordable.”
Another facet of renewable energy financing that needs improvement is the home appraisal process, Worthington says.
“In August 2024, Fannie Mae and Freddie Mac changed the guidelines so that only solar panels that are owned—not leased—can be considered in the value of the property,” Worthington says. “Appraisers and agents don’t always understand the value of solar power and batteries or other energy efficient features. The value should be based on lower energy bills.”
"Appraisers and agents don't always understand the value of solar power and batteries or other energy efficient features. The value should be based on lower energy bills." - Don Worthington, Division President, Primary Residential Mortgage
Resiliency Enters the Insurance Equation
Insurance companies focus on risk assessments when determining whether they will insure a home, and the premiums they will charge.
“We’ve seen a dramatic change among insurance companies over the past 18 months or so,” says Marshall Gobuty, founder and president of Pearl Homes, a sustainable home developer in Sarasota, Florida. “Some insurance companies used to say they wouldn’t cover solar systems because they might cause roof damage. But we clip our solar panels onto a standing seam roof. Our homes in Florida have been through four major hurricanes now without losing a single solar panel. Insurance companies who understand this are offering lower rates.”
Today, owners of Pearl Homes pay just $1,500 to $1,700 in flood insurance and another $4,500 for general homeowner’s insurance for a $1.5 million home—a very low amount given Florida’s high-risk climate, Gobuty says.
Pearl Homes incorporates numerous resilient and sustainable features in their homes, such as taller footings and more fill to raise homes above the flood zone, additional insulation with 2-by-6 framing and spray foam throughout the floors and walls, and roof strapping that is three times the code requirement. The net zero homes have solar with battery storage, so homeowners kept their lights through back-to-back hurricanes in the fall of 2024.
“We’re getting a patent for the technology we use in our homes. Hopefully, we will see homes built this way across the entire country,” Gobuty says. “The infrastructure of a home is an important piece of this, especially in areas prone to floods where you need to raise the fill and garage, or areas with high winds where you need to provide extra strapping on the roof.”
Insurance companies need to be educated about these resilience features, he notes.
“In Florida, it’s pretty easy to see the black and white of what happens when you harden homes and elevate them, so insurance companies are more willing to give discounts to homeowners based on those features,” Gobuty says. “It’s the role of builders to demonstrate and explain to insurance companies what they’re doing and how their homes have performed during natural disasters to help them see the risk reduction benefits and lower costs for buyers.”
In addition, Gobuty says that builders need to educate consumers, appraisers and lenders about the impact of resilient features, as well as the reduction in utility costs associated with homes with a lower HERS rating.
A program like one from Global Network for Zero calls for an assessment of a building and then provides an outline of how the structure can be improved. Credit: iStock/thankyouforyourassistant
Certification to Simplify Data Collection
While builders have an array of green certifications and ratings systems such as HERS and Energy Star to prove to insurance companies, lenders and appraisers about the existence and value of sustainable and resilient features, until recently it was harder for homeowners to access data and details on retrofits.
“When we first started, Pearl was focused on the problem that people were making considerable investments in their house, for efficiency, for renewables, and potentially for resilience, and they weren’t seeing any benefit from that in the form of an increased equity value,” says Cynthia Adams, CEO and co-founder of Pearl, a home performance rating organization. “The reason was that most of the things that they were doing were kind of invisible. It wasn’t about aesthetics such as granite counters as much as it was about performance and durability.”
Pearl’s first product was a certification system with a score that focused on energy efficiency and solar power. Now, Pearl’s score considers wellness, with the acronym SCORE for safety, comfort, operations, resilience and energy.
“Our SCORE is applicable for existing homes and new construction,” Adams says. “If you score above a certain amount, we can document the features that you have in your home and you can earn a certification. We want to embed the Pearl SCORE into the resale transaction to provide greater transparency for buyers.”
SCORE can serve as a blueprint for home improvement, to help buyers make cost effective improvements that benefit their family’s quality of life in multiple dimensions. Pearl is developing a database of 88 million homes for a robust system to check on the improvements of existing homes.
“We also have an app that consumers can interact with and upload photos and documents that verify their improvements and update their score,” Adams says. “This keeps homeowners in control and eliminates the need to hire a separate contractor to verify their improvements.”
Homeowners can issue a home performance report with features, model numbers and performance characteristics that can be given to an appraiser to demonstrate contributions to home values, Adams says.
“We’ve done studies that show a 3 to 5.5 percent price premium for high performance homes,” Adams says.
Adams hopes that Pearl’s registry and Pearl SCOREs will eventually be used by insurance companies to document reduced claims on homes that have resilient improvements.
“They already recognize the value of leak detectors and provide discounts, so we expect them to see the importance of de-risking homes in other ways,” Adams says. “Homeowners can document steps they take such as adding gutter guards that stop debris that could cause other damage, for example. On the flip side, insurance companies can also penalize homeowners with higher rates who don’t take steps to mitigate risk.”
Resilient and sustainable features such as taller footings and more fill to raise homes above the flood zone—found in dwellings built by Pearl Homes—can reduce home and flood insurance costs. Credit: Pearl Homes
Retrofitting for Resilience and Affordability
The National Institute of Building Sciences estimates that every $1 invested in private sector building mitigation retrofits could reduce the cost of future losses by $4. But homeowners who make improvements for resiliency and sustainability don’t always see the return on their investment in appraised value and insurance discounts. The Global Network for Zero generated a certification for residential buildings that applies to existing homes.
“There’s been a big focus on new construction and commercial buildings in terms of getting to net zero, but the lack of initial focus on existing residential buildings was a missed opportunity,” says Mahesh Ramanujam, CEO and co-founder of Global Network for Zero, and former president and CEO of the U.S. Green Building Council. “We’re highly focused now on net zero energy, net zero emissions, net zero water and net zero waste for existing homes.”
The Global Network for Zero’s program starts with an assessment of a building and outlines a plan of how a building can be improved.
“It’s like looking at a credit report and coming up with a two-to-five-year improvement plan,” Ramanujam says. “Then, we want to make sure that people get credit for whatever progress they make.”
Since lenders often own 80 percent of a home, Ramanujam believes they should offer incentives for homeowners to make progress towards achieving net zero.
“Lenders could offer a reduction in interest rates to compensate for the upfront costs of retrofits,” Ramanujam says. “Insurance companies could offer discounts, and I think governments could offer property tax breaks to homeowners who have invested in retrofits since everyone benefits from them."
“Everybody wants to do green,” Ramanujam adds. “We just need to show them they can all save money. We need to show them the green.”
Publisher’s Note: This content is made possible by our Today’s Homeowner Campaign Sponsors: Whirlpool Corporation. Whirlpool Corporation takes sustainability seriously, in both their products and their operations. Learn more about building and buying homes that are more affordable and less resource intensive.
By Michele Lerner, Associate Editor
Michele Lerner is an award-winning freelance writer, editor, and author who writes about real estate, personal finance, and business.Also Read