GreenCHOICE Mortgage®: What It Is, And How It Works

Written by Ashley FranklinUpdated: 9th Mar 2022
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If you’re like most people, you want to do everything you can to protect the environment. So, you recycle, you try to carpool when you can, and maybe even have a few solar panels on your roof.

But what about your home mortgage? Believe it or not, there’s a mortgage available that helps you go green – and it’s called the GreenCHOICE Mortgage®.

Keep reading to find out more about this unique financing option and how it could help you save money and improve your eco-footprint.

What Are Freddie Mac GreenCHOICE Mortgages®?

Freddie Mac GreenCHOICE Mortgages® are mortgages that allow you to make green improvements to your home that will conserve energy or reduce your environmental impact.

Theseenergy-efficient mortgages offer financing for a variety of green home improvements, including solar panels, energy-efficient appliances, and water conservation measures.

The best part? You can still take advantage of all the tax benefits and incentives available for green home improvements.

Plus, you can qualify for a Freddie Mac GreenCHOICE Mortgage® even if you don’t have perfect credit.

>> More: Best Home Improvement Loans

How Do GreenCHOICE Mortgages® Work?

GreenCHOICE Mortgages® work just like regular mortgages– you can use them to buy a new home, refinance your current mortgage, or even tap into yourhome equity.

The only difference is that the money you borrow must be used for green improvements, like adding insulation or installing solar panels.

There are a few different ways to get a Freddie Mac GreenCHOICE Mortgage®.

One option is torefinance your current mortgageand use the proceeds to make green improvements.

You can also get a GreenCHOICE Mortgage® when you buy a new home or if you want to tap into your home equity to make green improvements.

GreenCHOICE Mortgage® Features and Requirements

There are a few important features to look for when choosing a GreenCHOICE Mortgage®:

  • Borrow up to 15% of your home’s completed value
  • Reduce energy consumption
  • Increase your home’s value
  • You may use it for new or existing homes

There are also a few basic qualifications to keep in mind:

  • The home must be your primary residence
  • The property must be located in the United States
  • You must meet Freddie Mac’s eligibility criteria


For your property to be eligible for this program, you must obtain an interior and exterior inspection appraisal from a qualified appraiser. The value on these inspections should also correctly reflect current market values.

Energy Reports

An energy report identifies how much energy your home consumes and offers ways to conserve energy and save money.

The seller must have an acceptable energy report, including either a Home Energy Rating Systems report or Department of Energy Home Energy Score Report.

However, if the energy improvements do not exceed $6500, a report is not required.

Energy and Water Efficiency Improvements

Energy and water efficiency improvements are the only types of home improvements allowed under the GreenCHOICE Mortgage® program. These improvements must meet specific requirements to qualify:

  • The improvement must be permanently installed
  • The improvement must be for the primary purpose of conserving energy or water
  • The improvement should have a significant impact on energy or water savings
  • The improvement needs to meet all applicable codes and regulations

Eligible Mortgages

Other Freddie Mac fixed, and adjustable-rate mortgages qualify for the GreenCHOICE Mortgage® program, such as:

  • 30-year fixed-rate mortgage
  • 15-year fixed-rate mortgage
  • 5/1 ARM

Maximum Available Energy Financing

The maximum available energy financing will depend upon the value of the home you are purchasing or refinancing. The maximum amount available for financing will be 15% of the home’s completed value.

Maximum LTV Ratios

An LTV (loan to value) ratio is the maximum percentage of the home’s value that you can finance. The GreenCHOICE Mortgage® program has a maximum LTV ratio of 97%.

Property Type

Eligible property types for the program include:

  • Single-family homes
  • 1-4 unit multi-family properties
  • Condos
  • Coops
  • Manufactured homes

Bottom Line: GreenCHOICE Mortgage®

If you’re looking for a way to make your home more energy-efficient, the Freddie Mac GreenCHOICE Mortgage® program may be perfect for you.

This unique mortgage offers tax benefits and incentives, as well as a way to increase your home’s value. However, keep in mind that there are some specific qualification requirements and that not all improvements are eligible.

GreenCHOICE Mortgage® is available for new and existing homes. To find out if you qualify and learn more about this program’s benefits, contact a qualified lender today.

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Ashley Franklin
Ashley Franklin

Ashley Franklin is a professional writer and financial literacy expert. Ashley double-majored in Computer Science and Communications, and she brings her talents to the forefront with writing about personal finance and investing. Having worked with renowned international websites and publications, Ashley has found that there’s no one-size-fits-all solution to financial management. That’s why her articles are all about finding what works for you.