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Self-Help Builder Newsletter June 2013 Volume 6, Issue # 2 >
Dissecting energy efficiency as a compensating factor
By Art Seavey, RCAC rural development
specialist-housing
A recent U.S. Department of Agriculture (USDA) Rural
Development Administrative Notice (AN) provided guidance on the compensating
factor consideration of new homes constructed under specific energy efficiency
programs. The AN states: “A new home
built to exceed the prevailing International Energy Conservation Code (IECC)
results in greater energy efficiency and significantly lowers the homeowner’s
utility costs.” This indicates “that a 502 borrower may be able to make
larger loan payments than the ratio analysis suggestions.”
Homes built under the following programs result in 30
percent energy savings in comparison to typical homes and may qualify for an
additional 2 percent ratio increase as a compensating factor:
- Energy Star for New Homes (EPA)
- Challenge Home (DOE)
- Leadership in Energy and Environmental Design
(LEED) (U.S. Green Building Council)
- ISO 700 National Green Building Standard (National
Association of Home Builders)
- Green Communities (Enterprise Community
Partners)
The general intent of
the AN to exceed the IECC energy standards, the home must be built to be at
least 15 percent more efficient than the IECC that was adopted by the state.
Local municipalities
can create their own energy standards or they may adopt a version of the IECC.
Almost all states have adopted or plan to adopt a version of the IECC. Most
states use the 2006 version of the IECC, others use the 2009 version, and a few
use the 2012 version.
The most common energy
efficient programs are Energy Star and Challenge Home. All Challenge Homes are
Energy Star homes, but all Energy Star homes do not qualify as Challenge Homes.
Challenge Homes have mandatory building tightness testing that requires air
infiltration to be limited to only half of what an Energy Star Version 3 home
requires. The National Energy Star requirements can be found at: http://www.energystar.gov/ia/partners/bldrs_lenders_raters/ES_Combined_Path_v_65_clean_508.pdf and are determined by climate.
Challenge Homes require
construction to be more energy efficient/sustainable than an Energy Star home
in each of the following categories: comfort/quiet; healthy environment;
enhanced durability; advanced technology; quality construction and energy
efficiency. A Challenge Home has
requirements for increased insulation; ducts must be inside conditioned space;
and efficient hot water distribution beyond what Energy Star requires. In each
of these categories, a Challenge Home is striving to be 17 to 47 percent more
efficient than an Energy Star home.
First analysis shows it is more
costly to build a Challenge Home than an Energy Star compliant home. If your
participating households are struggling to qualify for loan funds, Energy Star
remains the better option to build an energy efficient home for your clients.
In the next newsletter’s energy
article, we will discuss other optional standards that can be considered as a
compensating factor.
Citations: DOE
Challenge Home Label Methodology, October 2012