Lenders are the latest group to jump on the environmental-marketing bandwagon by pitching mortgage products that offer homebuyers bigger loans or discounts if they are making energy-efficient improvements -- or if their new home meets certain efficiency standards… While energy-efficient mortgages have been available from many lenders for some time, they are receiving renewed attention. They allow borrowers to qualify for bigger loans because lenders permit the estimated savings on utility bills to be added to the borrower's qualifying income.

For example, energy-efficient improvements could save a homeowner $50 a month. The $600 extra a year could allow a person to borrow about $10,000 more on a 30-year mortgage, depending on the interest rate... The energy-efficient products are structured like traditional adjustable or fixed-rate mortgages, yet they incorporate the cost of energy-efficient improvements, such as insulation, windows and cooling systems, into a mortgage so customers can pay these costs over the life of the loan... Even though they can save homeowners some money, the mortgages typically haven't generated much interest for several reasons. In the housing frenzy of recent years, the products were rarely marketed, and many consumers didn't know they were available. Meanwhile, an inspection of the home can add several days and extra layers of paperwork to the process.

Also, some lenders say that the monthly savings weren't enough to get buyers interested, which is why some banks have been adding incentives such as the $1,000 in closing-cost savings.