Wichita Standard

U.S. Senator Jerry Moran (R-Kan.), ranking member of the Senate Veterans’ Affairs Committee and Senior Appropriations Committee Member, has led a group of colleagues in raising concerns to Department of Veterans Affairs (VA) Secretary Denis McDonough regarding recently adopted energy conservation policies by the Department of Housing and Urban Development (HUD) and the Department of Agriculture (USDA). These policies could potentially impact the cost of VA home loans for veterans.

On April 26, HUD and USDA announced the implementation of the 2021 version of the International Energy Conservation Code (IECC) as the minimum energy efficiency standards for financing new single and multifamily homes.

“If adopted by the Department of Veterans Affairs, we are concerned that the revised standards could negatively affect the availability, affordability, and competitiveness of VA home loans for veterans,” wrote Senators Moran, John Boozman (R-Ark.), James Lankford (R-Okla.), Marsha Blackburn (R-Tenn.), Kevin Cramer (R-N.D.), and Mike Braun (R-Ind.). “Declining to finance any loans for new homes that do not meet these increased requirements, the agencies put accessible homeownership in jeopardy for thousands of veterans. Both rental and housing costs have risen at the fastest rates in decades, and any proposals that raise the cost of home building must be meticulously examined.”

Carl Harris, Chairman of the National Association of Home Builders and Kansan, supported Sen. Moran’s stance. “NAHB commends Sen. Moran for urging the VA Secretary to produce the department’s own analysis on how the 2021 IECC would affect housing affordability and the ability of veterans to obtain VA home loans,” said Harris. “Studies have shown that requiring new construction to adopt to the 2021 IECC can add as much as $31,000 to the price of a new home and that it would require up to 90 years for a home buyer to realize a payback on the added upfront cost of the home. Sen. Moran and the nation’s home builders are concerned that if VA were to adopt the 2021 IECC, it would prevent many of our nation’s veterans from purchasing a new home using a VA home loan.”

The full text of their letter reads:

Dear Secretary McDonough,

We write to raise significant concerns about HUD's and USDA's recently adopted revised energy standards for newly constructed homes insured or guaranteed by their respective Departments.

We are particularly concerned with the impact of implementing these standards on veteran homebuyers. By only financing new homes if they are built to 2021 IECC standards, HUD and USDA describe potential market declines for Federal Housing Administration borrowers' new construction. If adopted by VA, we fear these revised standards could negatively affect VA home loans' availability, affordability, and competitiveness.

Recent estimates indicate even a one thousand dollar increase in home prices would price over one hundred thousand Americans out of housing markets. With mortgage rates around seven percent, prospective homeowners might pay tens of thousands more over a 30-year mortgage due to these standards. HUD's Regulatory Impact Analysis recognizes "lower-income households are less willing than higher-income ones to accept longer payback periods for energy-efficient investments." Declining to finance loans for homes not meeting these requirements jeopardizes accessible homeownership for thousands of veterans.

With rental and housing costs rising rapidly, any proposals increasing building costs must be meticulously examined. Ensuring robust access to VA-financed home loans is our duty. We call your attention to a directive included in Senate’s Fiscal Year 2025 Military Construction and Veterans Affairs Appropriations Committee Report on these revised energy standards and look forward to VA’s evaluation on adoption impacts on veteran homebuyers' costs including loan availability, affordability, and competitiveness.

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