FHA Energy Efficient Mortgage

What is an FHA Energy Efficient Mortgage?

FHA Energy Efficient Mortgage Program

Are you looking for a loan program that will allow you to make your home more energy efficient? The FHA Energy Efficient Mortgage may be the program you’re looking for.

This program provides mortgage insurance for you to purchase or refinance a principal residence and incorporate the cost of energy efficient improvements into the mortgage. A lending institution, such as a mortgage company, bank, savings and loan association, funds the mortgage loan and HUD insures the mortgage.

It helps current or potential homeowners significantly lower their monthly utility bills by enabling them to incorporate the cost of adding energy efficient improvements into their new home or existing housing. This FHA program eliminates the need for homeowners who are interested in making their home more energy efficient to take out an additional mortgage loan to cover the cost of the improvements they intend to make to their property. The program is available as part of a FHA insured home purchase or by refinancing your current mortgage loan.

The FHA Energy Efficient Mortgage Loan program provides better energy efficient housing and creates a way for homeowners to make valuable improvements to their homes at a relatively low cost.

How does it work?

Through this and other types of mortgage insurance programs, FHA helps low and moderate-income families purchase homes by keeping the initial costs down. By serving as an umbrella under which lenders have the confidence to extend loans to those who may not meet conventional loan requirements, FHA mortgage insurance allows individuals to qualify who may have been previously denied for a home loan by conventional underwriting guidelines. It also protects lenders against loan default on mortgages for properties that include manufactured homes, single-family and multifamily properties, and some health-related facilities.

What are the eligibility requirements?

Anyone who meets the income requirements for FHA's Section 203(b) and is able to make the monthly mortgage payments.

You are eligible for approximately 97% financing. You are able to finance closing costs and the up front mortgage insurance premium into the mortgage. You are also responsible for paying an annual premium.

Eligible properties are one to two existing units and new construction.

The cost of the energy efficient improvements that may be eligible for financing into the mortgage is the greater of 5% percent of the property's value (not to exceed $8,000) or $4,000.

To be eligible for inclusion in the mortgage, the energy efficient improvements must be cost effective, meaning that the total cost of the improvements is less than the total present value of the energy saved over the useful life of the energy improvement.

The cost of the energy improvements and estimate of the energy savings must be determined by a home energy rating system (HERS) or energy consultant. Up to $200 of the cost of the energy inspection report may be included in the mortgage.

Can I use this with the Section 203(k) Program?

The FHA Energy Efficient Mortgage can also be used with FHA’s Section 203(k) rehabilitation program; in this case the Energy Efficient Mortgage generally follows the Section 203(k) rehabilitation program's financing guidelines.

If you have any questions on the FHA Energy Efficient Mortgage , just fill out the contact me form and I will be happy to answer them.

If this type of FHA mortgage program fits your needs and you are ready to see if you qualify, fill out the online application and your process will begin.

By clicking on the above link, you'll be taken to our secure online quick loan application form.

After you fill out the form, you'll be taken to a page with a list of documents that you'll need to gather.

Please be sure to print out this page! Then you're on the way to finding the best home loan available to fit your needs.

________________________________________________________________

Return from What is an FHA Energy Efficient Mortgage?, to First Time Home Buyer Solutions home page.