Description

The U.S. Department of Housing and Urban Development (HUD) provides mortgage and loan insurance through the Federal Housing Administration (FHA). One FHA program is the Energy Efficient Mortgages Program (EEM). FHA insures mortgage loans so that first-time home buyers and residents of disadvantaged neighborhoods can obtain funding to help finance the cost of adding energy-efficiency features to new or existing homes. The FHA does not provide loan money to individuals. Instead, all loans are made through FHA-approved lending institutions-which include many banks, savings and loan associations, and mortgage companies. Applications are submitted to the local HUD Field Office through an FHA-approved lending institution. HUD’s homepage offers a searchable list of approved lenders.

EEM can be used to finance photovoltaics, solar water and space heating, and energy efficiency. Several FHA programs are eligible for the EEM, including the FHA Section 203 (b), (h) and (k) Programs and the Title 1 Home Improvement Loan Program. The cost of the energy improvements and estimate of the energy savings must be determined by a home energy rating system (HERS) or an energy consultant. Up to $200 of the cost of an energy inspection report may be included in the mortgage. Cooperative units are not eligible; individual condominium units may be insured if they are in projects that have been approved by FHA or the Department of Veterans Affairs, or meet certain Fannie Mae guidelines.

EEM is authorized under Section 513 of the Housing and Community Development Act of 1992. Program regulations are in Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family Properties (HUD Handbook 4155.1), paragraph 2-20. This and other FHA programs are administered by the Office of Single-Family Housing in HUD’s Office of Housing-Federal Housing Administration.