FHA Energy Efficient Mortgage Loans

The Energy Efficient Mortgages Program (EEM) helps home buyers or home owners save money on utility bills by enabling them to finance the cost of adding energy-efficiency features to new or existing housing as part of their home purchase or FHA refinance.

Borrowers who apply for the 203(b) home loan, 203(k) rehabilitation program, or 203(h) disaster relief program may qualify for the EEM improvements. The cost of the energy improvements that may be eligible for financing is either 5% of the property's value (not to exceed $8,000) or $4,000--whichever is greater. 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 an energy consultant. Up to $200 of the cost of an energy inspection report may be included in the mortgage. All applications must be submitted to the local HUD office through an FHA approved lender.  

For more information, the Department of Energy and HUD have published DOE/HUD Initiative on Energy Efficiency in Housing: A Federal Partnership, Program Summary Report, which is available at 1-800-483-2209.