FHA (Federal Housing Administration) has an Energy Efficient Mortgage program (EEM) that was put into place to help homeowners cut costs on their electric bills.
With this program, they are allowed to finance the costs of adding energy efficient features to their homes. This is specifically for homes that were financed under FHA.
Energy Efficient Mortgage Program (EEM)
This is good news for many homeowners, as well as potential homebuyers looking to buy a home in the near future. Energy costs continue to rise in the US. They have risen so much that they are actually unaffordable for many families. With the cost of energy rising so frequently, many homeowners are having a hard time making monthly mortgage payments, as well as other utility payments. The EEM program aims to help homeowners and homebuyers afford the cost of homeownership by making energy costs affordable.
How to Apply for a EEM
To apply for an FHA insured EEM, you must qualify, under the FHA guidelines. Contact a FHA approved lender for more information on how to qualify. They will be able to help you with the application and other necessary steps and paperwork.
Who is Eligible?
Any homebuyer who meets the income demands required for a FHA insured loan and has the ability to make the monthly house note can apply. The home energy rating system (HERS) is responsible for determining how much the energy efficient improvements will cost. They will also give you and estimated about of how much the improvements will save you in energy costs. You will probably have to pay for an energy report, but this can be added to the mortgage financing. Here are a some other factors about eligibility:
- Cooperatives, condominiums and townhouses are not eligible. Only single family detached homes can qualify.
- Victims of circumstances declared to be disasters by the president with FHA mortgages are eligible.
- Your mortgage must meet the requirements of both FHA and the EEM program.
Eligible Improvements
Energy efficiency improvements can be made under the EEM program for newly constructed and older homes. The only way these improvements can be added to the homeowners mortgage loan is if the cost of the improvements are less than the value of the estimated savings.
Eligibility Requirements
Homebuyers are required to meet the usual FHA requirements:
- Must meet eligibility requirements for the max FHA insured loan.
- A down payment of 3.5 percent of the sales price or appraisal value of the home is required.
- Insurance premiums for the mortgage can be added to the total financed loan.
- Other types of loans may be eligible.
The improvements have to be cost efficient for eligibility. They must be made after the close of escrow. The mortgage bank places the funds in an escrow account for the homebuyer. It’s released to them after there is an inspection to verify that the improvements have been made and there will actually be a saving in energy cost. The max mortgage amount, as in all FHA insured loans, is based on where the home is located. This amount adjusts annually according to current FHA guidelines. These amounts are based on the county where the home is located.
Article provided by Paula Henry, a Carmel Indiana Realtor. If you’re interested in learning more about buying or selling a home in Carmel, visit her Indianapolis Real Estate Blog or search homes for sale, Carmel Indiana on her website.
